Banks paying less corporation tax, study shows
26 May 2015
According to research by Cambridge Judge Business School, the amount of corporation tax paid in the UK by the biggest banks has fallen in recent years despite reports of improved profits.
The banks studied were Royal Bank of Scotland, Lloyds, HSBC, Nationwide, Barclays and Standard Chartered, and the data was published in the journal Fiscal Studies. Analysis of the figures shows that corporation tax receipts from the banking sector fell from £7 billion in 2005/6 to a low of £1.3 billion in 2011/12.
Professor of Financial Accounting at Cambridge Judge, Geoff Meeks, said: ‘While profitability of major UK banks recovered to levels seen before the financial crisis, there has been a sharp fall in banking corporation tax receipts by the UK Treasury’.
He added: ‘The exact reasons are difficult to pinpoint due to incomplete and patchy disclosure requirements on banks, which we believe obstruct analysis’.
Possible reasons for the decline in payments have been suggested in the research. These range from tax breaks from HM Revenue & Customs (HMRC) to banks shifting their profits offshore.