The Basel Committee on Banking Supervision has proposed regulatory reforms focused on:
The committee has proposed the creation of new capital instruments to support these reforms. A number of features of these instruments make their tax treatment uncertain under existing tax and accounting rules.
The Basel III provisions are expected to come into force following Capital Requirements Directive 4 (CRD 4) from 1 January 2013, so any changes to tax rules that the Government deems necessary will need to be made in Finance Bill 2012. In line with the Government’s ‘New Approach to Policy-making’, notice to this effect was given in Budget 2011.
As part of this process the Government has asked HM Revenue & Customs (HMRC) to identify specific tax issues arising from the Basel III proposals through an open informal discussion with industry with the aim of identifying any legislative changes to the tax rules that might be needed.
This page provides links to information published on the HMRC website. It will be updated regularly throughout the informal consultation process.
In May 2011 HMRC issued a discussion document on the tax treatment of regulatory capital instruments.
The Basel III Working Group has been set up to complement wider consultation. They have announced a series of meetings to discuss aspects of the Basel III proposals and forthcoming European Union CRD 4.
Follow the links below to read the discussion document, a note on current tax treatment of new instruments designed to be CRD 4 compliant, and find the terms of reference and membership for this group. Minutes of their meetings will also be published along with any supporting documentation.
Read the discussion document on the tax treatment of regulatory capital instruments (PDF 45K)
Read about the current tax treatment of new regulatory capital instruments (PDF 40K)
