Just days before the Move Your Money Month campaign begins, Barclays Bank has given its customers as good a reason as any to consider switching to a more ethical and socially responsible alternative.
The Government has decided to clampdown on “two aggressive tax avoidance schemes” recently disclosed to HM Revenue & Customs (HMRC) after Barclays Bank was lobbied to declare that it paid only £113m in tax in 2009, a year that saw the bank’s profits rocket to £11.6 bn.
David Gauke, Exchequer Secretary to the Treasury, 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”.
Gauke continued, “The Government is committed to creating a competitive tax system and we have brought in a range of corporate tax reforms, but we are absolutely clear that business must pay the tax they owe when they owe it”.
Immediate action by the Treasury will see the recovery of over half a billion pounds in tax, as well as protect further billions of lost tax revenue. To put £500m into a bit of perspective, it would be sufficient to pay the average salaries of around 18,500 nurses or policemen, which, let’s face it, would come in very handy indeed.
UK Uncut, a grassroots movement taking action to highlight alternatives to spending cuts was quick of the mark with a reaction. “This shows what the government can do when it chooses to act on tax avoidance. But we are calling for the Treasury to go beyond this gesture and start clawing back all the money that banks and other big businesses are avoiding through tax scams.”
UK Uncut activist Molly Sollomons was also keen to point out perceived double standards within the Government’s stance. “The government is being completely two-faced when it comes to corporate tax affairs. While the clamp down on Barclays tax scams is welcome, the Treasury endorsed a report this morning by [PricewaterhouseCoopers] who are key players in creating multiple tax avoidance structures that cost the UK taxpayer billions of pounds in uncollected tax.”
Barclays were very polite about the whole ordeal, stating to the press, “Barclays takes its responsibilities as a corporate citizen very seriously … In the UK we comply with the letter and spirit of all our obligations under the HMRC Code of Practice and have open and transparent dealings with HMRC”. Transparency seems to have a somewhat opaque definition. Gauze’s take on the Code of Practice was a little different: “The government is clear that these are not transactions that a bank that has adopted the code should be undertaking”.
So what are these abusive schemes? The first means that commercial profit gained from the buyback of a bank’s own debt is not subject to corporate tax. The second involves Authorised Investment Funds (AIFs) and “aims to convert non-taxable income into an amount carrying a repayable tax credit in an attempt to secure ‘repayment’ from the Exchequer of tax that has not been paid”. Legislation introduced today will block use of both schemes, as well as retroactively block the first, a ruling that applies to any company abusing the tax system.
The news comes at an all-time low public opinion of high street banks. However, we must vote with our feet. If you currently bank with an unethical and unscrupulous bank, you could do worse than to visit YourEthicalMoney.org to seek out an alternative.
There is no better time to Move Your Money.
Photo: Robert Scarth via Flickr