Plans to strengthen Banking Code of Practice confirmed by government
Following a consultation, new changes will be legislated for in Finance Bill 2014.
The government has confirmed plans to strengthen the Code of Practice on Taxation for Banks.
Following a consultation over summer 2013, changes announced today (Friday 11 October) will be legislated for in Finance Bill 2014 and will ensure that on signing up to the Code, banks fully commit to the obligations it sets out.
The three key changes are:
- more regular reporting from HM Revenue & Customs (HMRC) on banks’ compliance with the code
- a new independent reviewer will be asked to consider potential breaches of the Code. HMRC commissioners will have to take account of their views before deciding whether there is a breach. Banks that do breach the code could be named.
- 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
The Code already requires banks 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
- maintain a transparent relationship with HMRC
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.
The response to the consultation is published alongside revised legislation and the HMRC Code Governance Protocol.