US bank JP Morgan is getting close to reaching a £500m settlement with HMRC to pay back taxes from an offshore trust for bonus payments.
As reported in the Financial Times, the bank has asked more than 2,000 current and former staff to contribute a percentage of the amount owed to HMRC.
The Jersey-based trust in question was established 20 years ago and is now being wound up. It is unclear how much money is in scheme, however it is estimated to have held between £2bn and £9bn, which would therefore equate to a tax bill of at least £1bn.
The deal with the government is likely to represent around half of that amount.
A JP Morgan spokesperson told the FT: “Our employee trust has always been transparent to HMRC, and its independent trustee has consistently paid taxes in accordance with UK tax law,”
JP Morgan also said that in addition to taxes paid by the trust, it has paid more than £1bn of corporate and payroll taxes to HMRC annually over the past decade.
Employee benefit trusts (EBTs) have in the past allowed companies and staff to avoid paying employer’s NICs and income taxes. The EBT holds bonus payments, which cannot be repatriated without triggering a tax payment, but employees can take interest-free loans from the trust on an unsecured basis.