TaxCorporate TaxBanks’ tax transparency Bill launched

Banks' tax transparency Bill launched

Draft legislation to force financial institutions to disclose their worldwide corporation tax bills and their clients' accounts has been presented to Parliament

A BILL DESIGNED to force banks to disclose how much tax they are paying worldwide has been presented to Parliament.

The private members Tax and Financial Transparency Bill was unveiled by Green MP Caroline Lucas to the Commons on 17 March. It calls on the government to “take steps to require banks, corporations and trusts to provide information on their status, income arising and tax payments made in each jurisdiction in which they operate”.

If passed, the Bill would also require banks to disclose the accounts of companies that have failed to submit their tax returns to HM Revenue & Customs within 90 days of the deadline. The financial institution would have to give the taxman details of the names and addresses of the company owners and the directors.

James Roberts, partner at Barlow Lyde & Gilbert, said that the Bill was a result of the publicity surrounding the perceived low corporation tax bills paid by Barclays Bank. This would not change the tax regime much, he added.

“The Revenue has lots of powers to chase what here seems to be straightforward tax cheating,” he said. “At the heart of this are things like phoenix companies that close down then restart to avoid debts, including tax.

There is a well established regime to deal with this, so this is grafting on extra disclosure requirements to banks. Whether it changes anything fundamental is unlikely. The issue is more of whether HMRC has the resources it needs to use its existing powers.”

The requirement for financial institutions to disclose their corporation tax abroad would be difficult to enforce, he said. “Where it gets complicated is that the reporting regime is not just a UK regime, but a global arrangement under the International Financial Reporting Standards. Arguably, it would require a change in the global rules. If the government wants to scotch this Bill, the best way to do so would be to say ‘we would like to do it but our hands are tied by this international financial accounting regime’.”

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