Merill Lynch on course for 60-year UK tax escape

Reports have emerged stating that corporate banking giant Merill Lynch may evade paying tax in the UK for a period of up to 60 years.

According to the Financial Times, the investment bank has channelled its $29 billion (£15.5 billion) of sub prime losses to its London-based subsidiary, Merill Lynch International, allowing it to be able to offset UK tax against those losses.

This status could be maintained for decades as an operating cost to the bank's UK operation, allowing it to save as much as £4 billion, the paper said.

However, experts say the bank will be required to prove that Merill Lynch International owns the assets that have been underwritten before this becomes a reality.

The FT calculates that, going by the investment banker's 2006 profit figures, it would take up to 60 years before the losses are wiped out.

UK corporation tax is currently at 28%. The bank has so far refused to confirm or deny the issue.