Barclays says was singled out in tax row LONDON (Reuters) - British bank Barclays (BARC.L) said tax authorities singled it out for unfair treatment in a tax row earlier this year that damaged the bank's reputation. Britain said in February it would close two "aggressive tax avoidance schemes" used by Barclays and retrospectively applied a new tax to a bond buyback the bank did in December. Barclays could have to pay back about 120 million pounds ($188 million), Reuters has estimated. "The way in which this situation was handled seems to us to have been completely unwarranted," chief executive Bob Diamond said in a letter to Andrew Tyrie, chairman of parliament's cross-party Treasury Select Committee of lawmakers. "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," Diamond said. Tyrie asked Diamond to write the letter at a meeting on April 17 at which they discussed the matter. Tyrie released the letter, dated May 15, on Monday after saying he had asked finance minister George Osborne to assess what happened, in consultation with HM Revenue and Customs, the tax office. Tax avoidance is not illegal and Barclays has said it had done nothing wrong. But it was a high-profile embarrassment as the bank has signed up to a tax code of conduct and, last year, Diamond said banks must win back trust and be better "citizens." Diamond's letter to Tyrie said: "We were ... surprised to be singled out in the way that occurred; not only through a retroactive change of law, but the effective naming of Barclays ... accusing the bank of entering into a 'highly abusive' scheme." Barclays said it had an open and transparent process for reviewing deals with HMRC and it voluntarily disclosed that it had repurchased debt in a tax efficient manner. The tax treatment it used was based on strong legal guidance and other companies had used similar treatment, indicating there was a clear precedent the transactions were in the spirit of the law, the letter said. Reporting by Steve Slater; Editing by Dan Lalor