So let’s get back to the one tax the banks do pay as a charge on the income they make – which is corporation tax. As the Mail on Sunday notes today, based on research I did for them, the likelihood that any of our big banks will be paying any serious sums in corporation tax for a while to come is remote in the extreme. That’s because the 2009 accounts of each of the major banks shows just how much deferred tax asset they’re sitting on relating to tax losses that they can offset against their future profits – including those subject to Project Merlin. The figures are:
HSBC _ £4.2 billion
Barclays – £1 billion
Lloyds – £4 billion
RBS – £5.1 billion
Add them together and that’s more than £14.3 billion of tax that’s not going to be paid any time soon. Or at UK current corporate tax rates some £51 bn of profit that needs to be earned before tax is paid.
As the Mail article points out, that means it\’ll take two years before the banks exhaust these tax losses, given reported profits of about £25 billion a year.
But look at what he\’s arguing. When you make a profit you should pay tax. When you make a loss you should still pay tax on the profits you didn\’t make.
Next week, Ritchie reveals that not making a profit is corporation tax avoidance.