Banks and charitable trusts

Banks and charitable trusts

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I was hoping to turn to A Web today to find an informed comment on the article in yesterday's Guardian concerning the way some banks are alleged to be utilising discretionary charitable trusts that they control to enable them to issue bonds against mortgages that the banks have transferred to them. This way they can continue to show the mortgages as assets on their balance sheets without having to disclose the corresponding liabilities.

If true, isn't this essentially what Enron was doing? What, if any, would be the tax implications? If there are any I bet they would swamp what HMRC are hoping to collect from their "income splitting" manoeuvers?

What effect does this have on the true solvency or otherwise of Northern Rock, given that it is playing this game through its Granite Trusts?

David Pedlow

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