Barclays’ controversial tax planning business will come under fresh scrutiny in a US court this week over whether a transaction designed by the bank cost the US government more than $1bn in lost tax receipts.
The US Internal Revenue Service claims that complex, cross-border deals Barclays structured for several mid-tier banks in the past decade were an abusive tax shelter that exploited loopholes between US and UK tax laws.
The IRS will square off with Bank of New York Mellon in US Tax Court in New York today in the first of several lawsuits. Senior BNY executives as well as the star bankers that built Barclays’ famed Structured Capital Markets group face questioning over the structure, known as “structured trust advantaged repackaged securities”, or Stars, for short.