Archive for 2011

PRESS RELEASE: UK Uncut Legal Action issue legal proceedings against HMRC

  • UK Uncut Legal Action will issue legal proceedings against HMRC with a Photo Op at 15:30pm today. 
  • Campaign group goes for a full quashing of the tax agreement 
  • Support for the case voiced by leading Trade Unions, NGOs and MPs
  • £14,000 has been raised for the case in two weeks showing huge level of public support.
Adding to the parliamentary pressure on HMRC this week from the Public Accounts Committee, UK Uncut Legal Action, an NGO inspired by the anti-cuts direct action group UK Uncut will issue proceedings in the High Court today against HMRC, over the Goldman Sachs tax deal.
The campaigning group made the decision to go forward with the case after receiving what they term a ‘dismissive’ response from HMRC to letters from their lawyers demanding the alleged sweetheart deal agreed between David Hartnett and Goldman Sachs is quashed.

UK Uncut Legal Action have welcomed scrutiny into tax deals from both the National Audit Office and the Public Accounts Committee reports but claim the legal action they are taking is the only mechanism that can result in a declaration that the Goldman Sachs tax deal was unlawful, as well as returning £20 million to the public purse.

Leigh Day & Co who are acting for UK Uncut Legal Action, confirmed in a letter sent in October that if the settlement reached between HMRC and Goldman Sachs, allegedly allowing the company off £20million worth of tax owed, was not reversed it would issue these proceedings which seek specific disclosure for all internal documents regarding the process by which agreement was reached.

Richard Stein from Leigh Day & Co said: “We wrote to the HMRC in October asking them to quash the deal and reclaim the millions unpaid in taxes from one of the world’s richest banks but received no response. We chased again in November and they claimed they needed more time.

“They have now replied with what we feel is an extremely weak argument as to why this decision cannot be reversed, therefore, we will now progress this legal action and issue proceedings in the High Court.”

UK Uncut Legal Action has also launched a public fundraising appeal, which has raised nearly £14,000 in two weeks with over two thousand people making small donations. This represents what the campaign group is calling a ’people’s court case’ against HMRC.

Support for this legal action has also been voiced by leading anti-poverty NGOs, MPs and Unions, such as the National Union of Teachers, Unite, PCS, GMB, Compass, and the Tax Justice Network, who have signed onto a UK Uncut Legal Action statement which says: “It is undeniably in the public interest that this important case should go through the UK courts in order to ensure transparency, accountability and fairness.”

Tim Street, director of UK Uncut Legal Action said:

“There is overwhelming public support from Unions, NGOs, MPs and thousands of ordinary people who want to see this dodgy tax deal challenged in the courts. It shows the deep level of outrage that people feel over state sanctioned tax dodging by big business, while government destroys public services that ordinary people rely on, saying that there is no money.

He continued, “It shows that the government is making a political choice to turn a blind eye to tax dodging- which loses the public purse £25bn billion a year. The government is slashing public services and the support for the poorest instead of clamping down on rich tax dodgers. This cannot be allowed to continue. Dave Hartnett’s retirement is welcome news for campaigners but HMRC needs a massive culture change to stop special treatment for corporations and secret unlawful handshake deals”
Photo Op: 1530pm, HMRC, Horse Guards Parade
Lawyers and campaigners will hand the legal documents to HMRC.
ENDS
For more information, please call 07425 261 383 or 07591 992 825
The statement of support for the case is available for journalists, please contact us by email or phone to receive a copy. The Guardian Newspaper published a copy in their letter page today.

Breaking news: Parliament releases damning report into dodgy corporate tax deals

We can be one of the first to reveal the details of the Public Accounts Committee’s damning corporate tax report that is being released today. It describes systematic failures and fundamental concerns at the way HMRC operates regarding its handling of billions of pounds worth of tax disputes with big business.

This report is an important reflection of 14 months of UK Uncut campaigning by people up and down this country, well done everyone!

Here’s a summary of the key points from the PAC report:

  • HMRC is currently in negotiation over £25bn worth of tax disputes from 2,700 companies
  • There is an unfair disparity between the way some large corporations and ordinary tax payers are treated by the tax office. Companies have millions wiped off their tax bills, or they are given a whopping 10 years to pay their liabilities.  Small business owners or individuals do not receive this favorable treatment

  • HMRC is unaccountable and secretive. Even parliament, let alone the general public, do not have any oversight. The PAC finds it farcical that HMRC keeps details about high value corporate tax deals that involve billions of pounds secret. They argue that there is less justification for keeping tax information about big companies confidential than for information about individuals
  • That when called into Parliament to answer important questions about controversial tax details that have lost the public billions of pounds, Dave Hartnett – the chief tax man – gave “imprecise, inconsistent, and potentially misleading” information. Senior officials are seriously failing to be open and accountable

  • That HMRC routinely ignores its own governance procedures and that we have a ludicrous situation where those negotiating tax deals can also ‘sign off’ on these deals, sometimes even without third party legal oversight. This means that some of these tax deals could not only be outrageous, but also unlawful

  • There is a complete failure by tax officials to take any responsibility for HMRC’s failings

Press coverage

UK Uncut: HMRC deals ‘shocking’

