Barclays bank forced to admit it paid just £113m in corporation tax in 2009

Admission stuns politicians and tax campaigners on the eve of a day of protests planned against high street banks


* Jill Treanor
* guardian.co.uk, Friday 18 February 2011 19.43 GMT


Barclays bank Barclays bank has admitted it paid just £113m in corporation tax in 2009. Photograph: Paul Hackett/Reuters

Barclays Bank has been forced to admit it paid just £113m in UK corporation tax in 2009 – a year when it rang up a record £11.6bn of profits.

The admission stunned politicians and tax campaigners. It was revealed on the eve of a day of protests planned against the high street banks by activists from UK Uncut, a group set up five months ago to oppose government cuts and corporate tax avoidance.

The Labour MP Chuka Umunna, who lobbied Barclays' chief executive, Bob Diamond, to reveal the tax paid by the bank, described the figure – just 1% of its 2009 profits – as "shocking".

The current rate of corporation tax in the UK is 28%, although global banks such as Barclays – which has hundreds of overseas subsidiaries, including many in tax havens – do not generate all of their profits in their domestic market.

Max Lawson, of the Robin Hood Tax Campaign, said: "This is proof that banks live in a parallel universe to the rest of us, paying billions in bonuses and unhampered by the inconvenience of paying tax.

"If banks paid their fair share we could avoid the worst of the cuts and help those hit hardest by the financial crisis they did nothing to cause."

UK Uncut, which has also campaigned against Vodafone, Boots and Top Shop, intends to take its first national day of action against the banks on Saturday with protesters expected to bring more than 30 high street branches of Barclays to a standstill.

On Tuesday – when Barclays announced 2010 profits of £6.1bn and a 23% rise in average pay in its investment banking arm, Barclays Capital – the tax campaigners turned a London branch of the bank into a library.

The disclosure of the size of Barclays' corporation tax bill was made in a letter by Diamond to Umunna, who had asked the Barclays boss about the tax paid by the bank when he appeared before the Treasury select committee of MPs last month.

Diamond told the committee that Barclays paid £2bn in taxes to HM Revenue & Customs in 2009, but it is now clear that most of this is payroll taxes for employees. Umunna argued that the sum paid directly in corporation tax to the exchequer is the best reflection of a bank's contribution to the country.

At the time, Diamond said the period of "remorse and apology" for banks was over. Lord Oakeshott, the Liberal Democrat peer who resigned as the party's spokesman in the Lords, said : "I agree with Bob – the time for remorse is past, but what British taxpayers need now is behaviour change from Barclays. Our banks must pay their full whack in corporation tax , not derisory drops in the ocean like this."

Barclays' bill for corporation tax illustrates a dramatic fall in the banking industry's contribution to the exchequer. Before the financial crisis, the industry paid more than £10bn in corporation tax, but this had halved by 2009.

Treasury minister Lord Sassoon admitted this week, in response to a question by former City minister Lord Myners, that while the banks would pay around £20bn in tax in 2010-11 most of that total would be income tax and national insurance paid by employees which the banks hand over on their behalf.

Only 20%, said Sassoon, which would come from corporation tax.

Myners said: "The combination of tax avoidance strategies with subsidiary companies together with losses brought forward means that banks will be not be making a meaningful contribution to corporate tax for some years."

Diamond also confirmed to Umunna that the bank had 30 subsidiary companies in the Isle of Man, 38 in Jersey and 181 in the Cayman Islands but stressed that the bank was making efforts to liquidate some of these of operations in the crown dependencies.

With regards to the Cayman Islands, Diamond was insistent that the majority of these are subject to tax in the UK.

Barclays said it complied with tax laws in the UK and all the countries where it operates and that in 2010 it paid over £2.8bn in taxes in the UK and £6.1bn globally. The £2.8bn UK bill again includes payroll taxes.

The bank said: "The corporate tax affairs of an organisation with the global footprint of Barclays are complex and not reducible to simplistic comparisons. Any link between Barclays Group profits and the amount of tax paid to the UK government is inappropriate - there is no direct correlation between the two."

Umunna blamed the coalition for not being tough enough on banks, but Tories said the Barclays tax bill related to a period when Labour was in government.

A government spokesman said: "As a result of negotiations by this government, banks will pay less in bonuses, more in tax and lend more than they otherwise would have done this year."

Barclays bank forced to admit it paid just £113m in corporation tax in 2009 | Business | The Guardian

Barclays branches targeted in protests against tax avoidance

UK Uncut mounts direct action against 50 branches as Barclays admits it paid 1% corporation tax in 2009

* David Batty and agencies
* guardian.co.uk, Saturday 19 February 2011 14.18 GMT


A protester from UK Uncut raises his arms as he takes part in an occupation of a branch of Barclays bank in central London. Photograph: Carl Court/AFP/Getty Images

More than 50 branches of Barclays bank across the UK have been targeted by activists protesting against tax avoidance.

