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Treasury targets 500m Bank tax schemes

Feb 2012
On the afternoon of Monday 27 February, the Treasury released details of amendments that will be included in the Finance Bill 2012 to prohibit arrangements that exploit “deemed releases” rules on loan relationships to avoid Corporation Tax. The retrospective provisions will apply to arrangements made between 1 December 2011 and 27 February 2012 - the details of which would have already been disclosed to HMRC under its Disclosure of Tax Arrangement Schemes (DOTAS) rules.

In a statement exchequer secretary to the Treasury David Gauke mentioned no names, but pointedly remarked that the rules on discounted debt buybacks by banks had been targeted in the Finance Act 2010, but that an unnamed bank had entered into such a scheme. He said:
“The bank has adopted the Code of Practice which contains a commitment not to engage in tax avoidance. The Government is clear that this is not a transaction that a bank that has adopted the code should be undertaking.”

Stuart Coleman, Manager of the Tax Department of ABDS says:
“One scheme had included a loophole that allowed the bank to avoid paying corporation tax on profits gained from buying its own debt. The second scheme involved using Authorised Investment Funds (AIFs) to claim tax repayments from the Treasury. HMRC said that it is forcing the bank to repay tax due over the past year, in what is an extremely rare case of a levy being imposed retrospectively.”
 

For further information about Tax Rates and how they apply to you, contact Lavinia Newman, Stuart Coleman or Tonmoy Kumar to discuss how ABDS can help in all your financial planning and business advice.

ABDS Chartered Certified Accountants of Southampton.
Tel: 023 8083 6900  E-mail: abds@netaccountants.net
 

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