HSBC and Barclays in £2.6bn tax shortfall, says Tax Justice Network
A report produced by Tax Justice Network suggests Barclays and HSBC underpaid corporation tax by £2.6bn
BOTH BARCLAYS AND HSBC are today facing accusations they are “taking the British tax system for a ride”, following a report produced by the Tax Justice Network.
The report claims that between 2009 and 2012, the banks underpaid corporation tax by £2.6bn, although that figure is derived from what they might have paid under a unitary taxation system. Such a system would see businesses taxed on profits on a country-by-country basis.
Both banks dispute the figures, which are based on a comparison between turnover and corporation tax.
Around 40% of Barclays’ global operations are based in the UK, with UK corporation tax making up around 11% of its global tax bill, the report says.
HSBC has 17% of its staff based in the UK, with its corporation tax charge in the UK of £1.1bn accounting for 10% of its global bill.
While the UK’s lower corporate tax rate goes some way to explaining the figures, the report claims the banks use “generous” tax breaks to drive down their bills.
Authors of the report, Richard Murphy and Meesha Nehru, maintain that year on year, the shortfall from the two banks amounts to £650m, with the banking sector contributing £1.3bn annually according to HM Revenue & Customs.
“Under the current policies of economic austerity when vital public services are being cut, and the vulnerable are being made to suffer, there is more need than ever to ensure that those responsible for the current crisis, including all our major banks, make a fair contribution to the public coffers,” they said in the report.
“However, under current UK and international tax rules, HMRC can only tax HSBC and Barclays based on the profits the companies declare that they make in the UK.”
A spokesperson for HSBC said: “HSBC paid $9.3bn in tax globally last year. This demonstrates that we do not employ a strategy to avoid UK or other taxes. The $1.6bn (£1.04bn) paid in the UK puts us amongst the highest tax payers in the FTSE 100. HSBC applies to the spirit and letter of the law in all territories in which it operates and seeks to comply with the UK Code of Practice for the taxation of banks”
Barclays has been contacted for comment.