Publications

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Following the UK government’s Pre-Budget Report on December 9, we circulated an Alert on the new bank payroll tax prepared by our UK tax colleagues noting that the tax is to apply to “taxable companies” as defined in the draft legislation.

This definition extends much further than simply to banks and building societies. Any UK resident company, or non-UK resident company carrying on business in the UK through a permanent establishment, or generally any affiliate thereof, falls within the definition of a “bank” if: (i) it is authorized under the Financial Services and Markets Act 2000, and (ii) its activities include accepting deposits or certain other regulated activities such as administering investments.

Therefore, this tax may apply to many financial services and investment businesses in the UK which do not carry on traditional banking activities.

The potential scope of the tax, and the uncertainties surrounding the definition of “taxable companies,” have provoked widespread concern. This has led some groups such as the UK’s Investment Management Association (IMA) and the British Venture Capital Association (BVCA) to seek confirmation from the UK Treasury that the rules are not intended to apply to their members.

We understand that UK Treasury Officials may have given initial confirmation to the IMA and BVCA (though no public announcement has been made), and that meetings between these groups and HMRC/UK Treasury are to continue this week. Meanwhile, newspapers in the UK report that the UK Treasury intends to clarify the definition when it publishes more details of the tax in the next few weeks.

If you think that your business in the UK may be affected by the rules despite not being a “bank” or “building society” as commonly understood or an affiliate thereof, and you would like some further advice on your position including from our expert on the regulatory regime of the UK’s Financial Services Authority, please contact:

In the UK:

Richard Woolich

Paul Rutherford
London

In the US:

Bruce Wein
Chair, US Tax Group

Thomas Dick

Or your DLA Piper contact.