You’ve probably heard recently that Dave Hartnet, the Permanent Sectretary for Tax let Goldman Sach’s off the interest it owed on some unpaid taxes – costing the British tax payer (and saving Sach’s) £8 million

 

details of this case were outlineearly as April in this year in this blog post – How Tax Works For the Big Boys

In 2002 investment bank Goldman Sachs set up a complex offshore scheme to avoid paying national insurance on bonuses paid to their London employees. By doing this they avoided paying tax of £23 million.

In 2005 HMRC took a number of other companies operating similar schemes to court and won. On the back of this an amnesty was offered: a further 21 companies came forward paid the tax but were let off paying any interest.

Goldman Sachs disputed HMRC on a technicality but by 2008 HMRC had taken legal advice and were confident that they would win a court case against the bank. By this time the interest on the £23 million was about £17 million. Goldman Sachs were told to pay or court proceedings would be commenced.

At which point it seems that the Permanent Secretary for Tax at HMRC Dave Hartnett had supper at the Goldman Sachs offices and without any consultation with HMRC’s lawyers announced that Goldman Sachs were going to pay the tax but would not be charged any interest. At the time of the announcement it is estimated that the accrued interest was £20 million.

What’s interesting about this case is how differently the little people are treated compared to the ‘big boys’ – HMRC is currently pursuing 1.4m people for an average of £1,428 each in underpaid tax – not as a result of their trying to avoid tax, but as a result of its own chaotic collection system. 

So why is it that The government hassles the little guy but fails, time and time again to make large companies pay their fair share? In this case it seems nothing other than the ‘lunch deal’ that was struck between Hartnett and Goldman Sachs. I wonder where he might be headed after his term of office finishes?

To make matters worse, Hartnett also stands accussed of misleading parliament over this – having claimed last month that he didn’t deal with Goldman Sach’s tax affairs.

Of course it also appears that nothing is going to be done about this – SoSach’s keeps their money, Hartnett keeps his job – this all adds up to another reason to keep on protesting – just yet more evidence of how the system is clearly incapable of delivering social justice as it stands at the moment.