Britain will end “aggressive tax avoidance” schemes used by banks from the profit they can make buying back their own bonds. Barclays Bank has been ordered by the Treasury to pay half-a-billion pounds in tax which it had tried to avoid.
Barclays was accused by HM Revenue and Customs of designing and using two schemes that were intended to avoid substantial amounts of tax.
The government has taken the unusual step of introducing retrospective legislation to end such “aggressive tax avoidance” by financial institutions.
Tax rules forced the bank to tell the authorities about its plans.
The government has closed the schemes to retrieve £500m of lost tax and safeguard payments of billions of more tax in the future.
BBC business editor Robert Peston has been told by Barclays that it is surprised by HMRC’s reaction to the two schemes, which it believed to be in line with those used by other banks.
BBC business editor says it is highly embarrassing for Barclays, because Britain’s big banks have all signed a code committing them not to engage in tax avoidance.
The banking code on taxation was first introduced by the Labor government in June 2009.
Amwal Al Ghad