Categorized | news

Bank of Ireland caught out on tax avoidance

Sorry, Bank of Ireland – if contractors and the self-employed can’t get around new tax avoidance rules, neither can you, mate!

The BoI made a good run of things, but eventually it’s going to have to pay the piper after trying- and failing – to avail itself of a corporation tax loophole to the tune of £27 million.

 

Her Majesty’s Revenue & Customs took issue with how the bank tried to use former building society Bristol and West, a subsidiary of the Bank of Ireland, to avoid the tax. HMRC challenged the move, and lo and behold – the Court of Appeal threw the book at the bank.

For its part, the taxman said the scheme was a move to exploit the transition from one piece of legislation to another. Contracts from the Bank’s subsidiary, which were controlled by the original legislation, made their way into the hands of yet another subsidiary (how many subsidiaries does one bank need?), but under the newer legislation instead. With the Bank freely admitting it was doing what it was doing solely to weasel out of its tax obligations, the only defence it would raise was essentially, “well, the loophole was there, so we decided to use it,” a move the HMRC’s Director General of Business Tax Jim Harra denounced as “cynical.”

It absolutely tickles me to know these big, bad corporate entities – that likely thought they were above the law, simply because they were so large – are getting roughed up quite a bit by the taxman for their hubris. I’d love to see other companies get the same treatment – namely these giant multinationals that funnel all their taxable income offshore – especially since if HMRC could just get its hands on those  hundreds of millions in unpaid taxes, maybe it would stop harassing freelancers, contractors, and other self-employed folk who actually work for a living.

Will this actually ever happen? Probably not. Most of these multinationals are so powerful that, to a degree, they really can write their own rules – especially since they’ve got ministers and other legislators on the run out of fear that they’ll pull up tent stakes and leave the UK altogether. Still it’s nice to dream that maybe one day our country won’t be beholden to these grotesquely massive companies that run roughshod over our tax laws, isn’t it?

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