- Wednesday, 29 February 2012 10:04
- Written by Sean Dudley
The latest in a long line of gaffs by another high street bank has come to light this week, with the news that tax avoidance schemes used by Barclays could have cost the treasury £500 million.
The bank put in place two separate schemes to avoid tax bills, which it claims it thought was in alignment with what other financial companies were doing. However the government has now closed down these schemes.
The news adds to the long list of embarrassments for various high street banks in recent times, and can only be seen to be seen negatively by Barclays customers.
Unusually, in a bid to avoid ‘aggressive tax avoidance’ by financial institution, the government introduced a set of retrospective legislations.
David Gauke, Exchequer secretary to the treasury, said of the news ‘The bank that disclosed these schemes to HMRC has adopted the Banking Code of Practice on Taxation which contains a commitment not to engage in tax avoidance’. He went on to add ‘we do not take today's action lightly, but the potential tax loss from this scheme and the history of previous abuse in this area mean that this is a circumstance where the decision to change the law with full retrospective effect is justified’.
The Labour government introduced the banking code of taxation in 2009, and the 15 biggest banks in the UK all signed up. The code intends to prevent such libellous evasions of tax payment, and to ensure that all tax obligations are observed, be it for customers or the bank itself. The code also says banks should not put in place tax avoidance schemes.
However Barclays’s failing to adhere to this is another blemish for a bank that has seen its name in the headlines for the wrong reasons more so than the right in recent times.