MP demands details of deal to let Goldman Sachs avoid tax

Treasury select committee expresses fears over tax authority's effectiveness to deal with large corporations

HM Revenue & Customs has failed to provide details of a deal that allowed Goldman Sachs to avoid millions in unpaid tax after other firms settled similar disputes, according to a prominent member of a powerful parliamentary committee.

The lack of disclosure in the long-running dispute with the US investment bank meant there was a danger the public would think there was "one rule for some companies and another for individual taxpayers", said Labour MP Chuka Umunna.

Without directly attacking the appearance of preferential treatment for the US investment bank, Umunna said he was concerned that the case echoed the tax deal with Vodafone that led to demonstrations and protests by the campaigners UK Uncut. Vodafone was accused of saving £6bn in tax after it agreed a deal with HMRC.

The Goldman case has come under the spotlight following an investigation by the Treasury select committee, which is concerned about the tax authority's effectiveness in dealing with large corporations. Umunna said at a hearing this week that HMRC should disclose details of the deal to reassure MPs that Goldman was subject to the same rules as other taxpayers.

He called on Treasury minister David Gauke and Stephen Banyard, one of HMRC's senior directors, to come clean over the deal, which followed an eight-year dispute and the threat of court action against Goldman. Gauke admitted during the hearing that he was aware of the Goldman case but had not looked at the details of the settlement. He said: "I am aware of the issues with regards to Goldmans along these lines but this is not a subject matter I have discussed with HMRC's senior management."

Umunna said Goldman avoided £10.8m in unpaid tax when the case was dropped last year. The satirical magazine Private Eye, which has written extensively about the case, claims to have seen documents that show HMRC boss Dave Hartnett failed to follow standard guidelines applied to other tax disputes when he settled the dispute with Goldman.

Umunna said: "It is clearly in the public interest for HMRC to put more information into the public domain in relation to the Goldman Sachs case and settlement.

"With Vodafone, following public and media scrutiny, HMRC decided to give further information to our committee to reassure the public that the proper procedures were followed – it should do the same with the Goldman case for precisely the same reasons.

"It is incredibly important that the public can have confidence that there is not one rule for ordinary taxpayers and another for global investment banks and major corporations when it comes to people meeting their obligations to pay tax and national insurance."

Goldman came under scrutiny in the late 1990s, like many companies, for avoiding national insurance contributions by using staff at its London HQ that were employed by wholly owned offshore subsidiaries. HMRC launched legal proceedings in 2002. It won the dispute and settled with several companies in 2005, which meant they paid the full NI contributions without an extra bill for interest payments. Goldman continued to deny it breached tax rules, but eventually settled in 2010. Under standard procedures, it would have been forced to pay interest covering the 10 or more years the tax went unpaid, but this penalty was waived.

An HMRC spokesman said: "Taxpayer confidentiality is a statutory legal duty on HMRC. We have said all that we can concerning Goldman Sachs and Vodafone."


Phillip Inman

The GuardianTramp

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