'Highly abusive' tax loopholes closed after Barclays tried to avoid paying £500m

 

Two “highly abusive” tax loopholes have been closed by HMRC after Barclays used them to try to avoid paying more than £500 million.

The move will prove particularly embarrassing for Barclays as the bank is signed up to a code of conduct specifically designed by the Treasury to curb tax avoidance. Barclays has also previously stressed the importance of good citizenship in banking.

In a statement, Barclays said: "This situation arose when Barclays voluntarily disclosed to HMRC in a spirit of full transparency that it had repurchased some of its debt in a tax efficient manner."

The bank went on to say it complied "with the letter and spirit of all our obligations" under the HMRC Code of Practice and that is maintains open and transparent dealings with HMRC.

Unlike tax evasion, tax avoidance schemes are legal, but the Government decided that Barclays had breached the code of practice, which has seen all major banks promise to pay their fair share of taxes.

The closure of the loopholes marks the first time the Government has clawed back revenues retrospectively and should ensure billions of pounds of tax are paid in the future.

Exchequer secretary to the Treasury David Gauke said the Government was clear that "business must pay the tax they owe when they owe it".

He added: "The Government wants to ensure that the tax system is fair for all and we will not allow those who seek to benefit from this aggressive avoidance to get an unfair advantage.

"We do not take today's action lightly, but the potential tax loss from this scheme and the history of previous abuse in this area mean that this is a circumstance where the decision to change the law with full retrospective effect is justified."

Barclays has long faced questions about the way it pays tax and whether it attempts to take advantage of the differences in rules around the globe.

One of the tax schemes involved Barclays avoid paying corporation tax on profits it made buying back its own IOU-notes. The Treasury said it will move to block the recent use of the scheme by the bank and by any other company.

The other scheme - believed to be devised by Barclays - saw investment funds trying to receive tax credits from the Treasury on non-taxable income. The Government brought in legislation yesterday to block future use of the scheme.

Independent Comment
blog comments powered by Disqus
Career Services

Day In a Page

The 50 Best beachwear

The 50 Best beachwear

The hottest summer gear for men and women
Still standing: George Galloway reveals why his staunchly Leftist outlook is still invariably right

Still standing: George Galloway

Written off, ridiculed, wrongly accused of taking bribes the honourable member for Bradford West, has never bowed to the critics.
How will Daniel Radcliffe's fans react to his latest turn - as a damaged, drug-taking Beatnik poet?

Daniel Radcliffe as drug-taking Beatnik poet

His decade as the boy wizard may be over, but that hasn't hexed Daniel Radcliffe's enchanted life.
For whom the bell tolls: £20m 'Memo' project takes shape on Dorset's Jurassic coast

'Memo' project takes shape on Dorset coast

It started as a stonemason's visionary idea – to commemorate all the species that have ever existed and are now extinct.
Just add sunshine: Bill Granger's Turkish delights

Just add sunshine: Bill Granger's Turkish delights

Turkish cuisine is perfect for those long, sociable weekend meals with friends. It's just a shame that money can't buy the key ingredient.
Objets czar: David Usborne’s collection of myriad objects is quite the mystery

Objets czar: David Usborne’s collection of myriad objects

To others, they're junk. To David Usborne, they are his life: useful gizmos, mysterious thingamajigs and anonymous articles that dominate his home.
The iron ore lady: Why the world's richest woman is mired in controversy

World's richest woman: Gina Rinehart

Family feuds, attempts to control the Australian media and bitter public disputes are keeping the mining magnate in the headlines.
We just click: How Lego keeps building on its success

How Lego keeps building on its success

This year, Lego announced record profits. Gerard Gilbert visits its Denmark HQ.
The other bits: Mark Hix creates delicious and economical meals with cheaper cuts of meat

Mark Hix cooks with cheaper cuts of meat

Our chef creates delicious and economical meals on a budget
Strokes of genius: How to create summer's bold make-up look

Strokes of genius: Summer's bold make-up

From coral lips to fly-away fringes, make-up artist Kim Brown and hair stylist Richard Scorer reveal how to create the look
Marking his territory: Kilian Hennessy creates fragrances designed to provoke the senses

Marking his territory: Kilian Hennessy

The perfumer creates fragrances designed to provoke the senses
Photo essay: Britain's 1948 Olympians today

Britain's 1948 Olympians today

Photo essay
The top five E3 2012 triumphs: From Ubisoft's suite of titles to Dishonored and The Last of Us

The top five E3 2012 triumphs

The games and moments that left us grinning like the Cheshire Cat
The green movement at 50: Can the world be saved?

Can the world be saved?

Population growth and climate change are the big problems facing the earth in the next 50 years. But are there any solutions?
France: Will xenophobia go mainstream?

France: Will xenophobia go mainstream?

In the beautiful Rhone delta, John Lichfield visits a village where a dangerous new political landscape is taking shape