BKM503200 - The Code commitments – governance: governance

All banks that adopt the Code ‘should adopt adequate governance to control the types of transactions they enter into’.

The additional commitment made by a bank which is not a small bank (BKM502100) is set out in part 2 of the Code:

• 1. The bank should have a documented strategy and governance process for taxation matters encompassed within a formal policy. Accountability for this policy should rest with the UK board of directors or, for foreign banks, a senior accountable person in the UK.
• 2.1 This policy should include a commitment to comply with tax obligations and to maintain an open, professional, and transparent relationship with HMRC.
• 2.2 Appropriate processes should be maintained, by use of product approval committees or other means, to ensure the tax policy is taken into account in business decision-making. The bank’s tax department should play a critical role and its opinion should not be ignored by business units. There may be a documented appeals process to senior management for occasions when the tax department and business unit disagree.

BKM507550 covering HMRC’s operation of the Code has examples setting out what Code compliant governance looks like and what may give HMRC cause for concern. Where HMRC has a concern over a bank’s compliance with the governance commitment it will take action under the Governance Protocol (see BKM506000).