Barclays £500m tax ploy blocked
BARCLAYS was yesterday prevented f rom using two ‘ highly abusive’ loopholes to dodge paying £500million of tax.
The British banking giant – which recently signed a pledge not to engage in tax avoidance – was ordered to cough up the cash by the Government.
It will come as an embarrassment to Barclays and its multi-millionaire chief executive Bob Diamond who is in line for a bonus of up to £10million.
Barclays, which earlier this month unveiled £6billion of profits, has faced questions for years about the amount of tax it pays.
The Treasury yesterday accused an unnamed lender – understood by the Daily Mail to be Barclays – of using two ‘highly abusive’ and ‘aggressive’ avoidance schemes. The Government has now outlawed both loopholes. This is expected to earn it a further £2billion in tax in future years that would otherwise have gone unpaid.
David Gauke, exchequer secretary to the Treasury, criticised the bank for cooking up the schemes, having pledged not to avoid tax under the Banking Code of Practice on Taxation.
‘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,’ he said.
‘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. The Government is committed to creating a competitive tax system and we have brought in a range of corporate tax reforms, but we are absolutely clear that business must pay the tax they owe when they owe it.’
The tax dodges at Barclays came to light after they were disclosed by the bank to HMRC. The first scheme involved the bank claiming it should not have to pay corporation tax on profits made when buying back its own debt.
The second involved claiming tax credits on non-taxable income in what the Treasury said amounted to ‘an attempt to secure repayment from the exchequer of tax that has not been paid’.
Barclays yesterday declined to comment on the matter.