Campaigners can challenge tax deal

Tax avoidance campaigners have won High Court permission to challenge an alleged "sweetheart" deal between Goldman Sachs and HM Revenue and Customs (HMRC).

UK Uncut Legal Action was given leave by Mr Justice Simon, sitting in London, to seek a declaration that an agreement allowing the banking giant to skip a multimillion-pound interest bill on unpaid tax on bonuses was unlawful.

It wants £20 million allegedly involved to be returned to the public purse.

The judge ruled UK Uncut had "an arguable case" that should go to a full judicial review hearing.

Ingrid Simler QC, appearing for UK Uncut, said HMRC reached a settlement in a dispute over National Insurance due on bonuses with Goldman Sachs in 2010 without requiring the payment of interest.

The potential cost to the taxpayer is officially put at £8 million but a whistleblower says the sum could be as high as £20 million. The bank was allowed to skip the interest bill after the country's top tax official, Dave Hartnett, was wrongly advised there was a "legal impediment" to collecting it.

Ms Simler said the error was quickly noticed, but, despite legal advice that the agreement with the bank was not binding, HMRC unlawfully withdrew a County Court claim for what was owed without seeking to re-negotiate. She added: "Does it put embarrassment over the acknowledged mistake to one side and correct the error - or does it put the embarrassment first and avoid correction?"

James Eadie QC, appearing for HMRC, had argued that UK Uncut's application for permission should be refused.

He said the National Audit Office (NAO) was producing a report for Parliament on an investigation by a senior judge into a series of highly controversial tax deals, including the Goldman Sachs deal. Mr Eadie argued that it would be more "appropriate and convenient" to allow Parliament to deal with the whole matter.

Disagreeing, the judge said the report was likely to decide a number of important factual questions relevant to maladministration, but it would not deal with the legal issues raised in court. The judge said: "There is plainly public interest in this matter, and maladministration and legality are separate issues."