Comments from the chancellor dismissing concerns from Barclays that it had been 'singled out' by HMRC following its disclosure of an avoidance scheme which resulted in a £500m clawback by the taxman, have been published by the Treasury Select Committee chief.
Committee chairman Andrew Tyrie published George Osborne's comments, stating that the chancellor had 'flatly contradicted' the assertions made by Barclays following the clawback and immediate closure of the scheme.
The chancellor was asked for a response after Barclays then chief executive, Bob Diamond, expressed concern over the way in which Barclays was singled out for use of the scheme involving the repurchase of the bank's own debt in a tax efficient manner even though the bank had been advised that other companies used such tax treatments with no opposition from HMRC.
Barclays also took exception to being named by the Exchequer secretary in his statement to parliament, in which the bank was also accused of entering into a 'highly abusive' scheme.
Defending the Treasury's decision to introduce retrospective legislation to close the debt buy-back scheme due to the significant amount of tax at risk, the chancellor said that HMRC had not been able to identify other arrangements similar to Barclays'. HMRC also pointed out that if the bank had consulted it in advance of any transactions, it would have made its position on the matter clear.
Referring to the chancellor's comments, Tyrie said, 'If Barclays thinks the chancellor is mistaken, it should explain why.'
He went further to comment on the matter, saying that the development of a 'Code of Practice on Taxation', requiring banks to adhere to ill-defined standards in addition to the law, risks making the tax system even more ambiguous.
'Before reaching for what some might consider the nuclear option of retrospection, we need to consider why the law is delivering so many unintended consequences.
'There can be little doubt that those opportunities for avoidance - the unintended consequences - exist because the law is so complex,' said Tyrie.
According to reports in The Telegraph, Barclays has declined to respond to the comments, insisting that the bank has 'moved on'.
