HMRC has published proposals to 'name and shame' banks that do not comply with the Code of Practice on Taxation for Banks (the Code).
The Code, in operation from December 2009, is (and will remain) voluntary. UK banks, and UK branches of overseas banks, that sign up to the Code must:
- comply with the spirit, as well as the letter, of UK tax law
- maintain a transparent relationship with HMRC
Under the proposals announced last week:
- banks will be asked to unconditionally confirm (or re-confirm) their commitment to the Code
- a list will be published at the end of 2013 of all banks which have signed up to the Code
- from 2015, HMRC will publish an annual report, listing those banks that have, and have not, signed up. The report may also publish the names of those banks that, though signed up, are not compliant.
Not surprisingly, the proposals confirm that HMRC will regard a bank as being not compliant under the Code if it enters into a transaction caught by the new general anti-abuse rule (GAAR) due to take effect from this July.
The proposal to name and shame non-compliant banks is not a surprise. It will provide a real incentive to comply with the voluntary Code. In a climate of increased focus on perceived tax avoidance and bank behaviour, a proposal to make public the affairs of these particular taxpayers is likely to be well received by the population at large.