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UK lawmaker urges clarity to stop banks offsetting fines against tax
[LONDON] Britain's tax rules may need clarifying to ensure that banks cannot offset fines against their tax bill, a senior UK lawmaker said on Wednesday.
Andrew Tyrie, chairman of parliament's Treasury Select Committee, has asked Britain's finance minister George Osborne to clarify whether fines classified as "compensation" payments to regulators are tax deductible.
Britain's Financial Conduct Authority has imposed record fines on banks for compliance failures and for attempts to rig interest rate benchmarks and currency markets.
Tax rules were changed last year to stop tax deductibility for compensation payments made to customers.
But Mr Tyrie said Mr Osborne has suggested in a letter that last year's rule changes may not have caught compensation payments to regulators, which could therefore still be tax deductible.
"If so, taxpayers are on the hook for some aspects of a bank's misconduct. That would be unacceptable. I urge you to look again at this," Mr Tyrie has written to Osborne in a letter made public on Wednesday.
Mr Tyrie said regulators should also make sure that any misconduct payments are either made to customers and therefore come under the new curbs, or are clearly labelled as fines rather than compensatory payments, and therefore cannot be deducted from tax.
Mr Osborne had told Mr Tyrie that fines imposed as punishment by UK regulators and settlements agreed by banks with an overseas regulator are not deductible.