CIOT attacks code of practice for banks

The Chartered Institute of Taxation has strongly criticised HMRC's 'impractical' ambition to establish a code of tax practice for banks.

The professional body has expressed muscular opposition to a voluntary code – intended to stymie tax avoidance by financial instiutions – that 'tries to override statute as the governing force of taxation in the UK'.

In a written response to the Revenue's consultation paper Code of Practice on Taxation for Banks, the CIOT emphasises that it has 'long objected to "tax by law, untaxed by concession"'.

It adds: 'We similarly oppose a code that seems to attempt to "tax by code that which is untaxed by law"... taxation by intention of Parliament, in the sense that we understand is meant by HMRC in the [code], is impractical.'

HMRC, insists the institute, need to justify the ‘major’ step towards taxing by the spirit, rather the letter, of the law – and the department must also demonstrate ‘how a voluntary code can avoid becoming something that affected taxpayers are pressurised into adopting’.

CIOT president Andrew Hubbard remarked that the trade body has 'always had a consistent stance of upholding the rule of law in taxation.

'We do not think wider agendas about the banking industry – on which we are not qualified to comment – should erode that key principle. We strongly oppose a code that tries to override statute as the governing force of taxation in the UK.'

The institute's tax policy director, John Whiting, added: ‘If the code is to go ahead, there must also be comparable obligations on HMRC to operate the tax system in accordance with Parliament’s intentions – and if this is to be a voluntary code, it should be for HMRC to adjust their approach, not penalise those who do not adopt it.'

To read the CIOT submission in full, click here, and click here for the Revenue condoc.

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