Tax campaigners win legal fight on alleged £20m deal

UK Uncut’s legal action was given leave by Mr Justice Simon, sitting in London, to seek a declaration that an agreement allowing the banking giant to skip a multimillion-pound interest bill on unpaid tax on bonuses was unlawful. They want the £20m allegedly involved to be returned to the public purse.

The judge ruled UK Uncut had “an arguable case” that should go to a full judicial review hearing.

Ingrid Simler QC, appearing for UK Uncut, said HMRC reached a settlement in a dispute over National Insurance due on bonuses with Goldman Sachs in 2010 without requiring the payment of interest.

The potential cost to the taxpayer is officially put at £8m but a whistleblower says the sum could be as high as £20m.

The bank was allowed to skip the interest bill after the country’s top tax official, Dave Hartnett, was wrongly advised there was a “legal impediment” to collecting it.

Ms Simler said the error was quickly noticed, but, despite legal advice that the agreement with the bank was not binding, HMRC unlawfully withdrew a County Court claim for what was owed without seeking to re-negotiate.

Ms Simler said: “The issues in this case are of great importance both to taxpayers and HMRC as well.”

She said they concerned HMRC’s behaviour when mistakes were made settling “high-value tax avoidance claims by large corporations”.

Ms Simler asked: “Does it put embarrassment over the acknowledged mistake to one side and correct the error – or does it put the embarrassment first and avoid correction?”

James Eadie QC, appearing for HMRC, had argued that UK Uncut’s application should be refused.

He said the National Audit Office (NAO) was producing a report for Parliament, due to be released today, on an investigation by a senior judge into a series of highly controversial tax deals, including the Goldman Sachs deal.

Mr Eadie argued that Parliament should deal with the matter.

He said the UK Uncut application should at least be adjourned to see what the report contained.

Disagreeing, the judge said the report was likely to decide a number of important factual questions relevant to maladministration, but it would not deal with the legal issues raised in court.

The judge said: “There is plainly public interest in this matter, and maladministration and legality are separate issues.”

The judge also rejected HMRC claims that judicial review was not appropriate because the case involved confidentiality between the Revenue and taxpayers.

But UK Uncut suffered disappointment when the judge ruled out allowing it to seek a settlement quashing order which could have directly led to Goldman Sachs having to pay back the £20m.

Rosa Curling, from law firm Leigh Day & Co, which represented the campaigners, said: “Our clients are delighted that the judge has decided their claim is arguable and that the legality of the HMRC deal with Goldman Sachs should be considered by an open court.

“We look forward to considering the report from the NAO, and will consider with our clients whether to appeal the decision taken by the court today that permission should not be granted in relation to the quashing order sought, which could result on Goldman Sachs being required to pay the alleged £20m owed.”

An HMRC spokesman said: “We will strongly contest UK Uncut’s application.

“For legal reasons we can’t comment further on the application at his stage. However, large business tax settlements are a vital part of how HMRC secures tax revenues for the country and without them Britain’s public finances would be seriously damaged.”

The Goldman Sachs deal was highlighted when tax chiefs were criticised by MPs for allegedly bending rules to do favours for big firms at a cost of millions to the taxpayer.

The Public Accounts Committee warned that millions more were at risk unless procedures were tightened.

Its report last December called for safeguards to be put in place to avoid the impression that HMRC enjoyed an “unduly cosy” relationship with major companies.