Barclays hit by crackdown
BARCLAYS has been targeted by the government’s closure of an “aggressive” tax avoidance scheme, costing it around £500m.
The scheme shut by HMRC saw banks buy back their debt at a lower price than they had sold it, before avoiding corporation tax on the profit.
The government is shutting down that scheme retrospectively, hitting any bank which avoided the tax from 1 December onwards. It did not name the bank affected.
Treasury minister David Gauke said the decision was “not action that the government is taking lightly”.
Barclays announced its buyback of some of its debt in December, but yesterday it refused to comment on the Treasury announcement despite repeated requests.
Reuters estimated that Barclays made around £450m on its buyback, which could leave it with a tax bill of £120m.
A Treasury source believes the measures could protect up to £2bn in tax.
“By acting immediately, the government will ensure the payment of over half a billion pounds in tax, protect further billions of tax from being lost and maintain fairness in the tax system,” the UK government said in a statement.