Barclays’ tax procedures were ‘robust and sound’, and the bank fully understood the potential damage to its reputation arising from the use of complex structures, Barclays chairman Marcus Agius told the chairman of the Financial Services Authority weeks after the government announced retrospectiv
Barclays’ tax procedures were ‘robust and sound’, and the bank fully understood the potential damage to its reputation arising from the use of complex structures, Barclays chairman Marcus Agius told the chairman of the Financial Services Authority weeks after the government announced retrospective legislation to close two ‘highly abusive’ tax avoidance schemes.
Bob Diamond, who resigned as Barclays chief executive last week over the Libor rigging scandal, told the chairman of the Commons Treasury Committee in May that the government’s response to the company’s disclosure of a debt buyback arrangement was ‘completely unwarranted’.
But correspondence published on the Treasury Committee website yesterday reveals that FSA chairman Lord Turner had told Agius in April that the ‘net impact’ of the bank’s approach to UK tax management had clearly been ‘unfavourable to the degree of external trust in Barclays’ approach to issues such as tax, regulation and accounting’.
Turner’s letter of 10 April set out the FSA’s concerns about ‘the cumulative impression created by a pattern of behaviour over the last few years, in which Barclays often seems to be seeking to gain advantage through the use of complex structures, or through arguing for regulatory approaches which are at the aggressive end of the relevant rules and regulations’.
Today’s Financial Times reports that as ‘old news’ illustrating his point, Turner cited ‘Barclays’ infamous “Protium” structure, designed to shift a vast portfolio of illiquid investments off the bank’s balance sheet, and the “aggressive” price valuation of the bank’s monoline insurance exposures’. More recently, concern ‘focused on various massaging of capital needs, in which Barclays was “not fully transparent”, causing “unnecessary friction”’.
Replying to Turner on 18 April, Agius said the FSA’s concerns were a matter of regret. After setting out the bank’s response on several specific points, Agius turned to the UK tax issue, saying ‘we fully understand the potential damage to our reputation’.
Agius added: ‘On the other hand, as tested recently through a third party review, our tax procedures are robust and sound but no procedure can guard against retroactive tax law changes. We acknowledge that this is not a comfortable place for us to be. Despite our voluntary disclosure to HMRC of the transactions, they did not inform us of their intention to change the law.’
Barclays’ tax procedures were ‘robust and sound’, and the bank fully understood the potential damage to its reputation arising from the use of complex structures, Barclays chairman Marcus Agius told the chairman of the Financial Services Authority weeks after the government announced retrospectiv
Barclays’ tax procedures were ‘robust and sound’, and the bank fully understood the potential damage to its reputation arising from the use of complex structures, Barclays chairman Marcus Agius told the chairman of the Financial Services Authority weeks after the government announced retrospective legislation to close two ‘highly abusive’ tax avoidance schemes.
Bob Diamond, who resigned as Barclays chief executive last week over the Libor rigging scandal, told the chairman of the Commons Treasury Committee in May that the government’s response to the company’s disclosure of a debt buyback arrangement was ‘completely unwarranted’.
But correspondence published on the Treasury Committee website yesterday reveals that FSA chairman Lord Turner had told Agius in April that the ‘net impact’ of the bank’s approach to UK tax management had clearly been ‘unfavourable to the degree of external trust in Barclays’ approach to issues such as tax, regulation and accounting’.
Turner’s letter of 10 April set out the FSA’s concerns about ‘the cumulative impression created by a pattern of behaviour over the last few years, in which Barclays often seems to be seeking to gain advantage through the use of complex structures, or through arguing for regulatory approaches which are at the aggressive end of the relevant rules and regulations’.
Today’s Financial Times reports that as ‘old news’ illustrating his point, Turner cited ‘Barclays’ infamous “Protium” structure, designed to shift a vast portfolio of illiquid investments off the bank’s balance sheet, and the “aggressive” price valuation of the bank’s monoline insurance exposures’. More recently, concern ‘focused on various massaging of capital needs, in which Barclays was “not fully transparent”, causing “unnecessary friction”’.
Replying to Turner on 18 April, Agius said the FSA’s concerns were a matter of regret. After setting out the bank’s response on several specific points, Agius turned to the UK tax issue, saying ‘we fully understand the potential damage to our reputation’.
Agius added: ‘On the other hand, as tested recently through a third party review, our tax procedures are robust and sound but no procedure can guard against retroactive tax law changes. We acknowledge that this is not a comfortable place for us to be. Despite our voluntary disclosure to HMRC of the transactions, they did not inform us of their intention to change the law.’
