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Barclays was at fault over tax avoidance scheme, says George Osborne

06 September 2012   (0 Comments)
Posted by: SAIT Technical
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By Phillip Inman (The Guardian)

George Osborne has rebutted claims by former Barclays boss Bob Diamond that the bank was unfairly treated during a tax investigation by HM Revenue and Customs.

In a letter likely to dent the bank's reputation further, the chancellor said Barclays was at fault and HMRC would have blocked the tax scheme had it come to light earlier.

The Treasury rushed through legislation in the spring to close down two "aggressive  "tax avoidance schemes Barclays disclosed to HMRC in an effort to avoid tax.

Ministers said the bank, which at the time they refused to name, would face a fine of £500m after it embarked on a debt buy-back that HMRC said was designed solely to save tax.

Diamond, who resigned after the Libor interest rate manipulation scandal came to light, told the Treasury select committee that Barclays was being treated unfairly because many other firms used the same avoidance scheme. He said the bank was being punished when it had come forward with details of its operation and tax savings.

Osborne wrote to the committee, saying that Barclays was the only major corporation found using the complex scheme.

"It has been suggested that HMRC was aware of other companies that had used a similar approach for debt buy-backs. HMRC tells me that this is not right. HMRC has not been able to identify any arrangements similar to those put in place by Barclays, nor has any tax adviser or other company identified any such arrangements and HMRC would challenge anything that came to light," he said.

He denied the bank was treated harshly, saying it was the first opportunity to block a newly identified avoidance scheme.

Tory MP and TSC chairman Andrew Tyrie said it is regrettable that any company is fined retrospectively. He said it was necessary to simplify the tax system to limit the opportunities for companies to seek out loopholes




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