As it is revealed Barclays employed tax avoidance schemes to dodge an estimated half a billion pounds of tax, Channel 4 News looks at how widespread these devices are and what they involve.
Corporate tax avoidance is often presumed rather than definitively known about. Due to the complex and highly secretive nature of some parts of the financial services industry, avoidance schemes are not often reported in the media let alone properly understood.
The statement issued by the Treasury pointed out that the schemes employed by the company later revealed to be Barclays, were "designed to work around legislation that has been introduced in the past to block similar attempts at tax avoidance", suggested tax avoidance is an active, thriving business.
Barclays had even signed up to the Banking Code on Taxation where it promised not to engage in tax avoidance. The subsequent revelation that it did engage in such practices did not amuse the Treasury: "The government is clear that these are not transactions that a bank that has adopted the Code should be undertaking."
There is a very critical difference between tax avoidance and tax evasion. For example, not declaring earnings you know would be liable for tax is tax evasion and illegal, however declaring those earnings but using legal instruments to ensure you pay the lowest tax possible on them is tax avoidance and perfectly legal.
What the company did was not illegal. In its statement, it said: "Barclays voluntarily disclosed to HMRC in a spirit of full transparency that it had repurchased some of its debt in a tax-efficient manner.
Banks would be in no position to hand out such generous sums were it not for receiving the equivalent of economic steroids from our government. Robin Hood Tax Campaign
"This was based on guidance from professional advisers that the treatment was both legal and compliant with the tax code, and given others had used a similar treatment. Barclays also disclosed its participation in an authorised investment fund which is also legal and compliant with the tax code."
But such disclosures highlight the sliver-thin line between what could be seen as getting the best tax deal for a company and not paying what might be seen as a "fair" amount of tax on what are often huge amounts of money.
Nick Shaxson, writer of Treasure Islands: Tax Havens and the Men Who Stole the World told Channel 4 News such avoidance schemes are "very widespread in the UK and US" usually involving places such as Ireland and Luxembourg as well as the usual suspects, the Cayman Islands and Bermuda.
Each year, HMRC publishes a list of avoidance schemes statistics - accountants are supposed to tell the Revenue if they discover such loopholes - but from the Treasury's statement it would appear that chasing tax avoiders is a Sisyphian task.
Nick Shaxson explained to Channel 4 News one particular type of scheme which again though not illegal, does seem to be an extremely complex method of operating a business - unless it is being used simply to lower a company's tax burden.
"Companies routinely use a technique called 'transfer pricing' where they trade goods and services internally within a network of subsidiaries of the same multinational company, each in a different jurisdiction," he said.
"If the accountants manipulate the prices on those trades in certain ways, they can shift the profits into tax havens, where they pay little or no tax on those profits.
"This may be legal, but it contributes nothing to real economic efficiency: it just transfers wealth from taxpayers to them (and to their accountants). Financial activities are often particularly tricky to value, which makes it harder for tax authorities to challenge the artificial prices their accountants cook up."
But companies do not have to engage teams of international business lawyers in order to lower their tax burden.
As the Robin Hood Tax Campaign points out, financial services already benefit from not being liable for VAT on their services - Spokesman Simon Chouffot points out that even the IMF thinks the financial services industry benefits in a way not open to many other goods and services. In short, that it is undertaxed.
While goods and services in the real economy are VAT-liable at 20 per cent, goods and services in the financial sector remain VAT-exempt. The government itself has said this exemption costs us more than £5.5bn a year.
Mr Chouffot told Channel 4 News: "Banks would be in no position to hand out such generous sums were it not for receiving the equivalent of economic steroids from our government: a £5.5bn tax break and multi-billion pound direct and indirect subsidies, ultimately paid for by the UK taxpayer.
"The government appears to have U-turned on making banks pay their fair share. Dropping the phrase 'that we are all in this together', capitulating over rampant pay and using outlandish arguments to block the proposal for a financial transaction tax."
But author Nick Shaxson senses a possible culture change. He points to comments made by the Director General of the CBI John Cridland, who cautiously backed a government plan to target aggressive tax avoidance schemes.
Mr Cridland told the Guardian: "Business should not engage in abusive tax arrangements. However, in running their normal day-to-day activities, as well as in commercial transactions large and small, businesses need to manage their tax affairs as a key part in operating their businesses."
Meanwhile, in an interview in 2011 the Chief Executive of GlaxoSmithKline Andrew Witty criticised businesses who move their operations offshore to avoid tax. "One of the reasons why we've seen an erosion of trust broadly in big companies is they've allowed themselves to be seen as being detached from society and they will float in and out of societies according to what the tax regime is," he told The Observer.
At this stage it is unclear whether the punitive measures against Barclays announced by the government amount to more than a periodic clampdown on tax avoidance. But the issue continues to be a fertile topic of debate and as austerity measures are felt more keenly, the public may demand even more of the same.
25 August 2011