‘BASH the banks but just not too much, particularly if they threaten to up sticks and shift their tax base to friendlier climes’ – has been the reaction to HSBC once again considering whether to move its headquarters from the UK.
Earlier this week the bank – which has been engulfed by scandal and controversy over its historic tax practices – said it will review where it is domiciled, raising the prospect that it could end its 22-year stay in Britain and return to its historic home of Hong Kong.
And in Margaret Hodge, the former chair of the Public Accounts Committee and one of the bank’s fiercest critics, HSBC has found an unlikely supporter. Speaking to Financial Director at the Chartered Institute of Internal Auditors annual dinner at London Guildhall last night, Hodge, who once branded HSBC bosses as ‘incompetent and naïve’ over the bank’s tax affairs, said “of course they [HSBC] should stay, but they should act properly”.
Among HSBC’s chief gripes is the cost of the UK banking levy, effectively a tax on balance sheet assets. The bank is set to pay around £1.5bn in 2015. If HSBC and its ilk are to remain in the UK with their very substantial tax contributions, the chancellor will need to consider a reform of the bank levy in order to reduce its burden on the foreign operations of UK banks.
The taxman has also come in for its fair share of flak from Hodge during her tenure chairing the PAC. But rather than subject HMRC to an independent review of its resources, powers, culture, governance and modus operandi as called for by Paul Aplin, chair of the ICAEW’ Tax Faculty Technical Committee, Hodge added that the taxman should be “better and properly resourced”.
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