UK Uncut take HMRC to court over Goldman Sachs £10 million secret deal

[green]

Taken from the Guardian website :-

http://www.guardian.co.uk/business/2011/oct/28/uk-uncut-goldman-sachs

 

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."

[Andy]

Do you have a view to share on this green? We don't normally allow posts which are just a link or copy and paste from the newspaper - the member should add their own views too

[green]

Apologies Andy.

 

I believe that this action is excellent and keeps the story in the news, and more people will learn and understand it. Whilst Dave Hartnett was dragged to a HOC Committee and called a liar by politicians from all parties, not once has anyone asked how do we get this money back.

 

If Dave Hartnett is proven in court, that he undertook secret deals that contravene UK law, then this deal should be classed as illegal, and Goldman Sachs should be asked to repay the UK taxpayer.

 

Once this test case is won, the Vodaphone, Walkers Crisps, Boots deals should all be treated the same and the tax payer should be given these monies back.

 

I would also like to add, that Goldman Sachs dragged HMRC through every court possible using various time evading loopholes to stop payment previously, and should give the UK tax payer back all court costs too.

[Andy]

You may be surprised to hear, after our disagreement on the other thread, that I agree with you.

 

My only concern is that HMRC's legal bill will end up being in excess of £10 million, especially if UK Uncut win and are awarded costs. So the net result will be an increased cost to the taxpayer.

 

I doubt it will end up in court somehow, but the fact the issue is being highlighted is good.

[green]

Please also note, that this test case was borne from the OccupyLSX protests. Each day, various meetings are held by the protesters and passers by, curious to the occupation, and what achievements can be made collectively.

 

You will see many more intelligent steps like this, thanks to people working together.

[I1L2T3]

So the net result will be an increased cost to the taxpayer.

 

Short-term loss perhaps but long-term if the HMRC calculates that they may be taken to court every time they do a questionable deal with corporates then they may be less prone to doing those deals. Long-term it could lead to more tax being collected.

[green]

You may be surprised to hear, after our disagreement on the other thread, that I agree with you.

 

My only concern is that HMRC's legal bill will end up being in excess of £10 million, especially if UK Uncut win and are awarded costs. So the net result will be an increased cost to the taxpayer.

 

I doubt it will end up in court somehow, but the fact the issue is being highlighted is good.

 

If HMRC were to uphold the law & democracy correctly, Dave Hartnett would be sacked immediately and an investigation into these deals would commence forthwith. Once finalised, the companies whom benefitted from these deals should be asked to pay the tax payer monies owed, and no court case would be necessary.

[muddycoffee]

I would have thought that in tax avoidence terms the sum of £10million was mere chicken feed, and there will be many more examples of this into the billions. But most probably this one example is so blatent that the law firm sees a reasonable chance of success which is why it is worth persuing.

[HeadingNorth]

Someone doesn't know their tax law very well, if they intend to take HMRC to court.

 

 

The amount you owe, in law, is the amount that HMRC says you owe. If they say Goldman Sachs don't owe £10 million, then they don't, and the judge has no power to disagree with them.

[I1L2T3]

I would have thought that in tax avoidence terms the sum of £10million was mere chicken feed, and there will be many more examples of this into the billions. But most probably this one example is so blatent that the law firm sees a reasonable chance of success which is why it is worth persuing.

 

Indeed. Osborne let Vodafone off several billion of tax (precise amount disputed).

 

Like you say this is a test case where wrongdoing is clear. If this is successful other cases can follow if HMRC continues not to do its job.