Britain hits bank with US$800m tax bill

Britain has ordered an unidentified bank to pay half a billion pounds (US$800 million) in unpaid tax that it avoided by exploiting now-closed loopholes, a government minister said Monday.

Exchequer Secretary David Gauke said that the bank had operated an "aggressive" avoidance scheme that saw it dodge corporation tax on profit made buying back its own debt.

It also carried out a scheme to seek "repayment" from the government of tax it had never paid.

Gauke said both practices were "wholly unacceptable, against the intentions of Parliament and the spirit of the law".

He said the bank had disclosed the practices voluntarily and been told to pay more than £500 million in tax.

The government did not name the bank, but said it was one of the financial institutions that have signed up to a code of conduct promising to "follow the spirit of the law in addition to the letter" where taxation is concerned.

The 200 signatories include major banks such as Barclays, Citigroup, Credit Suisse, Deutsche Bank and HSBC.

Gauke said the loopholes used by the bank had now been closed.

- AP