Lawyers slam retrospective Barclays tax
LAWYERS yesterday railed against the retrospective £100m tax bill handed to Barclays bank by HMRC this week, saying it could set a worrying precedent.
Barclays faces paying over £100m to the Treasury after the government changed the law to close a tax loophole. The bank was allegedly exploiting a rule that says profit arising from a buyback of a firm’s own debt is not subject to corporation tax.
“The concern is if the government starts to use the tactic of retrospective rules, what’s to stop them using it again when there’s something they might not like?” said Sam Ripon, a tax associate at Bristows.
Although its actions were legal, Barclays and other banks have signed up to the Banking Code of Practice on Taxation, which contains a commitment not to engage in tax avoidance.
“Barclays may have chosen [what the Treasury regards as] aggressive schemes, but we are told it did exactly what it should – it implemented the arrangements and disclosed them to HMRC,” added Ripon.
Barclays said its actions were “based on guidance that the treatment was both legal and compliant with the tax code”.
But the Treasury called the scheme “highly abusive” and said it was “designed to work around legislation that has been introduced in the past to block similar attempts at tax avoidance”.