Barclays: a massive tax avoider

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The Sunday Times has reported:

BARCLAYS, the high street bank, is alleged to be making about £1 billion a year from an international web of financial schemes designed to avoid paying tax in the UK and abroad.

The claim has been made by a whistle-blower who passed internal Barclays documents to Vince Cable, the deputy leader of the Liberal Democrats.

I have seen some of this documentation. I am quoted in the article:

Richard Murphy, a forensic tax accountant, said the documents relating to Project Valiha indicated that it would be financed with £2 billion from Barclays, but it had no real underlying commercial activity.

“It is designed so the money goes round in a big circle and comes back to Barclays so that they make £99m in tax savings without taking any risk at all. The whole thing takes three days,” he said.

Murphy described the transactions in the documents as “almost entirely artificial”. He said: “They work on the basis of exploiting tax regulations and the laws of different countries. They don’t generate any real profit for anyone, but they do save vast amounts of tax that they would otherwise pay.”

The documents — which I am sure are real — where provided by a whistleblower who said:

The extent to which [Barclays] reduce tax through fictitious . . . transactions has made many in the industry uncomfortable, especially when this means less hospitals and schools being built.

The Sunday Times says:

Yesterday a spokesman for Barclays said the SCM did not exist primarily for tax avoidance schemes. He said the team was part of its financing business and provided services which often involved tax.

He said its revenue, rather than profits, was likely to be £1 billion, although there are no accurate figures available. He said this did not include the money made from the tax saved by its various projects.

I’m really not sure I believe that.


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