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Q & A : CODE OF PRACTICE ON TAX

<strong>Q.What is the objective of the code?</strong><br /><strong>A.</strong>The government wants banks to &ldquo;comply with the spirit, as well as the letter, of tax law&rdquo;.<br />Effectively, this places the onus on banks not to deny the government tax revenue.<br /><br /><strong>Q.What will banks be required to do?</strong><br /><strong>A.</strong>Banks will have to have a formal, documented strategy on tax, with directors accountable for upholding it and communicating with HM Revenue &amp; Customs (HMRC). They must also ensure their tax departments are not overruled by other business units and have dialogue with senior management.<br /><br /><strong>Q.What about tax planning?</strong><br /><strong>A.</strong>Transactions should be structured in such a way as to give a tax result which is &ldquo;not contrary to the intentions of parliament&rdquo;, even where a bank is an intermediary. Remuneration arrangements should ensure that the correct amount of tax is paid on employee pay.<br /><br /><strong>Q.how will banks show that they are complying?</strong><br />A.Lenders must be &ldquo;transparent and constructive&rdquo; and disclose any uncertainties in relation to tax to HMRC. They must also seek to resolve problematic issues before filing tax returns.