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Goldman Sachs Escapes Paying £10Million Bill In Sweetheart Deal With The Taxman

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Anger at Goldman Sachs is growing after it was claimed the taxman let the banking giant off a £10million bill for fear of reopening a £30m legal dispute over bonuses.

Goldman received a 'sweetheart' deal in which HM Revenue and Customs waived interest on a bill for National Insurance contributions on bankers' bonuses, according to the Financial Times.

The bank owed the Government £30m in back taxes after moving bonuses offshore - and this amounted to £40m including interest.

The HMRC admits to errors over governance procedures and to failing to collect the £10m interest - in the mistaken belief there was a 'legal impediment' to doing so.

But Dave Harnett - top tax official at HMRC - is today appearing before MPs at a hearing of the Commons public accounts committee to deny that a sweetheart deal was involved.

The Revenue's apparent failure to reopen the case after finding the error has angered MPs, who point out that small businesses and taxpayers are rarely given similar concessions.

Their fury at the handling of such situations now looks likely to lead to parliamentary demands for reform of how the HMRC deals with rows over tax avoidance by big businesses.

But sources say Goldman does not believe interest was or is owed under the law, and contests HMRC's description of its failure to collect interest as an 'error'.

While 21 other large investment banks settled with HMRC in 2005 over their use of offshore structures known as 'employee benefit trusts' to avoid National Insurance contributions on bankers’ bonuses, Goldman continued to litigate the case for five years before also opting to settle.

HMRC lawyers said Goldman had raked 'every conceivable point in the tribunal', according to a leaked memo published last month by the Guardian.

And although it has paid off the disputed £30m, the bank seems to have got away without paying the outstanding £10m bill.

MPs are reportedly infuriated by the incomplete account given by Mr Hartnett. HMRC says the dispute has been painted in a way that is 'fundamentally flawed' - but it cannot give more detail because of taxpayer confidentiality.

The National Audit Office is set to examine the reasonableness of the settlement.

UK Uncut, an anti-austerity pressure group, has threatened legal action if HMRC does not quash the deal.

Tory MP Jesse Norman has called on Mr Hartnett to resign if he could not explain himself after the leaked memo said he 'shook hands' on the settlement last November.

This apparently contradicted Mr Hartnett’s previous assertion that he did not deal with Goldman’s tax affairs. He told MPs he had known nothing about the dispute when he attended a dinner at the bank 18 months earlier.

Mr Hartnett’s explanation of the meeting – that he had helped 'with a difficult relationship issue' by asking the global head of tax at Goldman to fly over to unlock the dispute – defused some of the pressure.

Mr Norman said: 'Dave Hartnett has gone some way to explaining the discrepancy in his testimony to the Treasury committee. But the government has inherited a serious wider issue of the accountability and effective governance of HMRC, and this needs to be addressed in due course.'

Margaret Hodge, chairman of the public accounts committee, is highly critical of Mr Hartnett - partly because of the 107 breakfasts, lunches and dinners that he attended over three years with big companies and accountancy firms.

She said that having lunches with firms with which you have been negotiating is 'very dangerous'.

Mr Hartnett was named as the 'most-dined' of senior civil servants in an investigation by City University last year, although many of these invitations – like the Goldman Sachs dinner – were speaking engagements.

HMRC introduced a strategy six years ago to persuade directors of big business to view tax compliance as a matter of corporate social responsibility.

Their 'tax in the boardroom' plan involved forging just such risky, high-level links between top officials and senior business figures.

Absolutely nothing has changed. Nothing.

How many MP's and senior bureaucrats are going to quickly exit politics and go officially on the pay roll of the vampire squid?

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Eyes passim ad nauseam, as they say.

In other words, this has been covered in Private Eye for several months already. It’s only now that the more mainstream media have started to take notice, probably because of the recent appearance of HM Revenue & Customs boss Dave Hartnett in front of the public accounts committee.

If you really want to know what’s going on in the UK, you do have to read Private Eye, though, including all the serious, unfunny bits at the front and back.

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HMRC wins Goldman Sachs court case vs Uk Uncut

....HM Revenue and Customs (HMRC) has won its case in the High Court, where it had been accused of illegally letting investment bank Goldman Sachs off part of its tax bill.

The campaign group UK Uncut Legal Action had claimed that the taxpayer had been cheated of up to £20m.

It said HMRC had let Goldman Sachs off the hook through a "sweetheart deal".

The judge ruled the deal was "not a glorious episode in the history of the Revenue", but said it was not unlawful.

HMRC said it had changed its practices since it made the agreement with Goldman Sachs in 2010.

It also said that the maximum that had been lost to taxpayers was £8m.

HMRC welcomed today's judgement....

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Absolutely nothing has changed. Nothing.

And yet everthing has.

I know that's an old post, but just came across an economics paper today - 30pp pdf I'm about to read - with this concept:

"Gattopardo constitutes change that keeps things the same. Gattopardo

is relevant for understanding the economics profession’s response to the

financial crash of 2008. This paper explores gattopardo economics as it

applies to the issues of the macro-economics of income distribution; the

global financial imbalances; and inflation policy. Gattopardo economics

adopts ideas developed by critics of mainstream economics, but it does so

in a way that ignores the thrust of the original critique and leaves main-

stream analysis unchanged. Gattopardo economics makes change more

difficult because it deceives people into thinking change has taken place.

By masquerading as change, it crowds-out space for real change. That

makes exposing gattopardo economics a matter of vital importance."


The reference is to The Leopard by Tomasi: “For things to remain the same, everything must change.”

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  • 284 Brexit, House prices and Summer 2020

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      • down 5% +
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      • Even
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