Merrill Lynch freezes jobs and UK tax liability

by Gill Montia

Story link: Merrill Lynch freezes jobs and UK tax liability

Investment bank, Merrill Lynch, is continuing its cost-cutting programme with a freeze on staff recruitment that will cost further jobs in the UK.

According to reports in the press, the bank has warned staff that 5,000 job cuts worldwide are to be followed by a recruitment freeze that will shrink its 4,500 London-based staff further.

It is understood that only Merrill’s financial advisors and client associates will be unaffected by the move.

In addition, the bank looks set to offset some of its losses from the credit crisis by reducing its UK tax liability.

A recent filing with the US Securities and Exchange Commission has revealed that the bank has charged $29 billion of its losses to its UK subsidiary, Merrill Lynch International, and analysts have concluded that the group may not be liable for UK Corporation Tax for decades.

So far, Merrill’s losses are close to £13 billion and under UK tax law such losses can be carried forward until a business has posted profits that equal losses.

Meanwhile, in the US, Merrill is facing legal action over claims that it misled investors that purchased its securities.

Along with its Wall Street competitors, Merrill auctioned mortgage-backed debt that plummeted in value as the full scale of the sub-prime crisis unfolded.