Lloyds may face accusations of tax avoidance

LONDON (Reuters) - Lloyds Banking Group -- one of the banks bailed out by the British government -- has been accused in court of using a subsidiary to put hundreds of millions of pounds into tax avoidance schemes, the Guardian newspaper reported on Wednesday.

The newspaper said the government's tax body, HM Revenue and Customs (HMRC), has accused the bank of making huge loans to U.S. financial institutions and disguising them as commercial investments for tax purposes.

Citing a tax tribunal in London this week, the Guardian quotes HMRC lawyer David Ewart as saying that on two occasions, 350 million pound loans were made through a subsidiary, Hill Samel Investments Ltd, and "disguised as an investment."

Ewart said these were "two instances of the use of a tax avoidance scheme which was used by several UK banks."

Lloyds declined to comment directly on the case but said in a statement that its disclosure regime was "second to none."

"We take our obligation to taxpayers very seriously. We have been for some time one of the UK's largest corporate taxpayers. Our disclosure regime is second to none, and we have been rated one of the best for our tax transparency," it said.

"As a primarily UK-based business we pay most of our tax in this country. Where we pay taxes in other jurisdictions, we do so to the same high standards of disclosure, and are always committed to fulfilling our tax obligations to the authorities."

(Reporting by Kate Kelland and Myles Neligan. Editing by Richard Chang)