I have had a wide range of people telephone me during the course of this afternoon and evening. Many are journalists. Some are amongst those informed commentators who I liaise with frequently. The universal question has been:

What the heck is going on with Barclays?

I'll tell you what I think is going on with Barclays. In my opinion it has constructed a series of wholly almost entirely artificial transactions undertaken through a significant number of separate legal entities, most under the control of Barclays itself, but some, inevitably, owned, or controlled (and in these deals it is always difficult to define what that might mean, deliberately) by the counterparty to the transaction - in most cases banks such as Goldman Sachs, Deutsche Bank, Credit Suisse, Fortis and so on.

Those entities have been in a number of jurisdictions, the UK and the Cayman Islands being the most common, but Luxembourg also being a participant. Some have been limited companies, some limited liability partnerships.

Some of those entities, even when incorporated elsewhere are tax resident in the UK, and some are not.

Some account under International Financial Reporting Standards. Some account under UK accounting standards.

It would seem that Barclays are trying to realise profits that they have ‘manufactured’ in most cases through these immensely complex structures by arbitraging (trading off) international taxation law, company law in various jurisdictions and even accounting standards, to achieve taxation results that mean that profits are realised or sold without taxation liabilities arising for Barclays.

The result has been a deliberate attempt to defraud — by which term I mean seeking to secure a financial advantage by deception, although not (I stress) illegally.

The deception has been on three parties. The first has been tax authorities who despite their brave statements to the contrary did not, I suspect, know the full details of some of these arrangements. It would seem that some may not have been disclosed to them.

Secondly, Barclays have sought to defraud (using the above definition) the taxpayers of the UK and maybe elsewhere who have not received the funds rightfully due to them on profits declared.

Thirdly, I think they have defrauded (using the above definition) their shareholders by declaring profits which were not, in my opinion, sustainable and which were manufactured through preconceived and structured financing deals in which the counterparties played a remarkably small part in exchange for what was, in effect, a fee to allow Barclays to record realised profits by turning the manufactured profits into third-party transactions.

When it comes down to it, others have suggested that Barclays may have profited by £1 billion a year.

That would have massively distorted Barclays share price to the benefit of its management, in particular through the exercise of share options.

If that is a tax saving then it would have paid for seven hospitals in the UK in each year that it was done.

Alternatively, it is almost £17 for every man woman and child in the UK.

But what does it actually mean? I think that this will prove to be a Rubicon - even more than Sir Fred Goodwin’s pension was. That was personal greed. Here we can see a high street bank being structured to secure public money for private benefit. That appears to be, in effect, stealing from the taxpayer's purse, albeit so constructed that, no doubt, it was all done entirely legally and beyond current legal challenge.

I think that quite reasonably people will be exceptionally angry about this. I think that there will be significant questions for the government to answer, and these will not be party political points. The questions that people will raise will be along the lines of “ if tax is optional, or even a source of profit, for these banks then why should I pay?”

Of course that is not a reasonable question in normal circumstances. But are these normal circumstances? In the face of deliberate attempt to defraud (as defined above ) the government, taxpayers and shareholders is a normal response appropriate? Or do we now need to take exceptional action which will prevent Barclays obtaining the benefit of these transactions, even at the risk of this appearing retrospective?

We have a choice to make. Do we preserve the credibility of the tax system for bankers or do we preserve the credibility of the tax system for everyone else in the UK? Whose interests need to be sacrificed now? Do we uphold the duty of a taxpayer to make payment of their dues to a properly elected government within the democratic system? Or do we allow that democratic system to be undermined at serious risk to the future credibility of government in this country?

Is it a choice?

Yes it is. In blogs that will follow this one I will explain courses of action the government can adopt now to kill these schemes  dead, and stop Barclays securing the benefit of the transactions that they have already undertaken.

I would urge the Treasury to take careful note.