Two more top banks getting away with paying NO corporation tax in the UK: Credit Suisse and Citigroup are latest to admit using previous losses to slash their bills

Two more top banks getting away with paying NO corporation tax in the UK: Credit Suisse and Citigroup are latest to admit using previous losses to slash their bills

• Seven foreign investment banks in London now pay no corporation tax
• Fines and lawsuits used to slash their tax bills by millions of pounds
• Experts said the tax appears to be easier to avoid than the bank levy
• Shadow Chancellor John McDonnell dubbed latest findings ‘damning’

Two foreign investment banks with major businesses in Britain are paying no corporation tax, it emerged last night.
Citigroup and Credit Suisse disclosed in the past fortnight that their main British subsidiaries paid zero corporate income tax in 2014.
It means there are now seven foreign investment banks in London paying no corporation tax. They also include JP Morgan Chase, Nomura, Deutsche Bank, Bank of America Merrill Lynch and Morgan Stanley.
They used huge losses from previous years – including fines and lawsuits – to slash their tax bills. The revelation follows the controversial decision by the Financial Conduct Authority to shelve plans to investigate pay and behaviour in the banking sector.

Out of ten investment banks, Reuters reported that Goldman Sachs and UBS paid only £21million between them, while BNP Paribas paid the most – £118million in tax on £646million profit. The ten banks made more than £27billion in fees in Britain, and employed almost 50,000 staff.

Shadow Chancellor John McDonnell said: ‘These are damning findings that make a real mockery of the Government’s approach to taxation of the financial sector.’
Professor Robert Jenkins, a former policy maker at the Bank of England, added: ‘Government to big banks, “Here’s the deal – you pay a bank levy so we look tough and in return you pay no corporation tax”.’

Banking lobby groups argue that corporate income tax is just one of many taxes that investment banks pay. However the bank levy – a tax introduced after the financial crisis to discourage them from risky borrowing – has been slashed.

Chancellor George Osborne pledged to halve it during his July budget. At the same time, he increased the tax rate banks pay on corporate income.

Tax experts say corporation tax appears to be easier to avoid than the bank levy.
Banks have been able to use multi-million-pound fines for misdeeds such as rigging foreign exchange rates and Libor interest rates to offset profits made in Britain, which meant many technically reported a loss. A rule introduced last year means banks must disclose how much tax they have paid on profits generated on a country-by-country basis.

Chancellor George Osborne pledged to halve the bank levy during his July budget. At the same time, he increased the tax rate banks pay on corporate income

The FCA inquiry was meant to examine whether pay, promotion and other incentives contributed to wrongdoings across the sector, including the PPI mis-selling scandal.

Mr Osborne has been accused of forcing City regulators to scrap the probe. Records show he held almost 90 meetings with senior bankers since he took office in 2010.
Although there is no suggestion that banks have done anything illegal with their affairs, news of their low tax bill was met with outrage by MPs.

Last week John Mann, a Labour member of the Commons Treasury Committee, told the Mail: ‘It’s quite outrageous. The behaviour of firms like these led to the financial crisis. The public will be astonished they are not paying their fair share of tax.’

Margaret Hodge, the Labour MP who chairs an all-party committee on responsible taxation, said: ‘If they make money from the UK, they should pay tax in the UK.

‘These firms use our services, they should not be using complex structures to avoid tax. It’s a complete insult.’

Tax avoidance has become a big issue in Britain and the EU, which has begun investigating US giants such as Apple, Starbucks and Amazon.

Many of the banks have been fined millions by regulators in the US and the UK over the rigging of the foreign exchange markets. In 2014 Citigroup was fined £770million by the FCA.

Although Credit Suisse was cleared by the FCA in its foreign exchange probe – along with Deutsche and BNP Paribas – it was fined £2.4million for the misleading promotion of investor products in 2014.

Credit Suisse was also fined £1.75million in 2010 by the FCA for failing to provide accurate transaction reports.

All the banks declined to comment yesterday.