BARCLAYS, the high street bank, is alleged to be making about £1 billion a year from an international web of financial schemes designed to avoid paying tax in the UK and abroad.

The claim has been made by a whistle-blower who passed internal Barclays documents to Vince Cable, the deputy leader of the Liberal Democrats.

The documents — seen by The Sunday Times — detail a trail of transactions allegedly created to legally avoid tax by a team within Barclays Capital, a subsidiary of the bank.

One 2007 scheme, named Project Valiha, was allegedly designed to help Barclays save £99m in UK tax by embarking on a rapid series of transactions across just three days and involving a Swiss bank and companies in the Cayman Islands and Luxembourg.

Cable, a former chief economist at Shell, has been unable to confirm the identity of the whistle-blower. But he believes the documents are genuine and will send them to HM Revenue & Customs (HMRC) and the Financial Services Authority.

“The documents suggest a deeply ingrained culture of tax avoidance. The Barclays team looks like the spider at the centre of a highly artificial web of non-transparent transactions through tax havens. Reputable banks don’t turn tax avoidance into a profit machine,” he said.

The allegations come as Barclays has opened discussions with the Treasury, asking for financial help from UK taxpayers to bail out some of its toxic assets. “Barclays can’t pick taxpayers’ pockets with one hand and hold the other out for a hand-out,” said Cable.

In correspondence with Cable, the whistle-blower claims that he works for Structured Capital Markets (SCM) at Barclays Capital. He describes it as “a team of some 110 people with the sole purpose of structuring tax-aggressive transactions to avoid tax not only for Barclays but also for banks and companies across the world”.

The team was led for years by Roger Jenkins, who is believed to be one of the City’s highest earning bankers with a pay package of more than £40m a year. Jenkins is now based in the Middle East.

The whistle-blower says the team has recently been hiring more people to take advantage of the credit crunch, although Barclays says it is cutting staff. The whistle-blower writes: “Where the world sees turmoil and destruction, the leaders of SCM see opportunities arising from tax exploitation and corporate restructurings throwing up all sorts new and juicy areas of the tax code that can be profitably exploited.

“For the last 10 years the SCM team has generated a formidable amount of profits, peaking in the last few years at circa £1 billion per annum.”

Barclays dismissed this as “uninformed guesswork” and said the figure was more likely to be the amount of revenue generated by the unit.

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