The U.K. government acted to stop the use of two “aggressive” tax-avoidance schemes disclosed by a bank, ensuring the payment of more than 500 million pounds ($790 million) in tax, the Treasury said.
The schemes were designed to work around laws introduced in the past to block similar attempts at tax avoidance, the Treasury in London said in an e-mailed statement today. It didn’t identify the bank.
Barclays Plc (BARC) is the lender, the Financial Times reported today, citing people familiar with the case. Barclays doesn’t agree that the amount at stake is as much as 500 million pounds, according to the people, the newspaper reported. Barclays declined to comment, the Financial Times said. Leigh Bruce, a spokesman for the bank in London, didn’t respond to a message left after normal business hours by Bloomberg News.
The Treasury said the first plan sought to ensure that the commercial profit to a bank from a buyback of its own debt was not subject to corporation tax. The government will bring in legislation that will also act retrospectively to block use of the scheme. The second involved authorized investment funds and aimed to convert non-taxable income into an amount carrying a tax credit in an attempt to secure repayment of tax that wasn’t paid, the department said.
“The government wants to ensure that the tax system is fair for all and we will not allow those who seek to benefit from this aggressive avoidance to get an unfair advantage,” Treasury minister David Gauke said in the statement. “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.”
To contact the reporter on this story: Eddie Buckle in London at email@example.com
To contact the editor responsible for this story: James Hertling at firstname.lastname@example.org