My immediate reaction to the High Court's gagging order against the Guardian – forcing the withdrawal from the Guardian website of memos setting out details of tax avoidance schemes alleged to have been devised by Barclays Structured Capital Markets division – was that it had to be. I am of course angry that the reckless behaviour of some of our major banks, assisted by "light touch" regulation, triggered this recession. A bank that is supported by the taxpayer should not be engaging in dreaming up complex transactions created with the sole purpose of avoiding tax. But it is HMRC's job, not the media's job, to tackle avoidance and as the judge said yesterday, the documents contain confidential commercial information and legal advice.
However, Justice Blake is also reported to have said that there is a strong public interest in how the banks do business, that the subject of their tax avoidance is "acutely topical", and that to ban the Guardian from referring to the documents would be "unrealistic and disproportionate". Furthermore, a Guardian leader today makes two excellent points that are worth quoting in full:
"While the judge agreed the Guardian's tax coverage was important he seemed to think there was no merit in allowing a wider public to read the detailed documents in which Barclays employees discussed how they planned to structure these schemes and how they would argue their legitimacy with the taxman. It is better, in his view, that banks, tax advisers and lawyers should be allowed to have private conversations with Her Majesty's Revenue & Customs without any kind of wider scrutiny. This ignores widespread concerns – articulated by the Barclays whistleblower among others – that it is precisely the private nature of these conversations that has allowed banks and corporations to get away with such rampant tax avoidance over so many years.
"This is not an arcane dispute between a newspaper and a bank over marginal tax-dodging at the fringes. If Barclays were to be forced to follow RBS into abandoning its tax avoidance adventures, many hundreds of millions would be removed from its annual profits and leave the bank. Shareholders and government need to know what is going on. And the public should be allowed a glimpse into the cosy world of secret negotiations between bankers, lawyers and tax inspectors over who can get away with what. It is a worrying day when a judge thinks he knows better."
I am not saying I agree with every word here, but if today's editorial does not make the case for disclosure of confidential papers stolen by a whistleblower, it surely strengthens the case for outlawing structured tax avoidance. Can we expect the government to look again at the case for a general anti-avoidance rule (or principle)? Perhaps the time has come.
