Bank bonuses taken to Supreme Court
05 May 2015
HM Revenue & Customs (HMRC) is taking two major banks to court over alleged tax avoidance schemes for staff bonuses.
In the past, HMRC has lost court cases against the banks – UBS and Deutsche Bank – for activities it claims took place over ten years ago, but has now brought the matter to the Supreme Court, with a hearing expected later this year.
During the previous hearings, HMRC said the banks employed a ‘carefully planned tax avoidance scheme which was designed to enable them to provide substantial bonuses to employees in the tax year 2003/2004 in a way that would escape liability to both income tax and national insurance contributions’.
Controversy arose when the two banks gave employees shares in schemes as ‘restricted securities’ in order to bypass income tax, with bonuses then paid into those schemes. The matter was brought to the attention of 2,700 bank employees who were required to settle the tax disputes with HMRC.
According to HMRC’s claims, UBS reportedly avoided up to £37 million in tax and £13 million in national insurance contributions on £92 million of bonuses. Deutsche Bank reportedly sought tax avoidance on £91 million of bonuses, some over £2 million each.