Taxman hands Goldman Sachs £10m?

MPs will grill Inland Revenue boss Dave Hartnett today about an HMRC deal that, it appears, let Goldman Sachs avoid paying £10m in interest payments on a collapsed tax avoidance plan. This plan was designed to conceal, it's thought, the scale of Goldman bonuses. Hartnett personally okayed the deal with the Wall Street bank, headed by Lloyd Blankfein (pictured), in December.

HMRC hand-out?

So far, HMRC have denied wrong doing. But the case is looking wobbly. Amazingly, Hartnett has avoided giving little detail of the case, claiming disclosure would be illegal. The story has been stirred by documents leaked to Private Eye which contest the claim that publicly detailing the facts of the deal would be illegal - and that the former chairman of the Public Accounts Committee, Edward Leigh, was misled.

Goldman established an offshore trust in the British Virgin Islands back in the 1990s where many of its London-based bankers were 'assigned'. By doing this, it's thought Goldman could disguise the amount of bonuses paid which had a direct impact on National Insurance contributions.

Sweetheart deal

HMRC were a bit slow off the mark to cotton onto Goldman, and several other banks also followed Goldman's lead. However, when HMRC were able to prove in court that Goldman owed some £30m subsequently, it refused (though other banks 'fessed up). Delaying strategies were subsequently deployed. By 2010, the amount owed plus interest had climbed to £40m.

Now its alleged Hartnett let Goldman off the interest payments - which HMRC denies. "The picture you have been given is incomplete," HMRC told the Guardian, "and therefore fundamentally flawed but taxpayer confidentiality prevents us from correcting your story in detail."

"Dave Hartnett's long career in the tax service has been built on ensuring the right tax is paid by large businesses and individuals alike. HMRC does not do 'sweetheart' deals'."

You pay

The behaviour is all the more shocking when you consider that Goldman paid £9.5bn in bonuses to employees last year. Yet Goldman - a "great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money," as it was once called - will run rings around any country legitimately calling time on a £10m tax bill.

We'll know more later. But the relationship between tax avoidance and HMRC is increasingly open to question when you're talking corporates. Banks that the UK taxpayer has bailed out, like RBS, have also invested hugely into offshore avoidance schemes in the past, putting more pressure on the general UK taxpayer base.
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