By Dawn Kopecki (Bloomberg/Business Day)
Executive summary (SAIT Technical)
JPMC has asked more than 2,000 employees to contribute to a settlement with the HMRC over the use of an offshore trust for bonus payments. The bank and workers may have to pay about GBP 500m. The trust was established in Jersey 20 years ago.
JPMorgan Chase has 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 (HMRC), the UK tax authority, the person said. The bank and workers may pay about £500m in total, the Financial Times reported on Saturday.
Corporations including Starbucks, Amazon.com and Google have come under attack from British MPs and protesters over complex accounting methods to minimise tax liabilities. The UK government will invest in the part of the tax office that targets multinational companies, Chancellor George Osborne said last week.
The case involving JPMorgan focuses on a Jersey-based trust established 20 years ago, according to the Financial Times. 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, the newspaper 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 addition to taxes paid by the trust, the bank has paid more than £1bn of corporate and payroll taxes to the UK authority annually over the past decade, it said.
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% tax rate when the trust’s assets are liquidated, the newspaper said.