RBS told customers to stop paying tax

RBS’s effect on firms ‘made me sick’, says Lawrence Tomlinson in report to the Department of Business, Innovation and Skills

James Moore
Monday 25 November 2013 21:01
Comments
Royal Bank of Scotland’s controversial Global Restructuring Group demanded that companies falling within its remit stopped paying tax
Royal Bank of Scotland’s controversial Global Restructuring Group demanded that companies falling within its remit stopped paying tax

Royal Bank of Scotland’s controversial Global Restructuring Group, which has been accused of forcing businesses to the wall so they could be stripped of their assets, also demanded that companies falling within its remit stopped paying tax, according to Lawrence Tomlinson’s report into the unit and its activities.

The report, by the “entrepreneur-in-chief” at the Department for Business, Innovation and Skills, warns of a “significant” impact on tax revenues flowing into the Government’s threadbare coffers as a result.

Read more:

Derek Sach: Last of Fred Goodwin’s trusty lieutenants comes under fire over 'restructuring' tactics

RBS hires top law firm to probe claims it forced small businesses into collapse

Editorial: Has RBS learned nothing from the financial crisis?

According to the report, which Mr Tomlinson produced at his own initiative, “evidence has been received that suggests businesses are being directed by the banks not to pay HMRC when in GRG”.

It adds: “When taken in context of the Enterprise Act 2002 and the removal of Crown Preference in insolvency, the impact on HMRC is significant. HMRC sits behind the bank in insolvency and is unlikely to collect this money owed to them from the insolvency pot, if that is where the business ends up.”

Mr Tomlinson said that his talks with businesses made him “sick” and said he found RBS’s actions “disturbing”.

“It is ruining people’s businesses, and in some cases having a huge impact on their personal lives, too, even leading to family breakdown,” he said.

The Business Secretary, Vince Cable, said the claims in the report were “very serious”, and said he was waiting for an “urgent response” before deciding what action to take.

The GRG division handles loans deemed particularly risky, and stands accused of forcing companies out of business while at the same time racking up fee income for RBS and selling assets via the bank’s property division, West Register. 

The tax revelation is likely to prove politically explosive given the billions of pounds of taxpayers’ money injected into RBS to keep the business afloat during the financial crisis.

The state still owns 81 per cent of RBS and needs its shares to hit 500p if the Treasury is to make a profit. Yesterday they closed up 1.4p at 331.5p, despite the growing furore.

On Monday night, a Royal Bank of Scotland spokesman defended requests to stop paying tax as necessary when companies hit hard times. He said it was standard practice to focus the limited cash generated by distressed businesses on keeping them afloat by paying essentials, rather than the taxman, first. These include “wages, fuel bills, suppliers, critical payments to ensure that the business can continue to trade”.

RBS chief executive Ross McEwan has previously promised to implement the report’s findings in full.

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Please enter a valid email
Please enter a valid email
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Please enter your first name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
Please enter your last name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
You must be over 18 years old to register
You must be over 18 years old to register
Opt-out-policy
You can opt-out at any time by signing in to your account to manage your preferences. Each email has a link to unsubscribe.

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Join our new commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged in