Top UK banks sign up for tax code of practice

News - Tax

Written by Ray Clancy

Wednesday, 01 December 2010 11:38

The top 15 banks in the UK have adopted the Government’s new code of practice on taxation despite a slow start, it has been announced.

As at the 17 October 2010, only four out of the top fifteen banks had adopted the code since its introduction in 2009. But after the Treasury asked HM Revenue & Customs (HMRC) to ensure that all the major banks signed up by the end of November 2010, eleven more have now done so.

The banks signed up are Bank of America Merrill, Barclays, Citibank, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JP Morgan Chase, Lloyds, Morgan Stanley, Nationwide, Royal Bank of Scotland, Santander, Standard Chartered, and UBS.

Under the code they must have strong governance around tax, which is integrated into their business decision making and undertake tax planning to support their business operations, but this should not be used to achieve tax results that are contrary to the intentions of Parliament.

It also requires HMRC and the banks to work together to encourage mutually open and transparent relationships.

‘A year ago, the previous Government announced that it would require banks to sign up to the Code of Practice on Taxation. At the start of October this year only four out of the top fifteen had done so. I said that this was unacceptable and I gave them a deadline of end of November 2010 to sign up,’ said Chancellor of the Exchequer George Osborne.

‘That deadline arrived and I am pleased to say that all fifteen banks have signed up. Alongside the bank levy, this shows that the Coalition Government is taking action to ensure banks pay their fair share, unlike the previous Government, which talked tough, but failed to deliver,’ he added.

Richard Murphy, accountant and director of Tax Research LLP, said in September that British banks will avoid paying £19 billion ($30 billion) of tax on future profits by offsetting their losses during the financial crisis against their tax bills. That’s equivalent to more than £1,100 pounds for every family in the UK, according to a report published by the Trades Union Congress, the umbrella labour organization.