The code of practice proposed by Treasury to help crack down on tax avoidance will undermine the UK as a financial centre, critics from city law firms have told the Daily Telegraph.

Michael Wistow, head of tax at City law firm Berwin Leighton Paisner, said that the code would make the UK 'a less attractive place to do business, which cannot be helpful in these most difficult times and will further damage the UK as a major financial centre.'

The code stipulates that banks be expected to follow the 'spirit of the law' as defined by HM Revenue and Customs rather than legal precedent.

'All taxpayers, including banks, should be able to rely on the courts and Parliament alone,' he said.