Why Goldman Sachs?

UK Uncut Legal Action, together with Leigh Day & Co – a London based law firm – are taking legal action against Her Majesty’s Revenue & Customs (HMRC) to challenge  HMRC allegedly letting investment bank Goldman Sachs off at least £10m in interest on a 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 at least £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, 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 Hartnett had ‘shaken hands’ with Goldman Sachs”. The government was not going to get its full £40m, but only £30m.

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 a secret settlement with the multi-billion dollar bank, an agreement that UK Uncut Legal Action claim was contrary to HMRC’s own policies and strategy and therefore unlawful.

Read the latest details from court about the deal

Read more about Dave’s dodgy deal

Goldman Sachs let off paying £10m interest on failed tax avoidance scheme
Guardian | 11 October

Revenue chief accused of misleading MPs on Goldman Sachs deal
Guardian | 12 October 2011

Dave Hartnett accused of lying to parliament over Goldman Sachs tax bill
Daily Telegraph | 12 October 2011

Forgiving Goldman Sachs Tax Interest Was ‘Mistake,’ HMRC Says
Business Week | 12 October 2011

The taxman is never going to be popular but he must at least appear even handed
Independent | 13 October 2011

The taxman must account
Guardian | 14 October 2011

Hartnett pledges to answer questions on ‘odd’ tax deals
Daily Telegraph | 17 October 2011

Taxman accused of ‘cover-up’ over Goldman’s bill
Daily Telegraph | 17 October 2011

Revenue and Customs office faces MPs’ backlash after secret deals with bankers
Observer | 23 October 2011

Welcome to Britain, a haven for tax dodgers
Observer | 23 October 2011

More info

Profile: Dave Hartnett, HMRC
The Telegraph | 12 October 2011

Revenue boss entertained  by Vodafone accountants weeks before £6bn tax deal
Daily Mail | 27 March 2011

Whitehall’s most wined and dined civil servant is HMRC’s Dave Hartnett
The Telegraph | 17 June 2010

Vodafone’s tax case leaves a sour taste
The Guardian | 22 October 2010