Barclays takes its responsibilities as a corporate citizen very seriously. Barclays ensures that all transactions that it undertakes are fully in accordance with relevant tax law wherever it does business. In the UK we comply with the letter and spirit of all our obligations under the HMRC Code of Practice and have open and transparent dealings with HMRC.
This situation arose when Barclays voluntarily disclosed to HMRC in a spirit of full transparency that it had repurchased some of its debt in a tax efficient manner. This was based on guidance from professional advisors that the treatment was both legal and compliant with the tax code, and given others had used a similar treatment. Barclays also disclosed its participation in an authorised investment fund which is also legal and compliant with the tax code.
On the basis of that approach, HMRC has decided that it intends to work with the Government to change the tax laws retrospectively to prevent any company from using such treatment again.
Barclays respects the decision of HMRC and the Government to adjust the tax laws and will, of course, comply with the modified law once it is in place. The retrospective change in legislation enacted would not have a material impact on Barclays profits and would not cause Barclays to alter its Preliminary Results which were published on 10 February.