Saturday, 19 February 2011

The Barclays tax and profits story - getting at the facts

The BBC's article about Barclays profits is as disingenuous as you might expect. The article is headlined 'Barclays UK corporation tax bill for 2009 was £113m ' with the article starting:
'Barclays has revealed it paid £113m in corporation tax to the UK in 2009, 2.4% of its £4.85bn annual profit.'
The suggestion here is that Barclays are paying tax at a rate of 2.4%. Of course the truth is buried much further down the article:
'According to Barclays' financial results, the bank paid an "effective tax rate" on its gross profits - which comprises corporation tax paid in all parts of the globe - of 25% in 2010 and 23% in 2009.

This compares with the UK corporate tax rate of 28%.

Some 60% of Barclays profits are earned outside the UK and Ireland, meaning they are subject to corporation tax in other countries.

Typically, HMRC will only charge the difference between the UK's tax rate - if higher - and the local tax already incurred.'
So Barclays did in fact pay tax at the correct UK rate on UK profits and extra tax 'on the margin'.

At the BBC, however, facts like that cannot be allowed to obscure a piece of banker-bashing so as well as confusing tax paid on UK operations with global profits, the BBC also allow one of their new favourites 'Labour MP Chuka Umunna, of the Treasury Select Committee' the room to describe this revelation as "shocking".

What is most interesting about the beneficiary of the BBC's attempt to create a UK Barack Obama is that he makes a fundamental error, one that the BBC let slide. Barack ObamaChuka Umanna said 'the relatively low share of tax paid in the UK reflects the government's failure to take the robust action needed to make sure that the banks which caused the crash pay their fair share.' Maybe someone could point out to Chuka Umanna that the 2009 tax paid by Barclays was on profits made and taxed under a Labour government, one whose tax policy was in part set by the current Shadow Chancellor - one Ed 'second choice' Balls.

Right at the end of the BBC article, which most readers would not get to, the BBC does include this
'Tory MP Matt Hancock said that Mr Umunna "has uncovered the uncomfortable truth that under the Labour Government of Ed Balls and Ed Miliband the banks did not pay their fair share".'

This is a typical piece of BBC 'journalsim'; an anti-banking headline, followed by space given to a Labour MP to attack banks and the Conservative government and only at the end of the article allow the facts to intrude. The BBC know that the majority of readers scan the headlines, take in the highlight headings and maybe read the first few paragraphs, that's why they structure their reports in such a way.

Of course the BBC  never mention another corporation that manages to pay no corporation tax; in 2008 GMG, The Guardian's parent company, made £300 million in profit and paid £0.00 in Corporation Tax.

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