Tuesday, February 28, 2012

Liars, Damned Liars and City Bankers

Unless you have been on some remote island without access to communications, you cannot have escaped noting that there is a significant backlash in the media and in financial circles against the wholly justified complaints about the Financial Sector for the way they have mistreated their customers, repeatedly engaged in fraudulent practices, paid themselves obscene bonuses and generally conducted themselves in a manner which is guaranteed to generate disgust and antipathy among right-thinking people.

The backwoodsmen have come out of the trees and have started their predictable calls for a cessation of 'City Bashing' for fear that it is likely to 'damage the good name of the City of London'! Foreign business won't want to come here to work, we are told, if they get the feeling that the British people are 'anti-business'! Don't take any notice of these protestations, there was some tame back-bench M.P or industry spokesman saying exactly the same thing at the time of the South Sea Bubble!

The financial sector, we are told, is responsible for earning huge sums of money for the benefit of the British economy, and their profits go to maintain a high degree of tax revenues for UK plc.

Well, that's what we are told, and it is a persuasive argument, I mean it's difficult to argue about the Corporation Tax that these institutions must be paying!

Well, I don't think anyone who points out that the financial sector is run by a gang of spivs, wide-boys, dodgy croupiers and con-men is necessarily 'anti-business'! Anti-liars however is another matter all together!

I am not apologising for these hard words, because today, we have been entertained to another classic case of Banker's lies, and guess what, they are all about tax!

It seems that HMRC have clamped down on two shoddy tax avoidance schemes that were being adopted by UK banks. In the present case, Barclays Plc said it was the bank at the centre of two tax avoidance schemes, loopholes that the government had said they would close and raise more than 500 million pounds in tax that would otherwise have remained unpaid.

Barclays said it had notified Britain's tax office about its plan to buy back its own bonds, on which it and other banks have made hefty profits in recent years. Well, there's nothing particularly admirable about this, anyone seeking to promote a tax-avoidance scheme has to run it past H.M Treasury first, so Barclays were only doing what they were supposed to do anyway, although it is interesting to note that Barclays had already started to adopt the use of the scheme, prior to seeking approval! Perhaps they hoped that the Treasury wouldn't grasp the nettle and legislate retrospectively!

The Treasury said on Monday the scheme and another one were "highly abusive." That is putting it mildly. These were nothing short of an attempt to create a wholly artificial tax-avoidance scheme, and at a particularly hard time when the Government is expecting the rest of us to pay our fair share to get us out of the financial mess the bloody banks created in the first place!

Why do I accuse the banks of gross mendacity?

Well, Barclays and other banks have signed up to the Banking Code of Practice on Taxation, which contains a commitment not to engage in tax avoidance. They have now been shown to have broken that code and that was 'unacceptable', a Treasury spokesman said! He went on;-

"All the banks have signed a code of conduct, they have said that they wouldn't be engaging in aggressive, artificial tax avoidance arrangements of the sort that we have seen disclosed to the HMRC, and in those circumstances, when we were aware of what this bank was doing, it is right that we took strong action," he added.

The Treasury is willing to shut down more bank tax loopholes schemes, Treasury official David Gauke said on Tuesday.

"We are willing to act because in these particular circumstances the behaviour is not acceptable and we are prepared to step in,"

More damaging however than the financial hit could be the reputational damage. Only last November, Barclays boss Bob Diamond was pontificating on the need for banks to accept responsibility for past mistakes and show how they can contribute to society and economic growth to improve their standing with the public.

This is the sort of thing bankers say in public! What they do in private is completely another matter, as this shabby exercise of fiscal dodgy-dealing demonstrates.

The Treasury spokesman said;-

"I suspect the bank in question is regretting what it has done. It's not going to do them any reputational good and they've not made any money out of it,"

That's all very well, but it does not punish the banks enough for this shameless attempt to get out of their responsibilities to the country. Remember, banks are underwritten by H.M.Government, well, no, actually that's you and me who have to cough up if they look like failing. There is a price for this unique privilege, which is that the greedy bastards pay their taxes, in full, and on time.

What all this tells us is that they still don't get the real picture. They still haven't understood why so many ordinary, hard-working people, hate them so much. Cameron and his cabinet of millionaires need to wake up and realise that these continuing examples of double standards and fiscal sleight of hand are seriously damaging the perception of legitimacy that banks and governments need, in order to stay in business. That legitimisation comes from the people, and if they begin to get the impression that all the banks' protestations of honour and commitment are just another bunch of cheap lies, which is what they have just been proven to be, then they will rightly withdraw their willingness to accept anything the financial sector says, and they will carry on bashing the bankers for all they are worth, and rightly so!

So, let us start by recognising some unpalatable facts before we consider easing off our criticisms of the Square Mile.

Remember how much we are told the banking sector contributes to the tax take of this country? In 2011, our banking sector contributed only 7% of Corporation Tax receipts to H.M Treasury, yes that's right, the munificent amount of 7%! Mind you, 30% of the FTSE 100 companies paid no Corporation Tax at all, so we should be grateful for small mercies, but whichever way you look at it, it wasn't very much.

HMRC have done us all a very good service by this unusual exercise in retrospective tax clawbacks. They have not only recovered a figure close to half a billion pounds in unpaid tax, but they have demonstrated, in the clearest of terms, what a bunch of lying, cheating bastards are running the UK Banking Sector, and have confirmed the wisdom of keeping up the pressure on their wrongdoings and exposing them at every turn!


lifeafterdebt said...

Great to have news of the bankers finally being taken to task over something. In my blog above I wrote about our regulatory apathy for making the bankers accountable

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