PRESS RELEASE: Judge to rule on legal review of Goldman Sachs tax deal

  • UK Uncut Legal Action is in court on June 13th where a judge will decide whether a judicial review of HMRC’s tax deal with Goldman Sachs can go ahead. (1)
  • The campaign group is demanding that the decision to let Goldman Sachs of millions in unpaid tax is reversed and the money returned to the public purse.
  • Support for the case has been voiced by leading Trade Unions, NGOs and MPs.
  • Over £19,000 has been raised for the case in six months showing a huge level of public support.
  • The decision comes the day before a report from the National Audit Office who have been investigating similar tax deals with several as yet unnamed companies.

UK Uncut Legal Action, a campaign group inspired by the anti-cuts direct action group UK Uncut, will find out on June 13th whether they will have secured a judicial review of HMRC’s alleged ‘sweetheart’ tax deal with Goldman Sachs. (2)

This comes a day before the National Audit Office (NAO) publishes a report examining the ‘reasonableness’ of several large tax settlements with big business. (3)

UK Uncut Legal Action have welcomed scrutiny into tax deals from both the NAO and the Public Accounts Committee 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 the £20 million owed so that it can be invested in vital public services. (4)

Richard Stein from Leigh Day & Co said: “We wrote to HMRC in October 2010 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 £19,000 in six months 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.”

Murray Worthy, 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 the 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 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”

Notes:

(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 £40m.

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, 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) ‘Revenue to appear in court over Goldman Sachs ‘sweetheart’ deal’

www.guardian.co.uk/politics/2012/apr/18/hmrc-goldmansachs

(3) On 14th June the NAO will publish a report entitled ‘Tax and duties: Larger tax settlements: a follow-up report’. The review will examine the reasonableness of five of the largest tax settlements with big business.

www.nao.org.uk/publications/work_in_progress/larger_tax_settlements.aspx

(4) A December 2011 report from the Public Accounts Committee suggested HMRC risks losing “many millions of pounds” in cases where it is chasing a total of more than £25bn in unresolved tax bills because of a “too cosy” relationship with big business.

www.telegraph.co.uk/finance/yourbusiness/8966704/MPs-say-HMRC-are-too-cosy-with-the-City.html

One Response

  1. Mimbly says:

    Well done on today’s result. This will be justice for all individuals and small companies that are unable to make these “sweetheart” deals

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