Arab Today, arab today zero tax for rbs on massive profits from bond trades
Last Updated : GMT 05:21:22
Arab Today, arab today
Arab Today, arab today

Zero tax for RBS on massive profits from bond trades

Arab Today, arab today

Arab Today, arab today Zero tax for RBS on massive profits from bond trades

Edinburgh - Arabstoday

Royal Bank of Scotland paid zero tax in 2009 on trades similar to the one which this week saw Barclays harshly criticised for tax avoidance. Like Barclays, the state-owned RBS bought back its own bonds in the market in a way that meant it did not have to pay tax on the £3.8bn profits the deals made. At the time, these were not taxable – a loophole closed off by the Government the following year. Such a return would have been taxed at more than £1bn if RBS had paid normal corporation tax at the time, although the bank\'s loss-making status means that would have been far less in practice. The 2009 deals were made just a month after the launch of the Government\'s asset protection scheme, which in effect guaranteed billions of pounds worth of RBS\'s assets with taxpayers\' money. The Treasury this week described Barclays\' use of debt buybacks as being \"highly abusive\" to the tax system. The RBS case is clearly less egregious than that of Barclays because the trades were carried out before the 2010 Banking Code of Practice on Taxation in which banks committed not to engage in tax avoidance. RBS said it bought back the bonds primarily for business rather than tax reasons and points out that it did similar transactions the following year after the loophole was closed, meaning it did pay tax. The Independent began inquiring about British banks\' use of such trades after Barclays yesterday issued a statement claiming others were doing the same thing. Sources at Lloyds Banking Group said it had bought back debt in the market under Project Seaview – the bank\'s codename for the process of buying its way out of the asset protection scheme. However, it paid tax in full. Barclays would not name the professional advisers which guided it on the schemes. Its auditors are PricewaterhouseCoopers. The bank would not comment on seeking redress. John Cryer MP on the Treasury Select Committee told the news agency Bloomberg: \"The reaction of the man and woman in the street who just work and pay their taxes will be incredulity.\" The bank said: \"Barclays takes its responsibilities as a corporate citizen very seriously.\" Barclays admitted it had repurchased some of its debt in a \"tax-efficient manner\", but added: \"This was based on guidance from professional advisers that the treatment was legal and compliant with the tax code, and given that others had used a similar treatment.\" HMRC took a different view and advised the Treasury to close the loophole urgently and retrospectively. City analysts fretted that the revelations could prove damaging to Barclays.  the stockbroker Seymour Pierce warned: \"Over the last few years some investment banking talent has learnt that sailing close to the wind is not always the wisest course to steer, due to the risk of fines and damage to their reputations. Others find it harder to change. Loopholes closed HMRC is shutting off tax dodges. Here are some being closed: 1. Contrive to artificially create a pension surplus, allowing funds to be removed tax-free 2. Avoid PAYE and NI contributions by paying staff through family trust 3. Get Gift Aid by donating to dubious charities in return for shares from a non-UK \"philanthropist\" 4. Avoid property stamp duty by reducing purchase prices, making up the difference with side-payments 5. Buy a yacht with VAT-paid status while actually paying no VAT at all

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Arab Today, arab today zero tax for rbs on massive profits from bond trades Arab Today, arab today zero tax for rbs on massive profits from bond trades

 



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