Barclays and tax

Dunno how exactly true this is but it\’s persuasive to me:

\’On page 38 of the Annual Report you will find the relevant figures for corporation tax paid to the UK in the financial years 2007, 2008 and 2009. You will note that Barclays had an effective corporation tax rate of 27%, 9% and 23% respectively in each year.

As the UK Corporate Tax Rate for the same three years was 30%, 28.5% and 28%, we need only concern ourselves with the 2008 financial year where the effective rate was 9% against a 28.5% nominal tax rate.

In 2008, Barclays had a nominal corporate tax charge of £1,464 million which was reduced to £453 million by adjustments. You can look yourself at the detail but the major adjustment was the offset of £859 million of unrecognised non-taxable losses. This was the cost to Barclays of the banking collapse, in other words the losses incurred in writing down or off the bad loans etc which resulted from the worldwide collapse in asset values.

I rather suspect that the £113 million referred to by Umunna and the Guardian is the cash amount paid to the treasury in 2009 representing unpaid corporate tax from the 2008 financial year.\’

5 thoughts on “Barclays and tax”

  1. OT Tim but it turns out 3 of the 4 Downside monks have been cleared of impropriety.

    The fourth is the subject of a lawsuit by a man who had been asked to leave the novitiate of a monastery in another country for *ahem* inappropriate behaviour. Draw your own conclusions.

    Not that you’ll see the fact of the being cleared in the MSM.

  2. The answer is even simpler than that. The Barclays Annual report shows a loss on head office operations of £759 million, which basically means that Barclays is paying staff in the UK to do all the things that are necessary to run the business (credit control, accounting, operations, IT, training etc) which is set against their UK profits.

  3. None of this can be right. Barclays’ 2009 AR, in the *cashflow* statement (p208), shows Tax Paid of GBP1,177m (so that’s real money paid in real tax).

    I’m pretty certain – although I’m only professionally qualified to argue with accountants, not to be one myself – that Tax Paid on the cashflow statement is real tax paid by the company, not including payroll taxes paid on employees’ behalf.

    So either Barclays paid over a billion quid of tax overseas, which is possible, or there’s something I’m missing. Anyone want to confirm what I’ve messed up?

    Tim adds: I think we’re talking about payment lags. There’s a difference between “tax paid in a year” and “tax due on activity that year”.

  4. @Johnb

    You are quite right. The cash flow doesn’t tell the whole story because in most countries large companies pay tax in instalments, usually a few estimation payments made during the year then one or more made after the end of the year when the full tax liability is known.

    The problem with going with the cash flow figure is that it gives you the figure for the final payments from the previous year plus the estimation payments from the current year (which may be estimates based on a guess of the current year tax liability, but are often based on the prior year tax liability).

    So in summary, yes Barclays paid that amount of “income tax” in terms of net amount of cheques written to the various tax authorities, but it does’t tell you how much the net liability is for any year (i.e. that cash figure would show up in the cash flow statement even if they were entitled to have it all refunded next year).

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