BBC Radio Four ‘Today’- 20 December 2011

UK Uncut demands legal review of HM Revenue and Customs deal

The Telegraph- 20 December 2011

MPs say HMRC are ‘too cosy’ with the City

The Telegraph- 20 December 2011

Tax chiefs face mauling from MPs

Yorkshire Post- 20 December 2011

MPs blast tax chief for ‘cosy deals with big firms

Daily Mirror- 20 December 2011

Firms’ £25bn tax let-offs

The Sun- 20 December 2011

HM Revenue and Customs ‘hiding corporations’ unpaid tax worth £25bn’

The Metro- 20 December 2011

Tax Avoidance: HMRC stands accused

New Statesman- 20 December 2011

HMRC ‘bent rules’ for big firms

Channel Four News- 20 December 2011

Big firms let off £25billion in taxes

Daily Mail- 20 December 2011

UK Uncut vindicated? Commons report backs protext group

Politics.co.uk- 20 December 2011

MPs attack HMRC’s ‘cosy’ deals with big business

BBC News- 20 December 2011

MPs accuse tax chiefs of ‘cosy’ deals with big firms

Evening Standard- 20 December 2011

UK Uncut pushes for legal action against Goldman Sachs after report points finger on unpaid tax

This is Money- 20 December 2011

Revenue faces battle over lost tax

Morning Star- 19 December 2011

UK Uncut accuses Revenue & Customs of delaying judicial review

‎The Guardian – 22 November 2011

HMRC ‘stalling’ over tax deal case, say lawyers

Morning Star Online – 23 November 2011

NAO seeks tax expertise as HMRC faces legal challenge on Goldman deal

‎Tax Journal – 22 November 2011

Anger over Goldman interest on UK tax bill

Financial Times- 7 November 2011

Goldman’s HMRC deal faces challenge

Financial Times- 28 October 2011

UK Uncut target Goldman Sachs’ £10m tax deal

Guardian- 28 October 2011

Press release 28/10/11: UK UNCUT SPIN-OFF THREATENS LEGAL ACTION OVER GOLDMAN SACHS TAX DEAL

Law firm Leigh Day & Co have written to HMRC on behalf of UK Uncut Legal Action – a campaign group inspired by the anti-cuts direct action network UK Uncut – threatening a legal challenge over the Revenue’s ‘sweetheart’ tax deal with the global investment bank, Goldman Sachs. [1]

They say that they will take legal action if a settlement that was reached between HMRC and Goldman Sachs in December 2010 – which reportedly saved the banking giant £10m in interest on unpaid taxes [2] – is not quashed.

The legal action will put further pressure on David Hartnett, Permanent Secretary for Tax, as it follows the leaking of documents which show how top tax officials shook hands late last year on the secret settlement [3], which UK Uncut Legal Action claim was contrary to HMRC’s own policies and is therefore unlawful [4].

Leigh Day & Co have issued a letter before claim to HMRC allowing them 14 days to quash the settlement agreement and reconsider any settlement with the US firm to repay the sum owed to the UK treasury. The London based law firm has confirmed that if the settlement is not quashed they will issue proceedings seeking specific disclosure for all internal documents regarding the process by which the agreement was reached between HMRC and Goldman Sachs regarding the reported £40m owed.

Murray Worth from UK Uncut Legal Action said, “Most people will see this as incredibly unfair. The government’s top tax man appears to have secretly agreed to let a global investment bank off millions in tax, while ordinary people are paying for the massive £850bn bank bailout with their jobs, welfare payments, pensions and public services”.

Richard Stein from Leigh Day & Co said: “If this was an error by a junior official then that is fine and it can be rectified through quashing this settlement. It must not be swept under the carpet or buried within oak panelled rooms. It is money which should be contributing to all aspects of the country.”

ENDS

For further comment:

UK Uncut Legal Action: 07591992825 / 07432837219 ukuncutlegal@gmail.com / http://ukuncutlegalaction.org.uk/

Leigh Day & Co:David Standard 07540332717

Notes to Editors

[1] DETAILS OF THE TAX DISPUTE
In the 1990s, Goldman Sachs set up a company offshore in the British Virgin Islands called Goldman Sachs Services Ltd, which appears to have been designed to conceal the size of their bankers’ bonuses. Goldman Sachs also begrudged paying its share of UK national insurance on these six-figure bonuses.

The company, along with 21 other investment banks and other firms, purchased blueprints for an avoidance scheme called an employee benefit trust (EBT). It took the Revenue until 2005 for the courts to rule that these EBTs were merely illegitimate tax avoidance devices. Whilst the other firms surrendered and handed over what they owed, Goldman Sachs refused to pay its £30.81m bill.

By 2010, it is estimated that the unpaid bill with accumulated interest had mounted to £40mn.

In April 2010 a judge threw out the claim from the bankers that their true employer was in the British Virgin Islands. In July 2011, HMRC’s own QC, Malcolm Gammie, gave “broadly positive” advice that the government was in a strong position to get all of its money.

However, it has been reported that on 30 November 2011, a high-level HMRC committee heard that their top expert, David Hartnett, had met Goldman’s tax director, Mike Housden, and as a result “a late submission had come in about a deal on which Dave Hartnett had ‘shaken hands’ with Goldman Sachs”. The government was not going to get its full £40m, but only £30m.

According to the Guardian (11 October 2011) HMRC sources privately confirm that £10m of taxpayers’ money was thrown away because of a “technical mistake” by an unidentified official, junior to Hartnett, who misinterpreted the law. They claim that the National Audit Office, which audits HMRC accounts, has accepted the situation.

[2] See the Guardian article

[3] See the Guardian article
[4] Please see the letter before claim sent to HMRC. Email or phone for a copy of the letter.