Tags: Barclays | tax | avoidance | BBC

BBC: Barclays Expected to Ax its Tax Avoidance Unit

Monday, 11 Feb 2013 01:18 PM

By John Morgan

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Barclays Bank is expected to announce it will shutter a controversial unit of its business that helps clients avoid paying taxes, unnamed sources told BBC News.

The decision comes amid Barclays’ bid to rebuild its image following a string of scandals.

The BBC said it had obtained an advance copy of a statement from Barclays CEO Antony Jenkins that will be issued Tuesday along with the bank’s full-year financial results.

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In the statement, Jenkins will say, “There are some areas that relied on sophisticated and complex structures, where transactions were carried out with the primary objective of accessing the tax benefits,” the BBC reported.

“Although this was legal, going forward such activity is incompatible with our purpose. We will not engage in it again.”

The move would mean part of Barclays’ Structured Capital Markets (SCM) business would be jettisoned as part of a strategic restructuring. The SCM unit is a significant part of Barclays’ investment banking operation.

Jenkins has placed more focus on ethics since taking over from his predecessor Bob Diamond, who resigned after the recent London Interbank Offered Rate (Libor) scandal. Barclays was fined $450 million for its role in that international rate-rigging scandal among global banks and brokers.

Last week, Lord Lawson, a member of the British Parliament’s banking commission, accused Barclays of being involved in legal tax avoidance on an “industrial scale.”

The topic of tax avoidance has received much government and media attention in the United Kingdom in recent months.

British Prime Minister David Cameron said last month he would use his country’s term as presidency of the G8 to aim at tax-dodging tactics by businesses, The Associated Press reported.

Public attention in Britain has zeroed in on the practice since lawmakers accused major multinational companies including Starbucks, Google and Amazon of “immorally” avoiding paying tax.

“[S]ome forms of avoidance have become so aggressive that I think it is right to say these raise ethical issues, and it’s time to call for more responsibility and for governments to act accordingly,” Cameron told an audience at the World Economic Forum in Davos, Switzerland, in January. “This is an issue whose time has come.”

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