Mon, Dec 10, 2012 - Page 15 News List

JPMorgan said to ask employees to help fund UK tax

Bloomberg

JPMorgan Chase & Co asked more than 2,000 current and former employees to contribute to a settlement with the UK’s tax authority over their use of an offshore trust for bonus payments, according to a person briefed on the situation.

Employees who participated in the trust were asked to help fund a payment of at least a few hundred million pounds if they want to settle with Her Majesty’s Revenue and Customs (HRMC), the UK tax authority, the person said, asking not to be named because the talks are private.

The bank and workers may pay about £500 million (US$802 million) total, the Financial Times reported on Saturday, without saying where it got the information.

Several corporations, including Starbucks Corp, Amazon.com Inc and Google Inc, have recently come under attack from British lawmakers and protesters for using complex accounting methods to minimize tax liabilities in the UK.

The government will invest in the part of the tax office that targets multinational companies, British Chancellor of the Exchequer George Osborne said last week.

The case involving JPMorgan focuses on a Jersey-based trust established 20 years ago, according to the newspaper.

Such entities, typically holding bonus payments that cannot be repatriated without triggering tax payments, are being closed after they were targeted in legislation last year, it said.

“Our employee trust has always been transparent to HMRC, and its independent trustee has consistently paid taxes in accordance with UK tax law,” JPMorgan said in an e-mailed statement.

In addition to taxes paid by the trust, the bank has paid more than 1 billion pounds of corporate and payroll taxes to the UK authority annually over the past decade, according to the statement.

People who used JPMorgan’s trust told the Financial Times they were asked to participate in a so-called blind auction, in which they would volunteer to pay a tax rate of their choosing.

If the auction fails to generate enough money to fund the settlement, people who submitted less than the average bid would be excluded from the deal and face a 52 percent tax rate when the trust’s assets are liquidated, the newspaper said.

People who do not wish to participate can try to fight the government’s demand, the person briefed on the situation said.

HMRC cannot comment on individual cases, spokesman Patrick O’Brien wrote by e-mail, citing confidentiality rules.

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