HM Revenue and Customs is planning to take two banks to the Supreme Court over their apparent use of tax avoidance schemes which they used in order to avoid paying large tax bills on bonuses for its staff.
Previously, HMRC has lost two cases against UBS and Deutsche Bank over schemes operated in 2003 and 2004. It has been permitted to appeal to the Supreme Court in a new hearing which is scheduled to take place later this year, according to the Financial Times. In both cases, HMRC said bonuses given to employees as part of the scheme were subject to income tax.
At an earlier court case, HMRC accused the banks of using a ‘carefully planned’ tax avoidance scheme which enabled the banks to give employees substantial bonuses in a way that would escape paying income tax and national insurance contributions.
A number of the banks’ employees received shares in the schemes and the banks’ then paid bonuses into the schemes without informing HMRC of the tax liabilities that this brought.
It had been claimed at an earlier court case that UBS devised a scheme to avoid paying £37 million of tax and £13 million in National Insurance on £92 million of bankers’ bonuses. UBS won the case and HMRC failed to convince the court to overturn the decision.
Deutsche Bank’s plan was made to benefit £91 million of bonuses and some share awards to employees were above £2 million. The bank lost a tribunal case but won its appeal over the decision.