Bank slammed for avoiding tax bill
City Editor ONE of Britain’s biggest banks was yesterday ordered to pay more than £500m in tax after it tried to avoid the bill.
The Treasury accused the unnamed lender – understood by the Daily Mail to be Barclays – of using two ‘highly abusive’ and ‘aggressive’ avoidance schemes to hide the money from the taxman. The government has now outlawed both loopholes in a move that is expected to save it a further £2bn in tax that would otherwise have gone unpaid.
But the retrospective nature of the clampdown will raise eyebrows in boardrooms around the country. It came as HM Revenue & Customs agreed to appoint a new ‘assurance commissioner’ to oversee major tax disputes with big business. HMRC admitted it needs to improve ‘transparency, scrutiny and accountability’ after a humiliating report by MPS found Britain’s biggest firms have been let off £25bn in taxes. Tax experts said the crackdown on Barclays and the shake-up at HMRC showed how concerned ministers and officials are about Britain’s tax system.
‘ Efforts are being made to rebuild trust and confidence in the tax system and to make sure that people realise that the system is run fairly,’ said John Whiting, tax policy director at the Chartered Institute of Taxation.
The tax dodges at Barclays came to light after they were dis- closed 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 i n what the Treasury said amounted to ‘an attempt to secure repayment from the exchequer of tax that has not been paid’.
Treasury minister David Gauke criticised the bank for cooking up the schemes having pledged not to avoid tax under the Banking Code of Practice on Taxation. Barclays declined to comment.
‘We are absolutely clear that business must pay the tax they owe when they owe it,’ he said.
Rival HSBC yesterday revealed in its annual report that it could face a tax bill of £3bn over a dispute with HMRC around the treatment of some of its Asian and European subsidiaries.
HMRC was left reeling in December when MPS on the Public Accounts Committee said major corporations have a ‘far too cosy’ relationship with the taxman.
Dave Hartnett, Britain’s top tax official, recently announced his retirement after receiving fierce criticism over his involvement in signing off deals that saved Goldman Sachs up to £20m and Vodafone as much as £7bn. HMRC said the new tax tsar will oversee ‘all large settlements’ with big business to ‘protect the interests of taxpayers at large’.