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Group Finance Director Chris Lucas responds to issues raised in two news articles in the UK’s Daily Telegraph news paper.

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Group Finance Director Chris Lucas responds to issues raised in two news articles in the UK’s Daily Telegraph news paper.

Sir

I wish to respond to issues raised in two recent articles.

Firstly, your article “Barclays accounting distorts profits, warns PIRC” reports comments from Pensions Investment Research Consultants (PIRC) that we maintain are inaccurate.

The accounting treatment required for employee benefits (other than share-based payments) is set out in IAS 19 Employee Benefits. These requirements are used by all banks. Our accounting treatment is in accordance with IAS 19 and is consistent with that adopted by other banks. As such, our accounting, which has been applied consistently over recent years, reflects the usual industry practice.

The suggestion that we revealed this through an “obscure note in our 2010 annual report” is also incorrect. In addition to including this treatment explicitly in our annual results statement in February, there was a slide in the media and investor presentations used for our results announcement that set out explicitly the impact on the profit and loss statement of past deferrals and future deferrals – a net impact of around £100m in 2010. The accounting treatment of deferred remuneration was also widely reported in the media at that time.

We take our reporting obligations very seriously and are confident that our treatment of these costs is consistent not only with accounting standards, but also with the approach of our peers.

Secondly, your article "Taxman asked to investigate Barclay's Protium deal" and comment "Protium deal worthy of expert once-over" suggest that we have not already made the details of the sale of assets to Protium available to HMRC and insinuates that it may not conform with the spirit and letter of the Code of Practice on Taxation. Neither suggestion is fair.

As we have made clear on a number of occasions, we have a constructive and fully open relationship with HMRC, including the sharing of any and all documents that they wish to see related to any transaction that we undertake. That principle, of course, pertained in the circumstances surrounding the sale of assets to Protium (and equally to the purchase of the business last week).

We are confident that all aspects of these transactions comply with the spirit and letter of the Code of Practice on Taxation, even though the original transaction occurred before that code was adopted. We have no issue with retrospective application of the Code because all our transactions are compliant with the letter and spirit of the tax laws that prevailed at the time of their completion.

Yours sincerely,

Chris Lucas
Group Finance Director

 

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