LONDON -(Dow Jones)- The U.K. government's decision to retrospectively order Barclays PLC (BCS) to close down two tax loopholes and pay an estimated GBP500 million earlier this year was "completely unwarranted" and caused unnecessary damage to the bank's reputation, Chief Executive Bob Diamond said in a letter to the Treasury Select Committee that was released Monday.
In a letter to Treasury Select Committee Chairman Andrew Tyrie, dated May 15, Diamond said the tax situation arose after the bank voluntarily told the tax department, Her Majesty's Revenue & Customs, that it had bought back some of its own debt in a "tax efficient manner."
Diamond said the bank received guidance from professional advisers that the tax treatment was compliant with the Tax Code, and that other companies had used similar practices.
Diamond said the bank was therefore surprised to be singled out by the Treasury and for Exchequer Secretary to the Treasury David Gauke to name the bank in his statement to Parliament and accuse it of entering into a "highly abusive" arrangement. Diamond said this naming had compromised the principle of taxpayer confidentiality.
"The way in which this situation was handled seems to us to have been completely unwarranted," Diamond wrote. "Unnecessary damage was placed on Barclays reputation just at a time when the focus should be on rebuilding confidence and accelerating growth, not undermining it."
The committee also released a letter from Tyrie to Chancellor of the Exchequer George Osborne to respond to Diamond's comments.
-By Ainsley Thomson, Dow Jones Newswires; 44 20 7842 9318; firstname.lastname@example.org
(END) Dow Jones Newswires
May 28, 2012 11:08 ET (15:08 GMT)
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