TaxAdministrationBank’s tax code ‘unconstitutional’

Bank's tax code 'unconstitutional'

Financial institutions required to guess what HMRC is thinking on tax law

Government consultations always attract criticism for their proposals.
Usually they are accused of being unfair. But consultation for a new code of
conduct for banks on tax avoidance has attracted a different claim. Experts
simply say it is unconstitutional.

The consultation was launched at the end of June and closed for submissions
at the end of last week. It was triggered by the London G20 meeting in April
which saw international leaders commit themselves to greater financial
supervision and regulation.

But as the consultation closed it was clear that the proposals faced stiff
opposition. The criticism focused on the demand that banks should take an
uncertain piece of tax law and ask themselves how officials at HM Revenue &
Customs would interpret it.

Anne Redston, a visiting professor at King’s College, said on Accoutancy Age
TV: “First that’s difficult, but also it’s not the law. In this country we are
governed by the law not by government departments.”

This week ICAS also turned on the code saying it would discriminate, because
only UK banks are subject to its provisions but also pointed to the fact that it
was almost impossible to know how tax officials would interpret the law. The
practical difficulties, in short, are too great.

Redston believes the whole approach to second guessing HMRC needs to be
rethought. The whole issue is back in the hands of HMRC officials and
politicians to decide.

Watch
the full interview with Anne Redston here

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