UK-private bank Coutts & Co has reacted angrily to insinuations in the national press that it is currently involved in peddling tax avoidance for wealthy clients.
Recent reports in The Sunday Times and The Guardian newspapers had referred to the Swiss-based Castle Trust scheme in which 300 Coutts customers had been forced to repay up to £400 million (around $610 million) in tax they had hoped to avoid after HM Revenue & Customs ruled that the scheme had breached UK tax laws.
A spokesperson for the bank told WealthBriefing that the scheme in question was not a Coutts scheme, but one that had been sold by the private bank and its third party provider. Whether other wealth management institutions had marketed the scheme when it launched in 1998 is unclear.
"The scheme offered high net worth clients the possibility of mitigating UK capital gains tax. We made it clear at the time that success was not guaranteed and that the scheme was high risk," said the spokesperson.
After two tax years the UK tax authorities pronounced that the scheme would not be approved and any clients using the scheme would not be able to save tax by using it. Coutts lobbied the Revenue on behalf of clients, who had fees paid to the bank deducted from their taxable income.
"The scheme was never illegal, it just failed to gain Revenue approval," the spokesperson said.
According to the spokesperson Coutts now only advises clients on tax mitigation schemes which are already approved by the authorities, including EIS, VCTs and film finance schemes.
Press reports suggesting that a number of clients were planning to sue Coutts were rebutted by the bank.