This report is a follow up to the March 2012 report on the European Commission’s proposals for a Financial Transaction Tax (HL paper 287, session 2010-12, ISBN 9780108475771). Now the Commission has given the green light to a sub-group of 11 Member States to move forward with a significantly revised tax proposal, under a process known as enhanced cooperation - a move which the European Union Committee condemns as being divisive, significantly detrimental to the UK’s interest and deliberately contentious in such a controversial area. The report finds serious flaws with the Commission’s use of enhanced cooperation, namely: the tax would have an adverse impact on institutions in the non-participating Member States, such as the UK; the legislation could see the UK unfairly being required to collect the tax on behalf of other Member States, such as Germany and France; this use of enhanced cooperation fails to meet the requirements of EU law, including in respect of the Single Market; the flawed process by which the Commission has allowed enhanced cooperation to be used risks undermining its use in the future. The Committee criticises the UK Government for their slowness to appreciate the potential damage to the UK that such a tax could present. However they welcome the Government’s belated decision to launch a legal challenge in a bid to annul the decision.