In another setback to those campaigners fighting to hold our corrupt corporations and institutions to account, a judge ruled against UK Uncut’s legal action against the HMRC today. The judge ruled it was lawful for the HMRC to make a sweetheart deal with Goldman Sachs which cost the tax payer millions in unpaid taxes. What hope is there when even the courts aren’t providing justice anymore?
The Goldman Deal
Osita Mba (pictured above), whilst working as a tax solicitor at the HMRC (the organisation responsible for ensuring proper tax contributions by persons and corporations) discovered HMRC Chief Executive Dave Hartnett made an off the books sweetheart deal with Goldman Sachs. The deal, made over coffee, saw Hartnett unilaterally relieve Goldman Sachs of their legal obligation to pay up to £20m of interest on back taxes they’d aggressively avoided paying for five years. Mba wrote to Amyas Morse, the auditor general of the National Audit Office, in March 2011 outlining his concerns over the deal. In response, The HMRC immediately suspended Mr Mba, referred his details to the Criminal Investigations unit and used RIPA legislation intended for terrorists and financial criminals to spy on him and his wife.
This is how the HMRC treat an employee who seeks to ensure that corporations follow the tax rules.
So how did they treat Dave Hartnett, the Chief Executive who rather than recouping due taxes took corporate hospitality and offered sweetheart deals? Despite this clear breach of his duties, and several shambolic appearances before the Public Accounts Committee, he was not forced to resign but allowed to retire with a £1.7m pension pot. He has since taken up a position with recently convicted money launderers HSBC as part of its new anti tax avoidance division. You could not make it up.
The Legal Action
UK Uncut Legal decided to act where the HMRC and the government had failed, and sought to bring the HMRC to account at a court of law, in efforts to recoup our missing millions. They fought the case on the grounds of evidence that Hartnett made the sweetheart deal to save Chancellor George Osborne’s blushes, as Goldman had vowed to withdraw from the government’s flagship Banking Code if the HMRC pursued them for full taxes owed.
According to the Guardian:
The judgment by Mr Justice Nicol found that Hartnett “took into account the potential embarrassment to the chancellor of the exchequer if Goldman Sachs were to withdraw from the tax code. HMRC accepts that was an irrelevant consideration and should have not featured in his decision-making process.”
The court also criticised HMRC’s catalogue of errors in failing to collect the tax owed. The judgment concludes: “The settlement with Goldman Sachs was not a glorious episode in the history of the Revenue. The HMRC officials who negotiated it had not been briefed by the lawyers […], they relied on their belief or recollection that there was a barrier to the recovery of interest [… and] the officials who negotiated the agreement overlooked the need for approval [of the deal].”
The ruling leaves powerful organisations like Goldman free to exploit the political classes to avoid their tax obligations. In short, your obligation to pay tax is entirely proportional to your political clout.
Anna Walker, campaigns director of UK Uncut Legal Action, said: “Obviously, while we are deeply disappointed that this deal has not been declared unlawful, the judge’s ruling that top HMRC officials played politics with major tax deals to protect Osborne’s reputation is a major victory in exposing the truth behind these secret deals.
“Despite not having won the case today, we still feel that this judgment has demonstrated that the government is making a political choice to cut legal aid, public services and the welfare system, rather than take action to make corporate giants … pay their fair share of tax.
“This case has exposed the lengths the government will go to to look tough on tax avoidance and has been vital in holding the government to account for its shameful actions.”
The question remains – how can we hold our corrupt corporations to account, if the institutions responsible for the task manifestly fail to do so? The HMRC failed to collect the tax, the government failed to back up the HMRC to do so, and now the courts have failed to deliver the justice required.
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