Lloyds accused of avoiding tax to artificially boost profits – papers

A former employee of Lloyds Banking Group has accused the bank of artificially inflating its profits by almost £1bn through the use of aggressive tax-avoidance schemes and exotic "Lehman- style" offshore deals which he said amounted to false accounting.

The former senior tax manager at the bank told an employment tribunal Lloyds was involved in running battles with Revenue & Customs after it embarked on a hostile relationship with the tax authority over multimillion-pound corporation tax bills while involved in extensive manipulation of the way it accounted for unpaid taxes, The Guardian reports.

Between 2005 and 2007, he said, the bank insisted that finance staff devise ever more elaborate ways to depress a growing tax bill, many of them involving the now collapsed Lehman Brothers and the discredited financial products division of AIG, the American insurer that cost the US government $80bn to rescue.

By 2007, the bank was excluding more than £900m of potential tax in its accounts, allowing it to inflate profits by the same amount. Full story...

ALISTAIR DARLING faces pressure from Gordon Brown to fund pre-election giveaways as better-than-expected borrowing figures lifted some of the gloom about public finances, according to The Times.

Improving tax receipts led some experts to predict that the Chancellor could undershoot his deficit forecast by as much as £13 billion, but the Treasury played down the extent of any windfall, while aides insisted that Mr Darling would resist any last-minute moves to sweeten next week's Budget.

Measures to address youth unemployment and support key industries have not been ruled out, however, in what Labour is likely to present as a package aimed at fostering growth. The Chancellor's options have been increased by figures that showed that the Government borrowed £12.4 billion last month, much less than expected. Full story...

EUROPE'S rescue plan for Greece appears to be crumbling after the country threatened to call in the International Monetary Fund unless Brussels comes up with real money on acceptable terms within a week, says The Telegraph.

The inability of the eurozone to put together a viable package after a month of talks has dismayed markets, which thought the terms of a deal had already been agreed. Yields on 10-year Greek bonds spiked 17 basis points yesterday to 6.26pc.

The euro fell two cents against the dollar to below $1.36. "The facade of unity among eurozone members hardly held for more than a day," said Beat Siegenthaler from UBS. Full story...