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Code of Practice on Taxation For Banks Annual Report 2026

Friday 9th October 2026

HMRC has published its Annual Report for the year ended 31 March 2026 on the Code of Practice on Taxation for Banks.

The Code sets out that banks should adopt adequate governance to control the types of transactions they enter into, not undertake tax planning that aims to achieve a tax result that is contrary to the intentions of Parliament, comply fully with all their tax obligations and maintain a transparent relationship with HMRC.

Where HMRC has concerns over whether a bank has met its obligations under the Code, HMRC will take action to address these concerns in line with the published Governance Protocol. In particular, HMRC may name in the annual report banks that are found not to have complied with their Code commitments. A bank can only be named once all the steps set out in the Protocol have been completed.

In the 2026 Annual Report, the names of the 315 banks that had adopted the Code as at 31 March 2026 are listed at Annex A. The list includes 313 banks that had adopted the Code at 31 March 2025, and 2 banks which adopted in the year ended 31 March 2026.

One of the 314 banks listed as an adopter as at 31 March 2025 was not in the Code population as at 31 March 2026 because it had ceased all banking activity.

There were 6 banks considered to be within the Code population that had not adopted the Code as at 31 March 2026 and these are listed at Annex B. This list was drawn from banks which HMRC’s records show to be within the charge to the Bank Levy (whether or not they have any liability for the Period), and from the list of banks and building societies published by the PRA.

HMRC reports that the Code continues successfully to promote positive behaviours across the banking sector. In particular it notes that none of the banks which had adopted the Code by 31 March 2026 has been determined to be in breach of the Code during the period. No bank that had adopted the Code made any disclosures under the DOTAS regime in the 2026 period. All transactions for which a review was completed in the period during risk assessments were considered to be Code compliant, and no initial concerns were escalated to Director level or beyond during the Period.

HMRC’s Large Business directorate manages the tax compliance of the largest banks and several smaller banks that are part of large non-banking groups. This includes 78 of the banks within the Code population. HMRC’s WMBC directorate manages the tax compliance of smaller banks.

HMRC manages the tax compliance of the largest businesses through the Business Risk Review (BRR+) process. 35 banking groups dealt with in Large Business directorate had a BRR+ during the Period. Banks not receiving a BRR+ during the period have had the opportunity to hold an annual conversation with HMRC to discuss business developments and raise any issues.  Banks in Large Business that sign up to the Code are subject to an enhanced BRR+ process, under which the banks’ compliance with the Code is reviewed.  There are four Code categories on the BRR+ template, being:

  • the bank’s compliance with the Code has been reviewed and there are no current concerns
  • the bank’s compliance with the Code is under review
  • there are initial concerns over the bank’s compliance with its Code commitments
  • there is an interim view that the bank has breached the Code

During the period, one bank in Large Business was in the Code category of ‘under review’ at their BRR+ and remains under review. All other reviews under the BRR+ process conducted during the period were noted to have no current concerns. Where HMRC discovers any issues that give rise to initial concerns, it will escalate them in accordance with the Protocol.

During formal enquiries of smaller banks, WMBC will emphasise the Code obligation to ‘maintain a transparent relationship with HMRC’ in order to resolve matters quickly and efficiently. Outside the formal enquiry process, HMRC raises Code compliance when meeting the representatives of smaller banks in order to ensure they are aware of and meet their obligations under the Code. Generally, the banks that the team have interacted with during the year have had an open and transparent relationship with HMRC.  At the end of the period, one smaller bank was under review and remains under review.

Large Business directorate and WMBC directorate teams may also identify concerns about a bank’s governance, its approach to tax planning or the transparency of its relationship with HMRC during enquiries or other interactions through the year. If so, these are addressed in accordance with the Protocol.

If potential issues involving a bank are identified during compliance work on other banks, HMRC considers whether the available evidence gives rise to concerns about the bank’s compliance with its Code commitments. Where it does, HMRC will investigate the bank’s compliance with all aspects of the Code. Any suspected breaches will be dealt with robustly, in accordance with the Protocol.

HMRC encourages banks to discuss any proposed transaction where, on the bank’s analysis, there is a tax result that may be contrary to the intentions of Parliament. In the 2026 period, HMRC received no pre-transaction Code approaches involving any uncertainty around the intentions of Parliament.

Where HMRC considers there to be no identifiable uncertainty around the intentions of Parliament, HMRC may decline to provide a view. There were two instances of this in the period.

Overall, HMRC reports that the absence of any valid Code approaches continues a trend from previous years. It believes that there are a range of factors that have led to fewer approaches by banks, including a better understanding of the Code, and a continuing evolution in attitudes to tax avoidance.

If you would like more information on the 2026 Annual Report, please contact Keith Rushen on 0044 (0) 207 486 2378.

 

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