Measures to strengthen the Code of Practice on Taxation for Banks will be included in Finance Bill 2014 and will ‘ensure that on signing up to the code, banks fully commit to the obligations it sets out’, HM Treasury announced.
Key changes include ‘more regular reporting’ from HMRC on banks’ compliance with the code. A new independent reviewer will be asked to consider potential breaches, and HMRC commissioners will have to take account of the reviewer’s views before deciding whether there is a breach.
‘Banks that do breach the code could be named,’ the Treasury said. Any transaction within the scope of the general anti-abuse rule would be ‘considered an automatic breach of the code – resulting in the possible naming of the bank’.
The existing code has been adopted by 262 banks. ‘A list of those banks that have newly adopted or re-adopted the strengthened code will be published in the autumn and from 2015, HMRC will publish an annual report on how the code is operating,’ the Treasury added. ‘This will include the names of any bank not complying with the code, as well as an updated list of who has signed up to the code and who has not.’
In a summary of responses to the recent consultation, HMRC said some respondents felt that the proposals ‘placed HMRC in the position of final arbiter in imposing a potentially serious reputational penalty’. Reputational damage could be caused to a bank or building society ‘simply because HMRC considered that transactions … resulted in an application of existing tax law that was in HMRC’s view inconsistent with the “intentions of Parliament”’.
In the light of these concerns, HMRC will be required to take account of the views of an independent reviewer. ‘The government believes this will provide a significant safeguard to banks,’ HMRC said. ‘To reinforce this safeguard, however, the government has introduced a statutory requirement for HMRC commissioners, where their decision does not accord with the views of the independent reviewer, to set out to the bank the reasons why they have reached a different view and also to set those reasons out in the annual report.’
Measures to strengthen the Code of Practice on Taxation for Banks will be included in Finance Bill 2014 and will ‘ensure that on signing up to the code, banks fully commit to the obligations it sets out’, HM Treasury announced.
Key changes include ‘more regular reporting’ from HMRC on banks’ compliance with the code. A new independent reviewer will be asked to consider potential breaches, and HMRC commissioners will have to take account of the reviewer’s views before deciding whether there is a breach.
‘Banks that do breach the code could be named,’ the Treasury said. Any transaction within the scope of the general anti-abuse rule would be ‘considered an automatic breach of the code – resulting in the possible naming of the bank’.
The existing code has been adopted by 262 banks. ‘A list of those banks that have newly adopted or re-adopted the strengthened code will be published in the autumn and from 2015, HMRC will publish an annual report on how the code is operating,’ the Treasury added. ‘This will include the names of any bank not complying with the code, as well as an updated list of who has signed up to the code and who has not.’
In a summary of responses to the recent consultation, HMRC said some respondents felt that the proposals ‘placed HMRC in the position of final arbiter in imposing a potentially serious reputational penalty’. Reputational damage could be caused to a bank or building society ‘simply because HMRC considered that transactions … resulted in an application of existing tax law that was in HMRC’s view inconsistent with the “intentions of Parliament”’.
In the light of these concerns, HMRC will be required to take account of the views of an independent reviewer. ‘The government believes this will provide a significant safeguard to banks,’ HMRC said. ‘To reinforce this safeguard, however, the government has introduced a statutory requirement for HMRC commissioners, where their decision does not accord with the views of the independent reviewer, to set out to the bank the reasons why they have reached a different view and also to set those reasons out in the annual report.’
