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