It is ‘not possible’, because of taxpayer confidentiality, to estimate the collective losses that banks in which the state has an interest may set against future tax liabilities, Mark Hoban, Financial Secretary to the Treasury, said in a Commons written answer to the Conservative MP Peter Bone earlier this week.
During Treasury questions, Bone asked: ‘When the banks begin to make profits again, they will offset the losses that they made when they got us into a total mess, and will avoid paying tax. Whenever companies are paying tax on their profits, the banks will be avoiding tax on theirs. Will the government look at that?’
David Gauke, the Exchequer Secretary to the Treasury, replied: ‘There are occasions when taxpayers engage in aggressive avoidance and we put a stop to it, as we did last week. However, the offsetting of losses is not novel – it is a long-standing element of the tax system – and although we keep all such matters under review, the legitimate use of losses does not necessarily count as aggressive avoidance.’
When Faisal Islam of Channel 4 News suggested to RBS Chief Executive Stephen Hester a year ago that some people might regard relief for losses brought forward as a second bail-out of the banks, Hester said there was ‘no business in the country’ that would not carry forward losses against future profits. ‘There is a little bit of wanting cake and eating it in this debate,’ he said.
Guidance on relief for losses is provided in HMRC’s Company Taxation manual. Generally, losses are calculated in the same way as trading income, but relief for losses may be restricted in the event that a government investment in a company is written off.
It is ‘not possible’, because of taxpayer confidentiality, to estimate the collective losses that banks in which the state has an interest may set against future tax liabilities, Mark Hoban, Financial Secretary to the Treasury, said in a Commons written answer to the Conservative MP Peter Bone earlier this week.
During Treasury questions, Bone asked: ‘When the banks begin to make profits again, they will offset the losses that they made when they got us into a total mess, and will avoid paying tax. Whenever companies are paying tax on their profits, the banks will be avoiding tax on theirs. Will the government look at that?’
David Gauke, the Exchequer Secretary to the Treasury, replied: ‘There are occasions when taxpayers engage in aggressive avoidance and we put a stop to it, as we did last week. However, the offsetting of losses is not novel – it is a long-standing element of the tax system – and although we keep all such matters under review, the legitimate use of losses does not necessarily count as aggressive avoidance.’
When Faisal Islam of Channel 4 News suggested to RBS Chief Executive Stephen Hester a year ago that some people might regard relief for losses brought forward as a second bail-out of the banks, Hester said there was ‘no business in the country’ that would not carry forward losses against future profits. ‘There is a little bit of wanting cake and eating it in this debate,’ he said.
Guidance on relief for losses is provided in HMRC’s Company Taxation manual. Generally, losses are calculated in the same way as trading income, but relief for losses may be restricted in the event that a government investment in a company is written off.
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