Global Investment Firms Paid Little In UK Tax Last Year, Says FT

by Robert Lee, Tax-News.com, London

22 July 2004

An investigation by the Financial Times has revealed that several UK subsidiaries of global investment banks paid little or no UK tax last year.

According to the business daily, the most profitable London-based investment bank, Goldman Sachs, declared pre-tax profits of $665 million (£356 million) last year, although the bank’s accounts showed that its entire $128 million tax charge was rolled forward in the form of deferred taxation. The accounts also revealed a tax credit of $7 million.

The FT noted that the bank was able to roll forward its tax liability as a result of a timing difference between the figures in its UK tax calculation and figures in its financial accounts.

Meanwhile, Morgan Stanley International’s declared profit of $501 million had a tax charge of $124 million, of which $94 million related to foreign tax.

Credit Suisse First Boston also paid no tax last year, although this was due to a reported loss of $192 million.

The FT based its findings on the records of foreign subsidiaries filed at Companies House, and uncovered similar patterns for several other multinationals across different industries.

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