Following the earlier bail-out of the Royal Bank of Scotland, the Bank is now being forced to get rid of many business customers and is providing payments as an incentive to move to various competitor banks.
The European Commission agreed measures against RBS to minimise distortions in competition that resulted from the bail-out, mainly to promote greater competition in the SME banking market (for businesses with annual turnover of £25 million or less).
This includes up to £350 million for an Incentivised Switching Scheme to provide funding to other banks, in order to incentivise RBS’s SME banking customers (particularly Williams & Glyn) to switch their primary business current accounts and borrowing facilities to other banks.
This cash is being split between a payment to the business to cover switching costs (£75m) and a "dowry" to the other bank (£275m) that the bank can choose how to use for the benefit of the ex-RBS customer.
It is not clear to me how this "Business Banking Switch" receipt should be treated, but I would assume that it is a taxable receipt as it relates to the client's business activities.
My logic being that previous bank charges and interest were tax allowable, so the receipt of a sum to compensate for the previous charging / service should be a taxable business receipt in some form. However, it does not appear to be compensation, but more an inducement payment.
There is limited information online at: https://businessbankingswitch.rbs.co.uk/about
Any ideas where I can start to confirm the tax treatment of these potentially large sums?