LONDON – A deal between Goldman Sachs and Britain’s tax authorities about outstanding payments in 2010 was arranged clumsily but did not break any laws, a judge ruled on Thursday.
The activist group UK Uncut, which campaigns against tax avoidance programs, had asked the court to review the circumstances leading up to the deal, which allowed Goldman to avoid as much as £20 million ($30 million) in interest on unpaid taxes. The court ruled in favor of Her Majesty’s Revenue and Customs.
“The settlement with Goldman Sachs was not a glorious episode in the history of the Revenue,” Judge Andrew Nicol said in his ruling. He agreed with UK Uncut that there were some misjudgments and a failure to follow necessary procedures by the tax authority, but that none of the missteps were unlawful.
Large corporations have attracted public anger recently for using tax avoidance programs to reduce their tax bills. Prime Minister David Cameron made clamping down on tax evaders and avoidance schemes one of his top policy objectives. A parliamentary committee dedicated to expose such schemes on Thursday questioned Matt Brittin, head of Google’s northern European operations, for a second time in six months about the way the online search provider was paying taxes.
Rosa Curling, a lawyer at Leigh Day representing UK Uncut, called the ruling “disappointing.” But she said the case was important, adding that she hoped the tax authorities had learned from their “mistakes in the past and will ensure that such sweetheart deals, like that reached with Goldman Sachs, do not happen in the future.”
During the hearing, UK Uncut’s lawyer contended that tax officials felt under pressure to strike a deal with Goldman, which was not a defendant in the case, to avoid causing an embarrassment to themselves and George Osborne, the chancellor of the Exchequer. The group argued that avoiding personal embarrassment should not have been a relevant reason to agree to the deal.
Judge Nicol said the tax authorities had already accepted that their decision was based in part on “an irrelevant consideration.”
In a statement, Her Majesty’s Revenue and Customs said it welcomed the court ruling because it “has now drawn a line under the Goldman Sachs issue.”
The ruling “confirms what Her Majesty’s Revenue and Customs has always said: that while we made errors in settling the Goldman Sachs dispute, we made the right settlement in the circumstances, and that our decision was both proper and lawful,” the statement said.