The French banking company BNP Paribas lost a £35 million tax avoidance case with Her Majesty’s Revenue and Customs (HMRC), the UK government department responsible for tax collection. A tribunal ruled in favor of HMRC, finding that the bank attempted to make use of a tax avoidance practice that involved share dividends.
Specifically, the bank reportedly attempted to claim a tax exemption through the generation of an artificial loss on the purchase and sale of dividends without actually disposing of the underlying shares – a practice commonly known as “dividend stripping.” HMRC successfully argued to the tribunal that UK law prohibits this practice.
“Tax avoidance doesn’t pay,” Penny Ciniewicz, HMRC’s director general for customer compliance, said following the ruling. “This decision adds to the comprehensive run of wins by HMRC in which the courts have found against the small minority of taxpayers who seek to avoid tax.”
BNP Paribas has stated that it will respect the tribunal’s ruling and does not plan to appeal the decision.
“We did not appeal this decision and paid the tax amount in full before the tribunal was heard. BNP Paribas takes its tax obligations very seriously,” a BNP Paribas spokesperson said. “We pay taxes fully in accordance with UK legislation, voluntarily adopted the Code of Practice on Taxation for Banks in 2009, and maintain an open and wholly transparent relationship with HMRC at all times.”
The case is part of HMRC’s broader crackdown on both businesses and individuals that engage in tax avoidance. So far, this crackdown has brought in a staggering £29 billion in revenue.