UK banks to sign tax avoidance code

The biggest banks across the UK are readying themselves to sign up to a code of conduct on tax avoidance.

The code requires banks to provide key information upfront to Revenue and Customs about new avoidance schemes that could cost the taxpayer millions of pounds.

This move follows increasing pressure from the government on those institutions who had ignored pleas to agree to voluntary guidelines – just four of the top 15 banks had agreed to these.

But some banks are still stalling - the part-taxpayer owned Lloyds Banking Group, and Northern Rock, which is fully owned by the government, are yet to agree to sign on the dotted line. The Royal Bank of Scotland is the only one of the three government-backed banks to have signed up so far.

But government officials say that Lloyds, Barclays, HSBC, Santander UK and Northern Rock are not far off signing up - and should do so by the beginning of next month – a deadline set by the Chancellor.

As for why banks are reluctant to sign up to the code – they fear it could put them at a disadvantage to their rivals if they were to sign up first and they are not keen on a clause which means the banks are responsible for the personal tax affairs of senior staff.