UK Uncut Legal Action are seeking a High Court declaration that an agreement allowing the banking giant to skip a multimillion-pound interest bill on unpaid tax on bonuses was unlawful and in breach of the taxman's own guidelines. They want £20 million allegedly involved to be returned to the public purse.
Ingrid Simler QC, appearing for Uncut when the group was given permission by a judge to seek judicial review, 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 £8 million but a whistle-blower says the sum could be as high as £20 million. 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, said Ms Simler.
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. This went against HMRC guidelines stating that taxpayers should be treated equally and no discounts or deals were to be done.
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?"
The HMRC has announced that it will "strongly contest" the case. A spokesman said: "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."
Anna Walker, spokeswoman for Uncut, said: "We are taking this case forward to get this deal declared unlawful in the High Court so that HMRC is no longer under the misapprehension that it is either legally, nor politically acceptable to let big business off paying the tax that they owe. It's vital because HMRC have tried to cover up these tax deals every possible way.
"Every year £25 billion is lost to the public purse through tax avoidance schemes such as the one Goldman Sachs used. The Government cannot seriously claim to be clamping down on tax avoidance whilst it continues to let companies off millions in tax owed. The Government's claims are hollower still when the only people they are tough on are the poorest people as they privatise the NHS, cut legal aid and force people on benefits to pay extra for a bedroom that their disabled child sleeps in."