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Barclays tax avoidance division generated £1bn a year – Salz review Barclays tax avoidance division generated £1bn a year – Salz review
(about 3 hours later)
Barclays generated revenue of more than £1bn a year between 2007 and 2010 from its controversial tax avoidance division, data published in the Salz review shows. Barclays' controversial tax avoidance division generated revenue of more than a £1bn a year between 2007 and 2010, according to data published in a scathing review ofembattled bank's culture.
The review – named after lawyer Anthony Salz – also sheds light on the amount of tax paid by Barclays in 2012 when it made £7bn in top-line profits but paid just £82m in corporation tax to the exchequer. Pre-tax profits were £246m due to an accounting standard relating to how it values its own debt. The assessment by City lawyer Anthony Salz, commissioned by Barclays in the wake of the Libor-rigging scandal, produced data for the first time showing that in the 11 years to 2011 the structured capital markets arm generated revenue of more than £9.5bn. Profit numbers were not published but Lord Lawson, the former Conservative chancellor who sits on the parliamentary commission on banking standards has accused the secretive division of "industrial scale tax avoidance".
The review also shows the revenue being generated from payment protection insurance in which the bank had a 15% market-leading share in 2005. Sales of this discredited insurance was bringing in revenues of £400m a year and banks across the UK have now taken provisions of more than £12bn in mis-selling claims. The new chief executive of Barclays, Antony Jenkins, has insisted the division is being shut down as he attempts to clean up the image of the bank. But Salz found that the 100 highly-paid bankers in SCM have been redeployed around the organisation, instead of being fired.
The data provided on the structured capital markets (SCM) division, which embarked on large scale tax avoidance schemes for clients, showed that in the 11 years to 2011 it generated revenue of more than £9.5bn. In 2009 the Guardian revealed how SCM structured complicated deals to root money to offshore centres to avoid tax.
Antony Jenkins, the new chief executive of Barclays, has insisted that this division is now being shut down – although the 100 staff have largely been redeployed around the group rather than made redundant, the Salz review found. The Salz review also sheds light on the amount of tax paid by Barclays in 2012. Just £82m in corporation tax was paid to the exchequer after top line profits of £7bn shrank to £246m, as a result of an accounting standard relating to how it values its own debt.
The review warned that SCM operated in an "inherently risky business dependent on the interpretation of the relevant tax legislation". Barclays had tended to negotiate an annual settlement of its tax liabilities with HM Revenue & Customs, the Salz review said, but this had become more difficult after 2006 when the tax authorities adopted a different approach. Barclays has also faced fierce criticism for its admission that it paid just £113m in corporation tax in 2009.
The bank, which has faced fierce criticism for the amount of corporation tax paid in the UK in the past, paid £147m of corporation tax in 2010 and £296m in 2011. Barclays has previously admitted it paid just £113m in corporation tax in 2009. Salz, who describes Barclays banks as losing a "sense of proportion and humility", also described a pay structure in the retail bank which may have encouraged the mis-selling of payment protection insurance. He reveals that the bank had a market-leading share of PPI sales in 2005 and was bringing in revenues of £400m a year from the discredited insurance. High street banks have now taken provisions of more than £12bn in mis-selling claims related to PPI products.