A proposed code of conduct for banks on tax avoidance could be discriminatory
and won’t work, according to ICAS.
In comments made for consultation on the code the Scottish Institute said
that it fails because it depends on the banking sector fully understanding the
intention of parliament when it drew up tax law, which it claims is nearly
The code discriminates because it would apply only to UK banks and not
lenders from overseas operating in Britain.
Derek Allen, director of taxation at ICAS, said: “The answer of improving
compliance, or to revisit the debate about repealing most of the complex
anti-avoidance legislation and consider a general anti-avoidance provision
(GAAP) again. That could simplify matters, reduce costs for everyone and
discourage leaving decisions about the interpretation of tax law to various
boards of banks.”
Allen adds: “This voluntary code might lead directors into attempting to
interpret Parliament’s intentions rather than following the strict letter of the
law. As recent cases such as Arctic Systems Ltd show, if HMRC fail to properly
interpret these intentions, banks wouldn’t stand a chance.”
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