Barclays Bank and other shysters
Professional interest made me track down the Barclays Bank tax avoidance documents today after the High Court ruled that we shouldn't see them.
Barclays think that it is less embarrassing to act (very) guiltily than it is to let us see the documents and judge for ourselves.
The documents themselves are pretty routine, setting out chains of spurious transactions in order to avoid tax. Example:
"The interest rate swaps between Barclays and its affiliates are £[381.4]m in the money for Barclays across Tranche 1 and Tranche 2. The economic benefit of the Transaction is derived from the Barclays group's ability to transfer the fair value gain on these interest rate swaps (which is currently unrealised for UK tax purposes) to the Counterparty without triggering a taxable gain."
What Barclays have done in not illegal, but it does have a very nasty whiff about it and Barclays should not receive a scrap of state aid. All special liquidity scheme help should be withdrawn and the bank can then be nationalised for nothing when it runs out of cash. Although one suspects that the board have tightened up their contacts so that such a scenario would result in massive pensions.
Not that I am without sin - I helped Amazon set up a very lucrative tax-avoidance scheme four years ago. It was worth around $1bn over five years, with $200-$300m of benefit per year after that.
The thing is, it is the government and HMRC that are to blame for all of this. The loopholes are very easy to find and the politicians have convinced themselves that closing them would drive businesses away. They believe, somewhat stupidly, that if businesses had to pay tax on all their profits, they would leave the UK. There used to be talk of 'keeping the City competitive' which seemed to mean letting foreign nationals pay no tax and letting big companies run rings around HMRC.
In reality, if everyone paid tax on all their earnings or profits, tax rates would be significantly lower and there would be less need to avoid them in the first place. Or at least we wouldn't be running a 10% budget deficit.
For all the spleen-venting going on at the moment, I doubt anything will happen to change the corporate tax landscape. Big companies can fund lucrative avoidance schemes. International companies can shift their profits to low-tax jurisdictions at will. Small companies get reamed.













