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About In House Tax

About In House Tax

This weblog is a news and views site for tax professionals within the UK and international in-house tax community.  You will find information about appointments and people moves in and around the in-house tax market, issues affecting the in-house tax professional, opinions on the state of the tax job market, updates on tax technology, and other general thoughts of the day.

Hope you find it useful.

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Location: St Albans, United Kingdom

This site has been developed by Simon Godley, who also runs the niche tax recruitment company Talentpool Selection . Simon spends a lot of his time placing tax specialists into FTSE companies, large in-bound groups and some professional services organisations. He also recruits and is well networked around the UK tax technology and VAT markets.

Tax News

Banking code of practice - impact on front office tax teams?

Friday, 3 July 2009

The U.K. government will step up its anti-tax avoidance fight Monday, with the treasury announcing plans to ask banks to sign a code of good practice, a person familiar with the matter said Friday.

The person said the treasury will publish a consultation document Monday which will urge banks to be more transparent about their tax affairs.

The voluntary code, first mentioned in the budget in April, will encourage them to enter discussions with the U.K.'s revenue and customs agency about how to comply with the spirit of tax laws.

Banks will have 12 weeks to respond to the consultation but the government is confident most major institutions will sign up, the person said. It's thought there have already been talks on the code between the treasury and leading financial institutions.

The code of practice will build on a similar mechanism that HMRC has used to minimize tax avoidance from leading U.K. businesses.

The idea is to open a grown-up dialogue where banks can privately share information about their tax arrangements with HMRC, consulting with officials on what is acceptable and what HMRC considers inappropriate. A senior bank official - preferably a board member - will be asked to sign up to the code, the person said.

But if banks don't sign up to the code - or sign but don't improve their behavior - HMRC could adopt a more intrusive approach. The treasury isn't ruling out moving beyond a voluntary code if that approach fails to change banks' behavior.

"A voluntary code based on an open and upfront dialogue is likely to yield a more genuine behavioral change," the person said.

The move comes as the U.K. battles an economic recession that has taken large bites out of government revenue and bloated the budget deficit to record peacetime levels. The deficit will be above 12% of gross domestic product this year, with public sector net borrowing set to reach £175 billion.

In a bid to plug the fiscal gap, the treasury has become more aggressive in a number of areas, leading international efforts to press tax havens to be more open and seeking to tighten the rules for so-called non-doms, people who reside in the U.K. but are not domiciled here.

There are no exact estimates of how much the government hopes to save through the new code.

The disclosure regime introduced in 2004 requires avoidance scheme users and promoters to disclose details to HMRC. Since the introduction of this regime, HMRC has acted on information received to protect over £11 billion.

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posted by Simon Godley


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