HM Revenue & Customs has taken a tougher line against aggresive tax planning by UK banks in recent years © Bloomberg

HM Revenue & Customs has warned Britain’s banks against pursuing aggressive strategies that push the boundaries of acceptable tax planning after recovering £85m from lenders in the year to April.

The UK tax authority, which has toughened its approach to policing the banking sector during the past two years, has repeated that it has the power to name and shame banks that continue to disregard the spirit of the law.

The comments came in HMRC’s latest report on how UK lenders are responding to a code of conduct on taxation for banks. The voluntary code, which 309 banks have signed up to, was introduced under the Labour government in 2009 in an attempt to curb aggressive tax avoidance in financial services.

HMRC said: “There are a small number of banks where HMRC had or still has concerns over behaviour in relation to governance, tax planning or the bank’s relationship with HMRC. A subset of these continue to push the boundaries of acceptable tax planning.”

Last year UBS and Deutsche Bank lost a legal challenge brought by HMRC over their offshore schemes, designed to avoid paying about £50m each in tax on bankers’ bonuses.

Jason Collins, head of tax at UK law firm Pinsent Masons, said: “We have plenty of banks who are being challenged by HMRC very heavily over things they are doing — particularly value added tax. This has ramped up over the last couple of years. HMRC is tightening the screw and being a lot more interventionist.”

Dan Neidle, a partner at Clifford Chance, the law firm, added: “In the last year I have seen HMRC increasingly asserting tax avoidance in cases where there is just doubt as to the correct tax treatment. The spiralling complexity of the UK tax system, and the pressure on HMRC to deliver increased tax revenues, means these kind of disputes are going to become more and more common.”

After intense lobbying from the banks, including a threat by HSBC to move its domicile to Asia, the government said that it would steadily reduce the rate of the bank levy — an additional tax on banks — during the next few years. But this was offset by an 8 per cent corporation tax surcharge on the sector.

HMRC said it received £1.1bn from the banking surcharge in the latest financial year, as well as £4.8bn in corporation tax, up from £3.2bn the previous year.

HMRC was criticised for being too soft on tax-dodging by banks and their customers after it failed to prosecute hundreds of British customers who in the 2015 “Swiss leaks” scandal were shown to have used HSBC’s private bank to avoid paying tax.

Meanwhile, HSBC was one of several banks, including Coutts, Rothschild, UBS and Credit Suisse that were listed in the 11m documents leaked from Mossack Fonseca, the Panamanian law firm at the centre of the “Panama leaks” tax dodging scandal.

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