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| Version 1 | Version 2 |
|---|---|
| George Osborne challenged on 'unclear' bank fine tax rules | George Osborne challenged on 'unclear' bank fine tax rules |
| (about 1 hour later) | |
| Chancellor George Osborne has been asked to clarify whether banks are offsetting the cost of fines they pay against tax to cut their tax bill. | Chancellor George Osborne has been asked to clarify whether banks are offsetting the cost of fines they pay against tax to cut their tax bill. |
| Treasury select committee MPs raised concerns that banks fined millions for wrongdoing may be exploiting loopholes and "unclear" rules to pay less tax. | Treasury select committee MPs raised concerns that banks fined millions for wrongdoing may be exploiting loopholes and "unclear" rules to pay less tax. |
| It is important taxpayers do not "bear the burden", committee chairman Andrew Tyrie told the chancellor in a letter. | It is important taxpayers do not "bear the burden", committee chairman Andrew Tyrie told the chancellor in a letter. |
| The Treasury said it would respond to the letter in due course. | The Treasury said it would respond to the letter in due course. |
| Under UK law, banks are not allowed to log fines they are forced to pay for mis-selling and other misconduct as a cost in order to reduce their profits and, in turn, the amount of tax they pay. | |
| There are also tight restrictions about off setting compensation payments to customers against tax. | There are also tight restrictions about off setting compensation payments to customers against tax. |
| However, Mr Tyrie said it appeared in some circumstances banks were able to claim fines they paid to the regulator were tax deductable. | However, Mr Tyrie said it appeared in some circumstances banks were able to claim fines they paid to the regulator were tax deductable. |
| He called on Mr Osborne to confirm this was not allowed, as there appeared to be "some doubt" about the rules. | He called on Mr Osborne to confirm this was not allowed, as there appeared to be "some doubt" about the rules. |
| 'Alarming' | 'Alarming' |
| It was "not just appropriate, but essential" that fines were not tax deductable, he said. | It was "not just appropriate, but essential" that fines were not tax deductable, he said. |
| "It is important that taxpayers are not required to to bear any part of the burden of any payment import by the FCA or overseas regulators. The bill should be picked up by the bank's shoulders." | "It is important that taxpayers are not required to to bear any part of the burden of any payment import by the FCA or overseas regulators. The bill should be picked up by the bank's shoulders." |
| If banks were "not happy about it", they had a number of possible remedies, including controlling employees salaries and bonuses, he said. | If banks were "not happy about it", they had a number of possible remedies, including controlling employees salaries and bonuses, he said. |
| He also raised concerns that settlements reached with foreign governments were sometimes structured in a way that allowed payment to be offset against British tax. | He also raised concerns that settlements reached with foreign governments were sometimes structured in a way that allowed payment to be offset against British tax. |
| He did not know whether this suggestion was well-founded, but if it was true it would be "alarming", he said. | He did not know whether this suggestion was well-founded, but if it was true it would be "alarming", he said. |
| In recent years, banks including HSBC, Royal Bank of Scotland, Barclays and Clydesdale Bank have been fined by the FCA over misconduct. | In recent years, banks including HSBC, Royal Bank of Scotland, Barclays and Clydesdale Bank have been fined by the FCA over misconduct. |