On 19 December 2018 the annual report of the Code of Practice on Taxation for Banks was published. The Code was first introduced in 2009 with the objective of changing the behaviour of the banks in relation to tax avoidance. The banks occupy a unique position in relation to tax avoidance because they can both promote and fund tax avoidance schemes.

The Code outlines the approach expected to be taken by banks on governance, tax planning and their relationship with the tax authority. Banks in the UK can adopt the Code and commit to adopting best practice for their own tax position as well as committing not to promote tax avoidance by third parties.

Under the Code the banks adopt adequate governance; commit themselves not to engage in tax planning that targets tax results contrary to the intentions of Parliament; comply in full with their own tax obligations; and develop a transparent relationship with HMRC.

The annual report for 2018 reviews the operation of the Code in the twelve months to 31 March 2018. A total of 315 banks had adopted the Code as at 31 March 2018 and these are listed in an Annex to the report. Although 11 banks had not yet adopted the Code and are therefore also listed in another Annex to the report HMRC notes that nine of those banks have adopted the Code since 31 March 2018.

The list of banks that should be adopting the Code is taken from HMRC records of banks within the charge to the bank levy, and from a list of banks and building societies drawn up by the Prudential Regulatory Authority, one of the regulatory bodies in the UK.

The annual report for 2018 notes that none of the banks adopting the Code by 31 March 2018 have been in breach of the Code during the period covered by the report. The banks adopting the Code did not make any disclosures under the Disclosure of Tax Avoidance Scheme regime in the period. HMRC considers that banks previously engaging in tax avoidance activity before adopting the Code are no longer doing so and their governance and behaviour is compliant with the Code.