The direct action by UK Uncut, taking place in more than 30 towns and cities including London, Liverpool, Manchester and Birmingham, came as Barclays was forced to admit it paid just £113m in UK corporation tax in 2009 – a year when it rang up a record £11.6bn of profits.

A UK Uncut spokesman said: "We are hoping to very peacefully and legally send a big message to Barclays that paying 1% corporation tax is not really acceptable."

There are around 10 different protests under way in central London, with protesters staging a live stand-up comedy show, running a breakfast club for children and setting up a library.

Ruth Griffiths, 36, a UK Uncut supporter, said: "Today we are transforming the banks into schools, leisure centres and libraries and forests because it's society that's too big to fail, not a broken banking system."

Earlier protesters gathered outside the entrance of the Barclays branch at Piccadilly Circus, holding banners saying: "People before profits" and chanting "books not bonuses" as they made an impromptu library outside the building.

After 30 minutes of public protest, waiting police officers intervened to request activists move on.

Most of the group began walking towards another branch via Soho, while 20 people remained at the bank in Piccadilly Circus.

Supporters of UK Uncut said people were also angry at the refusal of Barclays' chief executive Bob Diamond to apologise for the banks' role in the economic crisis.

Emma Draper, 25, who stayed outside the branch, said: "It was announced yesterday that Barclays paid around 1% corporation tax.

"The government is allowing banks such as Barclays to get away with not paying huge percentages of their taxes while at the same time slashing public services.

"The cuts are not necessary, they are a political choice because the government chooses to continue to prop up banks such as Barclays instead of funding public services."

UK Uncut, a group set up five months ago to oppose government cuts and corporate tax avoidance, has previously targeted companies such as Vodafone, Top Shop and Boots.

Barclays branches targeted in protests against tax avoidance | UK news | guardian.co.uk

Corporate tax avoidance: Impoverishing the public

Bankers' determination to minimise their contribution to public funds is matched by the lavishness of the benefits they have enjoyed at public expense


* Editorial
* The Guardian, Saturday 19 February 2011

There was a time when the concept of tax justice might have been one to interest serious vicars and brown-bread socialists. But times change. Activists operating under the banner UK Uncut have taken to occupying stores whose owners and bosses have been avoiding tax. Today they move on to the organisation of a "bail-in" of Barclays branches, setting up schools, forests and libraries within the banks – an agitprop gesture to highlight the link between threatened services and the financiers that activists reckon could save them by paying their fair share.

It is a simple equation, and may not be an easy one for Whitehall to implement. But the Guardian's Tax Gap series meticulously documented squillions of pounds in avoidance, establishing beyond doubt that the seepage of revenue was on a scale that constituted a pressing public concern. Fixing the leaks may not save every last swimming pool, but it could make a big difference. Barclays is an iconic case for making the point, seeing as bankers' determination to minimise their contribution to public funds is matched by the lavishness of the benefits they have enjoyed at public expense.

Barclays did not, it is true, sell shares directly to HM Treasury during the great crash, preferring to punt them at the Qatari authorities instead. Nonetheless, it has benefited from all manner of subsidies and guarantees, whose total value to the sector the Bank of England estimates to have been worth more than £100bn in 2009. Like most of the banks, Barclays would be deep in the dustbin of history were it not for this state support. Two years on, taxpayers stare on in disbelief as Barclays' investment banking arm pushes up average pay – that's right, average – to £236,000, and chief executive Bob Diamond is rumoured to be in line for a £9m bonus.

Up in front of disgruntled MPs last month, Mr Diamond suggested that much of the bounty would trickle down for the common good. He pointed out, accurately, that Barclays had handed £2bn to the Revenue last year, a figure that sounds respectable enough in the context of pre-tax profits of £6.1bn for 2010. What he did not point out, but we have now gleaned thanks to some forensic digging by the impressive young MP Chuka Umunna, is that just £113m of that £2bn was corporation tax, a 2% drop in the ocean of the company's global profits. The rest was paid through other levies which scarcely touched profits and were largely paid by employees.

The banks might maintain that it does not much matter who pays the tax, so long as it gets paid. It is after all not so much financial corporations as their senior staff who have been taking us for a ride. Only yesterday a Financial Times analysis suggested bankers' pay was squeezing shareholders, particularly at Barclays. And perhaps it is indeed as a result of their own greed that managers are forced to scramble so frenetically to reduce corporate tax. Not even Barclays would pretend that its mind-boggling structure – with 30 subsidiaries in the Isle of Man, 38 in Jersey and 181 in the Cayman Islands – is unconnected with tax. There is still the technocratic argument that the only thing that can pay a tax in the end is a person, so we should not worry about how much is stumped up from behind the corporate veil. But this case simply collapses when companies routinely reshape themselves to avoid tax in a manner which no mere human taxpayer could match.

It was the high priest of free markets, Adam Smith, who warned that joint stock companies encourage negligence. Limited liability is a terrific privilege for which companies ought to expect to contribute generously to the community's coffers. Many fail to do so, including banks that have only recently drawn heavily on a common resource. Whatever the spin, they are coming to be seen – in another of Smith's phrases – as "a conspiracy against the public".