Lloyds accused of tax avoidance

Lloyds, one of the banks bailed out by the government, has been accused in court by the Treasury this week of using a subsidiary to pour hundreds of millions into transatlantic tax avoidance schemes, the Guardian reported.

Huge loans to American financial institutions were disguised as commercial investments for tax purposes, it is alleged in a case against the bank being brought by HM Revenue & Customs, a department of the Treasury, the newspaper said.

As a result, the money from the deals was treated differently for tax purposes on each side of the Atlantic.

The Guardian said that some of the details of the Lloyds schemes were disclosed at a tax tribunal hearing in London this week.

Lloyds said in a statement: 'We treat very seriously our obligations to comply with all tax legislation. In 2008, HMRC acknowledged the high quality of our tax submissions and our levels of disclosure. In addition, our tax compliance team was rated by HMRC 'gold standard' in respect of its general approach to disclosure and compliance with tax law.'

Dave Hartnett, permanent secretary for tax, said: 'HMRC cannot comment on individual cases under consideration in a judicial process. We pursue all tax avoidance cases vigorously irrespective of the taxpayer involved'.

Lloyds faces accusations of tax avoidance