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.
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:
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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
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
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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:
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.