Barclays’ tax dodge shut down

It is the first time the current Government has clawed back revenues retrospectively and the changes in the laws will ensure billions of pounds of tax are paid in the future.

Barclays said it flagged up the schemes to HMRC “in a spirit of full transparency” and insisted that it always operates within the law.

The Government decided the schemes, while legal, were in breach of a banking code of practice.

It is understood that Barclays does not agree with the Treasury’s estimate of a £500m loss, with reports that the real figure is less than £200m.

One of the tax schemes involved Barclays avoid paying corporation tax on profits it made buying back its own IOU-notes.

The other scheme saw investment funds trying to receive tax credits from the Treasury on non-taxable income. The Government has brought in legislation to block future use of the scheme.

Exchequer secretary to the Treasury David Gauke said the Government was clear that “business must pay the tax they owe when they owe it”.

He added: “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.”