Her Majestys Revenue & Customs (HMRC) has finally published its long-awaited draft Code of Practice on Taxation of Banks (the Code). The draft Code forms part of a consultation paper which invites comments by 25 September 2009. The key (and well publicised) aim of the Code is to ensure that banks comply with not just the letter but the spirit of the law.
Why Is the Code Required?
The Government believes that the banking sector has a particular responsibility to comply with the spirit as well as the letter of the law, and to do so in a way that is transparent and open. The consultation paper notes that banks are uniquely placed for the following reasons:
- banks can seek to avoid their own tax liabilities;
- banks provide financial services to customers which can involve tax sensitivities and tax avoidance;
- banks have access to large amounts of capital which can be used to facilitate avoidance schemes.