FT Alphaville " Barclays is one unhappy taxpayer Just in case you missed it earlier - we thought it worth posting the full letter from Bob Diamond, Barclays chief executive, to Andrew Tyrie MP, Treasury Committee chairman, regarding HMT's blocking of two tax schemes (one on buybacks of debt). This involved a rare use of retroactive legislation, if you recall. Anyway, the letter (click image for full doc): We were, therefore, surprised to be singled out in the way that occurred; not only through a retroactive change of law, but the effective naming of Barclays by the Exchequer Secretary in his statement to Parliament, accusing the bank of entering into a "highly abusive" scheme. ...the way in which this situation was handled seems to us to have been completely unwarranted. Unnecessary damage was placed on Barclays reputation just at a time when the focus should be on rebuilding confidence and accelerating growth, not undermining it. The FT was the first to actually name Barclays in connection with the two schemes. (One question we have: Did Barclays know beforehand that this letter was going to come out in public? In passing it on to the Chancellor for comment, Tyrie said that "I will be placing this letter, along with the enclosure, in the public domain.") The frustration of the bank about the whole story oozes from the letter. We quote: ... all tax-related transactions that we undertake are fully in accordance with the relevant tax law, wherever we do business. Furthermore, the UK's Tax Code of conduct, to which Barclays is a signatory, requires the bank to comply with the letter and the spirit of the law. This is where it gets a bit comical, in our opinion (emphasis ours): The important judgement from our Advisors was that other companies had used a similar treatment; that it was reasonable to assume that HMRC was aware of similar treatments; and that, because HMRC had take no action to prevent those treatments, there was a clear precedent to satisfy the test of the spirit of the law. Translation: Everyone else was doing tax-advantaged debt buybacks. Why the hell are you picking on us out of everyone?! Especially after we were so nice as to tell you what we were doing so you'd know what's up... If you remember from FT Alphaville's overview of one structure that permits tax efficient treatment in purchases of debt, part of the reason it's possible to do these types of deals is because of concessions in the tax code for corporate rescues. "Rescuing" oneself doesn't seem too much in the spirit of things to us, no matter who's doing it - a small taxpayer, or a slightly bigger one. Or as we put it at the time, it's like knights dressing up as damsels and rescuing themselves. Then again, there is a great tradition of cross-dressing in the UK... By Joseph Cotterill and Lisa Pollack Related links: Knights, damsels, and tax-advantaged debt buybacks - FT Alphaville Barclays deplores UK tax case tactics - FT This entry was posted by FT Alphaville on Tuesday, May 29th, 2012 at 14:05 and is filed under Capital markets, People. Tagged with barclays, bob diamond, tax, UK banks.