It is I think quite fair to say that a great many people who callled me yesterday afternoon were stunned by the news that Barclays paid just £113 million in tax in the UK in 2009.
And off we go into a discussion of how they’re tax dodging bastards.
Yet we actually know the answer, Ritchie kindly provided it to us only one week ago:
So let’s get back to the one tax the banks do pay as a charge on the income they make – which is corporation tax. As the Mail on Sunday notes today, based on research I did for them, the likelihood that any of our big banks will be paying any serious sums in corporation tax for a while to come is remote in the extreme. That’s because the 2009 accounts of each of the major banks shows just how much deferred tax asset they’re sitting on relating to tax losses that they can offset against their future profits – including those subject to Project Merlin. The figures are:
HSBC _ £4.2 billion
Barclays – £1 billion
Lloyds – £4 billion
RBS – £5.1 billion
Add them together and that’s more than £14.3 billion of tax that’s not going to be paid any time soon. Or at UK current corporate tax rates some £51 bn of profit that needs to be earned before tax is paid.
They made losses which they can carry forward and offset against tax.
There’s no mystery here, just the simple and obvious point that you pay profits tax on your cumulative profits, offsetting losses, as will be true in any not entirely insane system of taxing profits.