Lloyds Bank forced to admit its not always in tax havens for business reasons

Posted on May 17 2013

Lloyds Bank was forced to make an interesting admission yesterday:

The boss of Lloyds Banking Group pledged to pull out of tax havens where the bank is not conducting genuine business at its annual meeting on Thursday.

Chief executive António Horta-Osório said the 39%-taxpayer owned bank had embarked on a systematic review of "so-called tax havens" after a shareholder demanded to know why the bank was the seventh biggest user of such facilities.

Shareholder Anne Edmonds said: "I want to know when this will be stopped. Tax avoidance is legal and what Lloyds is doing is legal. But to me there is little difference between tax avoidance, which is legal, and tax evasion, which is illegal."

This was "very wrong", she said. "That money should be kept in the UK for the benefit of the UK."Horta-Osório agreed with her comments. "In 2012 alone we have closed 60 of those companies and that is more than 20% of the total. We are going to close all of them unless there are strong business reasons for our customers to keep them there," he said at the meeting in Edinburgh. He later clarified that "business reasons" did not mean "tax reasons".

Campaigners say Lloyds has 259 entities in tax havens, although the bank said this was out of date.

Chairman Sir Win Bischoff said Lloyds was the third biggest taxpayer in the UK. He added: "We do have for operational reasons some subsidiaries in what might be called tax havens."

First, full marks to Anne Edmonds for shareholder activism.

Second, full marks too for getting an admission that Lloyds is not in all these places for business reasons.

But then we've always known that.

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10 Responses

  1. SF says:
    May 17 2013 at 8:00 am

    Third – how about some marks for a company saying that they are going to stop using tax havens and actually having done something about it!

  2. Theremustbeanotherway says:
    May 17 2013 at 8:32 am

    Full marks go though to the shareholder raising the issue.

    The money should indeed be kept in the UK for the benefit of the UK in order to make productive and not “ponzi investments!

  3. Allan says:
    May 18 2013 at 3:19 pm

    “But to me there is little difference between tax avoidance, which is legal, and tax evasion, which is illegal.”

    Except of course one is a crime and one isn’t – for example following the shareholders view perfectly useful tax avoidance using an ISA for example would be classed as illegal in her eyes. I wonder, if as a shareholder, the individual concerned has structured their affairs to illegally evade taxes – I beg your pardon – minimise their tax bill in a perfectly legal way.

    I notice though that the Chairman said, “We are going to close all of them unless there are strong business reasons for our customers to keep them there…”

    So it isn’t really the banks cash he is talking about, it is it customers. Nice one – neat sidestep, very cynical. I wonder what happens when the customer threatens to go across the road to the other banks that will do the job the customer wants?

  4. JonDee says:
    May 19 2013 at 4:11 pm

    Is it really a safe idea to move away from a properly applied and reasonably certain rule of Law to the rather uncertain rule of the “spirit” of that Law? Is the said “spirit” to be interpreted by Courts or by politicians or by Parliament or by some specially anointed caste? Or will it perhaps be made clear by divine guidance to certain self-declared holy people?

    Under the rule of the “spirit” will there be any firm precedents to be relied on? Will such precedents become abruptly irrelevant as the “spirit” moves on?

    Why can’t the law drafters get it right. Why do the politicians not just tighten the loopholes?

    … Exactly.