The Code of Practice that banks have signed up to – which is meant to stop tax avoidance – has a glaring loophole. The main provision says that banks “should not engage in tax planning other than that which supports genuine commercial activity”. But financial engineering (including tax planning) is a commercial activity. So there should be no problem in banks undertaking tax planning for schemes specifically designed to avoid tax.
It would appear that the activities of banks, and the complexities of the codes designed to govern them, are too byzantine to be understood and managed by anyone. Hence the appeal to the ‘spirit’ of the law. I fear that the only spirits to co-operate will be those at the bar.