Arab Today, arab today deutsche bank and ubs group lose bonus tax case in uk supreme court
Last Updated : GMT 03:44:27
Arab Today, arab today
Arab Today, arab today

Deutsche Bank and UBS Group lose bonus tax case in UK Supreme Court

Arab Today, arab today

Arab Today, arab today Deutsche Bank and UBS Group lose bonus tax case in UK Supreme Court

Deutsche Bank and UBS Group must pay taxes on two banker bonuses plans
London - Arab Today

Deutsche Bank and UBS Group must pay taxes on two banker bonuses plans, the UK Supreme Court has ruled, saying the firms exploited loopholes to avoid payments in a decision that will affect a number of similar arrangements.
The 12-year-old dispute involved taxes on two £90 million (€116m) employee bonus plans set up in 2003 to reduce liabilities on some bonuses the following year.

The British tax collection agency, Her Majesty’s Revenue & Customs (HMRC), later found the plans amounted to tax avoidance and asked UBS and Deutsche Bank to pay about £50m each.

Supreme Court Judge Jonathan Mance said the schemes were “commercially irrelevant” and had no purpose other than to escape taxes, which is not what lawmakers intended when they created the rules.

“It is difficult to accept Parliament intended to encourage, by exemption from taxation, the award of shares to employees, when the award of such shares has no purpose other than the obtaining of the exemption itself,” Mr Mance said.

The British government has become aggressive in targeting legal but unpopular tax avoidance, closing loopholes and pursuing individuals and corporations in courts. Mr Mance said the appeal was a test case for several other schemes.

“It’s very bad news for the banks involved: they will need to pay the tax on employee bonuses which were delivered over a decade ago,” said Justin McGilloway, a lawyer at Wedlake Bell who wasn’t involved in the case.

“This success could open the door for HMRC to challenge other so called ‘tax avoidance schemes,”’ which were perfectly legal when they were originally implemented.”

In the Supreme Court case, lawyers for Deutsche Bank and UBS argued that while the banks had tried to avoid taxes, they had done so without breaking any rules. Both banks say the disputed arrangements were only used once.

The banks, not the employees awarded the bonuses, will have to pay the money owed to HMRC.

“This matter concerns a disagreement over the interpretation of highly technical tax legislation and dates back to a one-off compensation plan for 2003,” said UBS spokesman Oliver Gadney, who added that the bank was disappointed with the decision.

Deutsche Bank spokesmen Charlie Olivier said all tax and national insurance due as a result of the ruling had already been paid.

Another Supreme Court Judge, Robert Reed, compared the banks’ plans to a “Houdini taxpayer” making sophisticated attempts to “avoid the manacles of tax,” in the written decision.

“In our society, a great deal of intellectual effort is devoted to tax avoidance,” he noted.

Much of the attention on tax avoidance has focused on companies.

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Arab Today, arab today deutsche bank and ubs group lose bonus tax case in uk supreme court Arab Today, arab today deutsche bank and ubs group lose bonus tax case in uk supreme court

 



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