Brokers stuck in limbo over the bonus tax

UK TAX authorities have demanded access to fresh information about the risk profiles of the City’s independent stockbrokers to determine if they will be hit by the government’s Bank Payroll Tax (BPT), City A.M. has learned.

Brokers are still in limbo as they await a decision on the tax, two months after it was first introduced in the pre-Budget report.

HM Revenue & Customs has this week requested a more detailed breakdown of the brokers’ revenue profiles.

In particular, it wants to know the ratio between gross trading positions and net assets, to decide if any of them will be eligible for a “low risk profile exemption”.

The move comes after 11 brokers – Arden, Oriel, Collins Stewart, Numis, Evolution, Altium, Cenkos, Panmure Gordon, Shore Capital, Canaccord Adams and Astaire – wrote to HMRC in December, arguing that they should not have to cough up as they would not benefit from taxpayer bailouts.

All deposit-taking firms are subject to the tax, as well as firms whose activities consist wholly or mainly of trading on behalf of clients and with their own money.

The brokers involved say the majority of their income comes from corporate broking retainer fees, fundraising fees and advice.

A HMRC spokeswoman said yesterday that it is still working with brokers and their representatives on ways of narrowing the scope of the provisions to remove them from the tax.

Meanwhile, City minister Lord Myners has asked fund managers including Schroders and Fidelity to scrutinise bonus payments at the banks they invest in. Lord Myners asked asset managers to “engage” with boards.