Not for the first time Politicians in Britain are complaining that foreign Banks with active subsidiaries in the UK, pay little or no tax on their results.
These complaints have been going on for years, so what is really surprising is that no responsible Government official has ever denied that there is a "tax avoidance" problem !
The correct issue really is "Why is tax avoidance tolerated ?"
There is a basic rule when preparing a tax declaration : it is permissible to avoid paying tax if no "illegal methods or accounting principles" are employed.
The British Chancellor, George Osborne, must legislate to erase doubt over any possible misinterpretations of tax laws. Tax Inspectors must use audit principles to determine whether a Declaration appears to be satisfactory.
This is particularly the case when a healthy company or bank seems very profitable, yet pays little or no tax. When the mother company abroad pays normal taxes on its operations, why not its subsidiary ?
Normally any company must justify its calculations and the principles it used to determine its tax liability.
If Inspectors are still not satisfied with the explanations they have received, a detailed audit should be undertaken !
In the end, the Chancellor should legislate, or deny that there is a problem of underpaid taxes ! He is the Minister responsible for ensuring that proper taxes are recovered !
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