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UK banks accused of exploiting tax relief laws

The UK government is this evening reeling from the news that a number of UK banks appear set to review various tax relief laws to offset losses accumulated during the credit crunch and use these to offset and reduce their future tax bills. It is believed that banks could exploit up to £19 billion in tax relief and the UK government is now looking to "encourage" UK banks to sign up to new tax avoidance measures.

As you might expect, with literally tens of thousands of jobs lost with companies such as the Royal Bank of Scotland, the unions are up in arms at the fact that banks, bailed out by UK taxpayers, will now be able to use these losses to reduce their tax payments in the short to medium term. However, the truth is that tax relief laws have been in place for many years in the UK and the procedures rumoured to be under review by many banks are perfectly legal.

Whether the UK government can effectively force banks to sign up to various tax avoidance schemes remains to be seen but it will not make good reading as and when UK banks announce major profits in the future and are able to significantly reduce their tax payments.

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