The government is to end "aggressive tax avoidance" schemes used by banks from the profit they can make buying back their own bonds, a move that could cost Barclays more than £100 million.
The government said today it was closing two tax loopholes immediately to save it more than 500 million pounds, adding that the loopholes were disclosed by an unnamed bank.
The Financial Times said Barclays was the bank.
Barclays declined to comment on the report, which followed widespread speculation in London that the bank was the main target of the clampdown.
Legislation would be introduced to retrospectively "block its recent use by the bank that has disclosed the scheme and by any other company that has engaged in a similar scheme in the same period," the Treasury said.
The government also moved to plug another tax loophole whereby authorised investment funds seek to claim back tax from the treasury when no tax was paid in the first place.
"By acting immediately, the Government will ensure the payment of over half a billion pounds in tax, protect further billions of tax from being lost and maintain fairness in the tax system," the UK government said in a statement.
Europe's banks are under pressure from regulators to bolster their capital and one way of doing this is to buy back their own debt under so-called liability management exercises (LME).
More than a dozen banks across Europe have announced such offers, including Barclays, which launched an offer on Dec. 5. The Treasury said the retrospective element would date back to the start of December.
Barclays made about £450 million on its bond buyback offer, according to Reuters estimates, so it could face a tax bill of almost £120 million based on a 26% tax rate.
Lloyds Banking Group, which is 40% owned by the UK government, made a gain of £1.3 billion on a liability management exercise in December, although that offer involved an exchange into other bonds, rather than the repurchase of the debt.
"We do not take today's action lightly, but the potential tax loss from this scheme and the history of previous abuse in this area mean that this is a circumstance where the decision to change the law with full retrospective effect is justified," David Gauke, a junior minister for taxation, said in a statement.
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The bank that disclosed the schemes has adopted the Banking Code of Practice on Taxation that contains a commitment not to engage in tax avoidance, the Treasury said.
Tax avoidance is not illegal, but the schemes under scrutiny should not be transactions conducted by any bank that has adopted that code, the government said.
The legislation for plugging the investment fund tax loophole will not be backdated.
