I’ve gone back in time to 2009

The BBC is this morning reporting that Barclays is shutting down its “tax avoidance unit”. Or “structured capital markets” team, as it’s euphemistically known.

Now I know our friends at Barclays didn’t take a direct equity investment from the Treasury (not that they weren’t urged to, and not that they didn’t benefit from all the other government programmes introduced at the time as well as from the perception that having propped up RBS and Lloyds/HBoS, the government was never going to let Barclays go to the wall). But still. Did no one tell them that banks had become quite unpopular? And that tax avoidance had become even less popular than it used to be?

The so-called “state-owned” banks were encouraged to shut these units down years ago, although, to be fair, Barclays had pioneered this business in the UK and was already by far the biggest player. Has it really taken Liborgate and everything else that’s happened in the last few years for Bob’s successors to wake up to the fact that this business is a relic? That banks don’t operate in a vacuum any more? That at least the appearance of social responsibility is an implied part of the contract these days?

Barclays will no doubt argue that it was generally “foreign” governments who lost out due to the unit’s activities; and that the enormous profits it generated ended up contributing to Barclays own tax bill. And a small minority will nod and conclude that logically, perhaps there wasn’t that much wrong with a unit like this (ignoring the fact that it’s difficult to argue that Starbucks and co should be brought to book for hiding their revenues away from HMRC when Barclays and co are helping American companies hide theirs from the IRS).

But for everyone else, it’ll stink that this business was still around to get shut down in 2013.

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2 comments

  1. Whilst I understand and agree with the sentiments expressed re Barclays, how do you rationalise this position when not considering the impact of the mega tax avoidance industry run by ten of thousands of chartered and other accountancy practices, small and large ???? They have exams on the subject !!

    1. An interesting angle and thanks for your comment. Yes, there are there other sinners, but I think in this instance it’s the magnitude of the sin committed by just a handful of people that makes it (or should have made it) so much easier to stop it in the first place. Never before was so much tax avoided by so few people. Looking at the accountancy practices – and stripping away everything they do which has little or nothing to do with tax avoidance – there’s still a continuum between “arranging one’s own tax affairs in order to minimise the burden” – which has always been seen as legitimate (although public opinion’s looking like this could change, too), and entering into transactions “the sole purpose of which” is to avoid tax – which has always been seen as closer to evasion, and therefore morally unacceptable and legally questionable. So yes, if you can take a whole industry, and separate the lambs from the goats, weed out the sinners, then by all means do – but it’s a hell of a job. Whereas shutting down one department with maybe a hundred people working for it, all of whose activities are on the line at best – well, it’s hardly rocket science. It would have been easy. Easy to do it back in 2009. I’m just surprised they didn’t.

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