The government has confirmed plans to strengthen the Code of Practice on Taxation for banks, with the new changes to be included in Finance Bill 2014, reports Harris & Co chartered accountants.
The three main changes, the result of a consultation this summer, include more regular reporting from HMRC on banks’ compliance with the Code, a new independent reviewer who will consider potential breaches, and HMRC"s role to expose banks that breach the code by naming them.
HMRC commissioners will have to take account of the independent reviewer’s views before deciding whether there is a breach, while any transaction that falls within the scope of the General Anti-Abuse Rule will be considered an automatic breach of the Code, resulting in the possible naming of the bank.
Exchequer secretary to the Treasury, David Gauke, said: ‘The government is clear that aggressive tax avoidance is unacceptable and we have provided HMRC with the resources to clamp down on it. The change we are making today will strengthen the Code and ensure the banking sector continue to carry out their tax obligations and act responsibly.
A list of those banks that have newly adopted or re-adopted the strengthened Code will be published in the autumn and from 2015, HMRC will publish an annual report on how the Code is operating. This will include the names of any bank not complying with the Code, as well as an updated list of who has signed up to the Code and who has not.
Currently 262 banks have adopted the existing Code, which requires them to adopt adequate governance to control the types of transactions they enter into; not undertake tax planning that aims to achieve a tax result that is contrary to the intentions of parliament; comply fully with all their tax obligations; and maintain a transparent relationship with HMRC.