So Barclays has now been exposed pursuing two tax avoidance schemes so “highly abusive” that this government, which gets half its donations from mega-wealthy City banks and individuals, felt obliged to take retrospective action to stamp them out. The Barclays wheeze was designed to escape payment of at least £500m in taxes by: (i) avoiding tax on profits from buying back debt at less than face value, and (ii) generating tax credits on income even when no tax had actually been paid.
Barclays’ excuse was they were advised these scams were legal, other banks were doing it, and the sordid truth only came out because they were ‘good corporate citizens’ in checking with HMRC. The stench however is still unmistakeable.
Does Barclays think good gorporate citizenship lies in perpetrating a massive tax dodge even if (because of lax government regulation) advisers say it’s legal? Does Barclays think tax cheating is OK as long as others are doing the same? How can Barclays claim it’s somehow high-minded to practise deceit on such a scale when they’ve signed a code of practice on tax avoidance to stick not only to the letter of the law but also the spirit? And how can Barclays pretend to be a Good Citizen when it conspired with government to keep these patently unsavoury practices under wraps at all costs?
Nor is the stench confined to Barclays. The Tory government shows its true colours over this all too clearly. Gauke, junior minister at the Treasury, initially repeatedly refused to identify the bank responsible in order no doubt, though it would never of course admit this, not to embarrass one of the chief Tory party donors. The government is also taking no action to penalise Barclays, even though the bank’s contrived devices to circumvent tax law are a blatant infringement of the code of practice the bank signed up to.
Then there are the actions which both Barclays and the government should take if they really believed the principles of honesty and openness which they both hypocritically proclaim. Barclays (and other banks and corporates) should now provide a country-by-country analysis of where it pays direct taxes so that the use of tax havens and transfer pricing can be blocked. Second, Barclays should come clean about the ‘structured capital markets’ (Barcap) which are the source of so much evasive tax planning. For its part the government should introduce the ‘general anti-avoidance principle’ (GANTIP) which would go a long way to stop the immoral depredations of so many banks, accountants, lawyers, and big business in the City. But given how the banks hold the government to ransom, don’t hold your breath.
