Bank wins battle to shelter clients.
Coutts, the Queen’s Bank, has claimed victory over the Inland Revenue following discussions over one of its tax shelter schemes. The bank, which also has Sir Elton John and the Duchess of York among its customers, has been in meetings with the Revenue after revealing it had set up a tax shelter designed to cut the tax bills of hundreds of its corporate customers through the purchase of capital losses. The shelter involved the use of derivatives to establish losses on one deal to offset the profits on another. However anti-avoidance legislation was subsequently introduced in the last Budget, eliminating the setting up of similar tax shelters in the future. Following the change, the Revenue attempted to take out a section 20 aimed at making the bank reveal the clients involved. But the bank and its auditor KPMG defeated the move. Coutts head of tax advice, Martin McLennan, said: ‘We have been involved in a meeting with the Revenue and have successfully fought to prevent having to disclose the list of clients in the scheme. It is round one to the taxpayer.’ The Revenue has disallowed the scheme and, as a result of the loophole closure, clients cannot join the shelter now, but the unknown number of current clients can remain in the scheme. The battle came to light as Natwest continued to resist takeover bids from Bank of Scotland and Royal Bank of Scotland.