Barclays forced to repay half a billion in dodged taxes

Barclays Bank must pay back half a billion pounds worth of tax which it had done its best to avoid, the BBC reports.

The banking giant was accused by HM Revenue and Customs of avoiding the £500m in tax by creating and implementing two schemes which have now been closed and must now allegedly pay back the entire sum under new retrospective legislation introduced by the government to put a stop to the "aggressive tax avoidance".

The BBC said that although the bank has not been officially named and shamed by the government, it has "several well placed sources" which claim Barclays is the "target of HMRC's crackdown".

Try 6 free issues of MoneyWeek today

Get unparalleled financial insight, analysis and expert opinion you can profit from.

Start your trial

Sign up for MoneyWeek’s free twice-daily newsletter.

Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.

Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.

Sign up

Exchequer Secretary to the Treasury, David Gauke, said: "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. The government is clear that these are not transactions that a bank that has adopted the code should be undertaking.

"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 Treasury said the two schemes were unlawful because they were "an attempt to secure 'repayment' from the Exchequer of tax that has not been paid".

The banking code on taxation first came into play in June 2009 under the Labour government.

NR