Five major investment banks paid no UK corporation tax last year, report finds

Five of the largest investment banks in the country paid no corporation tax last year despite booking billions of pounds in profits, according to a report.

JP Morgan, Bank of America Merrill Lynch, Deutsche Bank, Nomura Holdings and Morgan Stanley paid no corporation tax at all in 2014, figures from news agency Reuters have shown.

The lenders were able to do this by using tax breaks and offsetting previous losses against any gains made last year.

The banks have declined to comment, but their tax returns comply with UK tax regulations.

The report looked at the tax returns from seven banks, including Goldman Sachs and UBS, and found they paid a combined £20 million in corporation tax in 2014, even though they racked up profits of £3.6 billion on revenues of £21 billion.

The seven banks employ 33,000 staff between them in the UK.

The bank filings also show that some of the firms paid no tax because they reported losses in London, while reporting profits in much smaller units in lower tax countries such as Luxembourg.

Tax campaigners and politicians argue that banks should pay their fair share of tax, particularly after having received financial support during the financial crisis.

Jonathan Isaby, chief executive of the TaxPayers' Alliance, said: "Our hideously complex tax code makes it easier for well-paid accountants to run rings around the taxman.

"The power to make our tax system simpler lies in the hands of politicians, so they must stop grandstanding and actually do something to reform it."

The bank filings became available because of changes to European Union rules in 2013 which compel banks to publish country-by-country profit and tax accounts.

The report comes as a growing number of US and other international firms are being investigated over their tax affairs by the European Commission (EC).

In October Starbucks and Fiat were ordered to repay up to 30 million euro (£22 million) in illegal tax breaks after the EC found that deals struck between the US coffee chain in the Netherlands and the Italian carmaker in Luxembourg effectively amounted to illegal state subsidies.

The deal was seen as a landmark ruling and a major step forward in the battle against tax avoidance deals used by multinationals.

Earlier this month the EC said it would probe tax deals it said had been struck between US fast food chain McDonald's and Luxembourg.