UNITED KINGDOM: Barclays Bank faces a blow to its reputation and a hefty tax bill after the British government moves to close down two tax avoidance schemes

Record ID: 861145

  • Title: UNITED KINGDOM: Barclays Bank faces a blow to its reputation and a hefty tax bill after the British government moves to close down two tax avoidance schemes
  • Date: 29th February 2012
  • Summary: LONDON, ENGLAND, UNITED KINGDOM (FILE) (REUTERS) BARCLAYS LOGO INSIDE BRANCH
  • Embargoed: 15th March 2012 12:00
  • Keywords:
  • Location: United Kingdom, United Kingdom
  • City:
  • Country: United Kingdom
  • Topics: Finance,Politics
  • Reuters ID: LVA67ZET0S263DG5GPE5OAVAGAL5
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  • Story Text: Barclays Plc said it was the bank at the centre of a clampdown by Britain on two tax avoidance schemes that the government said would close loopholes and raise more than 500 million pounds ($792 million) in tax.
    Barclays said it notified Britain's tax office about its plan to buy back its own bonds, on which it and other banks have made hefty profits in recent years.
    Tax avoidance is legal, but the Treasury said on Monday the scheme and another one were "highly abusive".
    The Treasury's estimate that it will ensure the payment of 500 million pounds refers to tax collected from all banks, a person familiar with the matter said.
    Reuters on Monday estimated Barclays could have to pay about 120 million pounds.
    Barclays and other banks have signed up to the Banking Code of Practice on Taxation, which contains a commitment not to engage in tax avoidance.
    Treasury official David Gauke said Barclays' scheme had broken that code and that was unacceptable.
    "Well, there is a disclosure regime for banks and there is a Code of Practice for banks and actually, by and large, I think the banking sector is responding well to the changed circumstances and a real need to make sure everybody pays their fair share. We have been faced with these two schemes which are very aggressive, very abusive, very artificial arrangements, designed for a tax benefit purpose and nothing else and as a consequence, we've responded to that," he said.
    Gauke said Britain was also willing to shut down more bank tax loopholes schemes.
    "HMRC will obviously be scrutinising the financial affairs of banks and other taxpayers and so if anyone else has tried to use the same scheme then they will be caught in exactly the same way. This is a law that applies to everybody and is not targeted at one entity but we became aware of these particular arrangements as a consequence of a disclosure by a bank and we've responded very quickly to it, so that these schemes, which were abusive, not consistent with the spirit of the law, are essentially now ineffective," he said.
    Barclays shares were down 0.8 percent at 242 pence by 0932 GMT, underperforming a slightly higher European bank index.
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