The government has taken steps to close two aggressive tax avoidance schemes recently disclosed to HM Revenue & Customs (HMRC) by a bank. It will retrieve £500m of lost tax and safeguard payments of billions of pounds more tax in the future. The bank in question is believed to be Barclays.
A treasury minister has said that the bank who revealed to HM Revenue and Customs (HMRC) that they were operating schemes which allowed it to avoid paying tax is "an exception".
David Gauke MP told the Today programme's Justin Webb that the bank, which business editor Robert Peston revealed to be Barclays bank, has "not actually broken the law" but will receive no benefit and will take a "substantial reputational hit".
Business editor Robert Peston explained that the two schemes in question related to a device used to manufacture tax credits i.e. claim tax back, even though no tax was being paid in the first place. And also that the bank was buying back its own debt at a profit which HMRC wanted corporation tax paid on.
He said that Barclays was "shocked" to discover HMRC did not believe this was an appropriate way to behave.
But David Gauke insisted that all the banks have signed a code of conduct not engage in aggressive practises such as this but it was right that the government steps in with an emergency measure to claw back £500m of lost tax.
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