BARCLAYS’ AUDITOR, PwC, did not advise the bank on two schemes that attempted to avoid £500m and have been shut down by the the Treasury, a source familiar with the bank said.
The source said the bank used another unnamed advisor for the schemes, which tried to avoid tax on profits from a debt buyback and exploit regulations to generate a repayment of tax.
PwC signed off Barclays’ 2011 financial results, which were published on 10 February, and included transactions from the tax avoidance schemes. Barclays disclosed the tax avoidance schemes to HM Revenue and Customs.
Accountancy Age understands although Barclays did not make a specific provision in its annual results to cover the risk that the two tax avoidance schemes would be closed by the taxman, the risk was noted and cash was set aside as part of a provision for various business risks.
PwC declined to comment, citing client confidentiality.
The Treasury said on Monday that closing the two schemes would bring in £500m from a bank, later revealed to be Barclays, and would stop billions of pounds in tax being lost in the future.
In a highly unusual move the Treasury introduced retrospective legislation to end “aggressive” tax avoidance schemes involving debt buybacks.
Heather Self, a director in the tax practice at law firm McGrigors, said: “It is very rare for arrangements already in place to be stopped by retrospective changes to the law.
“This shows that the government is serious about clamping down on avoidance, and makes it even more likely that formal consultation on a GAAR (General Anti-Avoidance Rule) will be announced at the Budget in March.”
Lord Howard Leigh of Hurley discusses the government’s initiatives to mitigate tax avoidance and evasion
Top 50+50: Demand for tax advisory services remains high, but fee pressure is expected in relation to compliance services
The demand for tax advisory services remains high and this looks to continue; but fee pressure is expected in relation to compliance services as the “Making Tax Digital” initiative is rolled out,
While some resistance to change is to be expected, the degree of controversy surrounding HMRC's Making Tax Digital proposals has surprised the government
Kevin Reed discusses the worrying findings from HMRC on micro-businesses' problems handling Real-Time Information, and the latest thoughts on how accountants can provide value-added services