WIREDGOV

The Government today published a consultation document on a code of practice on tax for banks. The code sets out the behaviours the Government expects from banks in the management of their tax affairs and in their relationship with HMRC, including governance, tax planning and the relationship between banks and HMRC.

Feedback is being sought on a range of issues, including introducing and complying with the code, how uncertainties arising in interpreting the code could be dealt with and what support banks can expect from HMRC in return.

The Government and HMRC will be speaking directly with banks operating in the UK to develop a shared understanding of the principles and implications of the Code.

Financial Secretary to the Treasury Stephen Timms said:

“While banks play a vital role in the UK and are important contributors of tax, it is clear that many continue to be involved in tax avoidance that goes well beyond reasonable tax planning. This Code is part of our work to minimise tax avoidance and ensure that large businesses such as banks have a clear understanding of the behaviours the tax authorities expect from them.

“As part of the consultation we will be talking directly with banks to develop a shared understanding of the principles that underpin the code and, in particular, what it will mean in practice for banks. This is vital to ensuring that the code plays a part in changing the behaviour of banks and in turn minimising the loss to taxpayers through tax avoidance.”

1. The 2009 Budget report (see section 5.98) reiterated the Chancellor’s announcement made on 16 March 2009 that a Code of Practice concerning taxation for the banking sector would be published. The consultation document published today requests feedback from taxpayers, their advisers and others on implementation issues relating to the introduction of the Code.

2. A copy of the consultation document ‘A Code of Practice on Taxation for Banks’ can be found on Her Majesty’s Revenue & Customs Internet site at http://www.hmrc.gov.uk./

3. The consultation period will run from 29 th June 2009 to 25 th September 2009.

4. The Code of Practice will be introduced in Autumn 2009.