Campaign group launches legal action after leaked documents reveal investment bankers' secret deal with HMRC
The first steps have been taken in an innovative legal action by campaigners to try to recoup £10m in tax from Goldman Sachs. It follows the leaking of internal tax documents to the Guardian revealing that the US investment bankers avoided interest payments thanks to a secret deal with the head of HM Revenue & Customs.
The campaigning group UK Uncut, which a year ago occupied Vodafone offices in protest at a similar alleged "sweetheart" tax deal by the mobile phone company, want the Goldman deal quashed. HMRC's top official, Dave Hartnett, has admitted to a parliamentary committee that the tax concession was a "mistake".
The London law firm Leigh Day & Co has taken the formal first steps to mount a legal challenge to HMRC over the Goldman Sachs deal. UK Uncut supporters claim it was contrary to HMRC's own policies and therefore unlawful.
The secret settlement that was reached between HMRC and Goldman Sachs in December 2010 saved up to £10m in interest on unpaid national insurance charges. Goldman Sachs had been trying to operate an ultimately unsuccessful avoidance scheme by paying huge bankers' bonuses offshore into so-called employee benefit trusts.
The legal action will put further pressure on Hartnett, permanent secretary for tax, following the leaking of documents to the Guardian and Private Eye detailing how Hartnett "shook hands" on the deal.
Before the internal memos were leaked, Hartnett had exasperated MPs on the Treasury and public accounts committees by refusing to release information on secret deals made with giant transnational corporations.
After the leaking led to him being cross-questioned by MPs, Hartnett said he had arranged for the global head of tax for Goldman Sachs to fly in from New York for a London meeting he presided over, to repair what he said was a bad relationship between Goldman Sachs and the UK tax authorities.
Under judicial review proceedings, UK Uncut's lawyers will eventually be able to demand disclosure of all internal documents regarding the process by which the agreement was reached to waive the interest Goldman Sachs owed.
Jesse Norman, a Tory member of the Treasury committee, said Hartnett should resign after telling parliament that he did not deal with Goldman Sachs's tax affairs, which turned out to be untrue. Hartnett said that when he said he did not deal with Goldman Sachs he meant that he did not deal with its tax affairs every day.
Murray Worthy from UK Uncut Legal Action said: "The government's top taxman 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." He said most people would see this as "incredibly unfair".
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."
The Guardian, Friday 28th October 2011
