Robert Lovell

Journalist

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UK Uncut loses judical review

Robert Lovell

16th May 2013

8 comments

Robert Lovell

Journalist

Have you found this content useful? Use the button above to save it to your profile.

Tax avoidance protest group UK Uncut Legal Action has lost a High Court case against HMRC over the lawfulness of a tax settlement with Goldman Sachs in 2010.

The grass-roots campaign group claimed HMRC had acted illegally when it reached a so-called £20m “sweetheart deal” over the amount that the US investment bank needed to pay in tax.

The High Court judge, Mr Justice Nicol, ruled the deal was “not a glorious episode in the history of the Revenue”, but said it was not unlawful, drawing a line under the Goldman issue.

HMRC director general for business tax, Jim Harra, said the dismissal “puts to rest the fallacy that HMRC is soft on large businesses.

“The High Court’s judgment confirms what HMRC has always said: that while we made errors in settling the Goldman Sachs dispute, we made the right settlement in the circumstances, and that our decision was both proper and lawful,” he said.

Despite losing the battle, UK Uncut Legal Action campaigners claimed the ruling as a “major victory” in exposing political embarrassment behind the tax deal.

Anna Walker of UK Uncut told the BBC: “We are disappointed we've lost the case, but it has exposed the truth behind these backroom deals.”

HMRC added that it has since changed its settlement practices: “The public can have confidence in our governance processes, which we have strengthened, providing greater levels of scrutiny, transparency and role separation.”

The dispute started over a tax avoidance scheme involving the payment of bonuses to UK staff through offshore tax havens.

While other banks had used the scheme, only Goldman refused to settle in 2005. By 2010 HMRC had agreed the US bank should pay the amount it owed but not the interest over five years.

UK Uncut claimed the taxpayer had been cheated of up to £20m in NICs, while HMRC said the maximum lost was £8m. The high profile claim ultimately added pressure to the departure of HMRC permanent secretary Dave Hartnett who was involved in reaching the settlement.

The Commons Public Accounts Committee (PAC) and the National Audit Office (NAO) have since scrutinised the deal, with the latter concluding that the deal was “reasonable”.

James Bullock, a partner at law firm Pinsent Masons, said they were not surprised by the outcome, adding: “In our view, taxpayers had little to gain from this litigation, and we hope that this decision will result in a more balanced and better-informed discussion of the issue.

“Unfortunately, the whole subject has been ‘hi-jacked’ by activist groups and in response HMRC rigidly adheres to a Litigation and Settlement Strategy which is highly inflexible and is in danger of making the UK's Tax system uncompetitive – despite the government’s efforts to encourage more businesses to set up here by lowering the corporation tax rate,” he added.

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HMRC

Replies (8)

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By carnmores

16th May 2013 16:35

total rubbish

just look at the opening lines of Uncuts press release , its almost total fiction- who is funding these panjandrums anyway? Mind you i cant follow the logic, if thats what it is , of Bullock & Pinsents

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Replying to legerman:

By dh326

17th May 2013 10:57

Logic....?

carnmores wrote:

just look at the opening lines of Uncuts press release , its almost total fiction- who is funding these panjandrums anyway? Mind you i cant follow the logic, if thats what it is , of Bullock & Pinsents

I agree, the logic in their statement appears to be that if you are big enough you should have the right to bully your way to a better deal than the average Jo blogs company paying the standard rate (or fine/interest etc), and that internationally you are more able to negotiate an individual settlement than you are in the UK?

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By ver1tate

16th May 2013 20:30

cash flow

By 2010 HMRC had agreed the US bank should pay the amount it owed but not the interest over five years.

Hope the above helps your cash flow. Now you do not need to set aside monies for interest due to HMRC.

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By GuestXXX

17th Mar 2015 15:54

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By iainx6

16th May 2013 23:53

UK Uncut

The judge ruled that the decision accorded with the Litigation and Settlement Strategy,

He noted that the Commissioners believed that the agreement of 19th November taken as a whole represented a good deal for the Revenue. Sir Andrew Park agreed with that assessment. The judge observed that the Claimant had not contended that the judgment of the Commissioners in this regard was irrational, or that the 19th November agreement did not give taxpayers value for money.

I think that was as far as he could go but it was not a rebuttal of the view it was a good deal, hence I assume "not soft"?

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By Ian McTernan CTA

17th May 2013 11:22

Court Costs?

I hope UK UnCut were ruled to pay HMRC's costs and that HMRC send them a bill for all the time and expense wasted in defending a perfectly reasonable deal.

The average man on the street thinks tax is simple 'it's 20%, right?', and UK Uncut and these other so-called 'pressure groups' pander to this in their attacks, wasting taxpayers money forcing HMRC to defend their decisions.

Part of the problem with international taxation is that every country wants to keep a big a slice of the pie as they can, whilst every company wants to keep their tax bill as low as possible, so naturally companies will design structures to minimise their taxes.

People in the public sector whose pensions aren't funded apart from coming from our pockets won't care, but for private sector employees this actually matters- as those companies are where your pension funds are invested, and the less tax the company pays the better dividend they can pay and the more value for the company, which leads to a bigger pension.

Of course the biggest theft of all time was Gordon Brown's 'I'm scrapping a tax- ACT' which in reality meant no more tax credits on dividends and which resulted in pension funds being worse off to the tune of over 10 BILLION a year.

£20 million doesn't really seem that much in comparison...

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By pembo

17th May 2013 11:48

Really ??

and Goldmans is of course a shining beacon of this philosophy.If this action was so spurious why are HMRC so relieved to see the back of it. Have you read Hartnetts emails ?

Typical comment from Sue Grabbit and Run that as ever misses the point by some distance.

Still Dave must be relieved as he continues to advise HSBC (another shining beacon of financial probity ) on how to combat "financial crime". The appreciation of irony does alas appear lost on the great and good of this country as they struggle to keep their balance on the revolving door of life.

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By nogammonsinanundoubledgame

17th May 2013 16:18

Whatever the merits of this case ...

... I personally applaud the fact that someone out there is at least testing the boundaries. Just imagine what deals would be struck if HMRC were confident that they would not be held to account or public scrutiny. I speculate that the rules of governance which have since been put in place would not have been brought about but for the public outrage at this deal.

If the public purse has to suffer a tiny drop in order to oil the wheels of justice in such cases then as a taxpayer I should regard that as an acceptable price to pay.

With kind regards

Clint Westwood.

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