Financial News

  • 17 May 2013, 13:10

HMRC's Dealings With Goldman Sachs 'Lawful'

The High Court has ruled that HMRC's 'sweetheart' tax deal with the investment bank Goldman Sachs was lawful.

Campaign group UK Uncut Legal Action had brought the action at the High Court, claiming a deal worth up to £20m was allowed to proceed to avoid "major embarrassment" to Chancellor George Osborne† and the tax authorities.

It alleged that the agreement was reached after the bank had become "aggressive" and made threats.

UK Uncut asked Mr Justice Nicol, sitting in London, to declare that HMRC's decision to let the deal go through was legally flawed and involved a breach of statutory duty but he ruled that while it was "not a glorious episode in the history of the Revenue," it was not unlawful.

The group argued it was wrong to allow rich companies to avoid paying millions in tax while the Government-imposed tough austerity measures on the poor and ordinary taxpayers, who are pursued for every penny.

Murray Worthy, a director of UK Uncut, admitted he was disappointed with the decision but added: "This case has shown that the Government's tough talk on tax is just that - talk not substance."

Tax authority lawyers defended the settlement in court, saying it was among five big business deals declared "reasonable" by a 2012 report of the National Audit Office.

It related to a long-running dispute over National Insurance contribution payments dating back to the 1990s.

Jim Harra, HMRC's director-general for business tax,† welcomed the ruling: "The High Court's comprehensive dismissal of UK Uncut's claim puts to rest the fallacy that HMRC is soft on large businesses.

"HMRC has an exemplary record in relentlessly challenging those who avoid tax. We have recovered £34bn in additional revenues from large businesses in the last seven years.

"The High Court's judgement confirms what HMRC has always said: that while we made errors in settling the Goldman Sachs dispute, we made the right settlement in the circumstances and that our decision was both proper and lawful."

News of the campaign group's defeat emerged as Google's vice president prepared to give new evidence to the Public Accounts Committee of MPs on his company's tax arrangements.

Matt Brittin is facing questions on apparent revelations of UK sales activity in London.

At a previous hearing in November, he had said that all UK sales were carried out from Ireland and that no sales took place from Britain.

Google has denied any suggestion he misled the committee.

Newly-published accounts have also revealed that Amazon.com's main UK unit only paid £2.4m in taxes in 2012 on sales of £4.3bn.

Chairwoman of the committee, Margaret Hodge, has said that Amazon also faced being dragged back to its inquiry on tax avoidance to explain its finances though the firm has insisted it has played by the rules.

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