The Code of Practice on Taxation for Banks, first introduced in 2009, sets out a framework for what the Government considers to be good practice for tax governance and decision-making in banks, including decisions regarding tax planning. The Code encourages banks to build and maintain open and transparent relationships with HMRC.
Legislation due in Finance Bill 2014 will enact a number of proposals relating to the Code, including:
- Publication by HMRC of a list of all banks adopting or re-adopting the Code as proposed in the Autumn Statement 2013;
- A requirement for any bank that wishes to be subject to the strengthened Code, to provide an unconditional confirmation (or re-confirmation) regarding their commitment to the obligations contained within the Code; and
- From 2015 onwards, the publication of an annual report on the operation of the Code which may ‘name and shame’ any bank that HMRC consider to be failing to comply with the Code. The report will also provide an updated list of those banks which have adopted the Code and those which have not.
The annual list to be published of those adopting the Code, and those considered by HMRC to be failing in their obligations may prompt banks to consider whether any tax planning entered into is likely to be considered by HMRC to be against the spirit of the Code.