City's expat bankers feel pain as taxman targets 'low-hanging fruit'
Monday 15 October 2012
The taxman's more aggressive efforts to crack down on tax avoidance by foreign bankers working in the City appears to be paying off.
HM Revenue & Customs has increased its take from investigating high-income international workers by 23% to £117.2 million over the last two years.
Ray McCann, director of law firm Pinsent Masons, which carried out the research, said: "HMRC is really cracking down on highly paid expats, most of whom are working in investment banks and hedge funds. Foreign expats have always been a high-yielding target for HMRC, and with the organisation trying to boost its revenue, it's not surprising that they're targeting low-hanging fruit."
Pinsent Masons said the HMRC team that targets ex-patriates living in the UK generated an "additional yield" of £94.9m in 2009-10 and £110.8m in 2010-11 against £117.2m in the most recent financial year. Mr McCann added: "This rise in additional tax take is also interesting, given that City bonuses and the number of investment bankers have been slashed since the credit crunch. The Eurozone crises and the economic downturn have really depressed investment banking revenues, so HMRC has had to put in a lot of extra effort to increase its take from these investigations."
The Government has stepped up efforts to crack down on high-earning foreigners since 2007, when Chancellor Alistair Darling copied the then Tory shadow chancellor George Osborne's plan to impose a levy on non-doms.
Mr McCann said the City is receiving particular attention from HMRC, so expats in the financial services sector are even more likely to come under investigation.
"Some tax planning schemes that have been a popular way for banks and hedge funds to help their staff manage their tax bills are now very much under the Treasury's microscope," he explained.
Despite this, there is speculation Britain will see an influx of French financial workers after President François Hollande signalled plans for a 75 per cent rate of tax.
...while downturn hits goldman's london operation
Investment banking revenues slumped by a third to $421m (£262m) at Goldman Sachs' London operation in the first six months of this year, new figures have revealed.
Half-year accounts for Goldman Sachs International said: "Equity underwriting decreased, primarily reflecting a decline in industry-wide activity."
GSI's total revenues still rose 4% to $3.17bn as institutional client services, which covers fixed income and currencies, and the investing and lending arm both boosted sales.
Pre-tax profits were $847.5m against $1.21bn a year earlier, but this slide is thought to have been caused largely by changes to the value of employee share awards, which are linked to the bank's fluctuating share price.
The accounts also said GSI set aside $81.9m in UK corporation tax for the half year — unlike full-year results for 2011 when accounting rules meant GSI ended up paying just $6.6m on $3.1bn of profits.
Parent company Goldman Sachs Inc will report third-quarter results tomorrow, when it is expected to swing back into profit after a surprise loss a year earlier.
A slew of other US banks will also announce results this week, after JPMorgan became the first to report better-than-expected profits last Friday.
Jeremy Paxman reveals he has heard senior Tories calling activists 'swivel-eyed loons'
Gay couple beaten in park urge MPs to moderate language on gay marriage
Strewth mate. Aussies wave goodbye to Britain as it becomes too pricey to stay
X marks the spot: The find that could rewrite Australian history
Oklahoma tornado latest: Obama pledges support for 'as long as it takes' to rebuild the suburb of Moore
- 1 'He was lucky he didn't die' - George Michael fell out of speeding car onto M1 motorway, according to eye witness
- 2 Austerity has hardened the nation's heart
- 3 Gay couple beaten in park urge MPs to moderate language on gay marriage
- 4 X marks the spot: The find that could rewrite Australian history
- 5 'It was just like the movie Twister': Man survives Oklahoma tornado by taking refuge in horse stall
BMF is the UK’s biggest and best loved outdoor fitness classes
Find out what The Independent's resident travel expert has to say about one of the most beautiful small cities in the world
Win anything from gadgets to five-star holidays on our competitions and offers page.
iJobs Money & Business
£850 - £1000 per day: Orgtel: Programme Change Manager - Banking - London - £8...
£180 - £230 per day: Orgtel: Operations Analyst - Leading Bank in the City of ...
£500 per day: Orgtel: A top tier banking client urgently requires Finance Busi...
£425 - £550 per day: Orgtel: Senior Finance Project Manager - £550 - Bristol -...