Goldman Sachs have £20m of our money, but we're on the road to getting it back

HMRC's sweetheart tax deal with Goldman Sachs must be declared unlawful

Last Wednesday we were delighted when a High Court judge declared that we will be allowed to take forward our case against HMRC over its decision to let banking giant Goldman Sachs off of up to £20m in interest on an unpaid tax bill. The banking giant has owed this sum since December 2010 and we want HMRC to correct their error and make Goldman Sachs pay their debt as soon as possible so that it can be invested in our vital public services at this time of unprecedented spending cuts.

Our aim now is to have the High Court declare that the agreement reached by HMRC with Goldman Sachs was unlawful. We also want the court to order HMRC to take steps to reopen the agreement it reached with Goldman Sachs about the interest owed and seek to recover that money.

Importantly, the day after we secured our review of HMRC's "sweetheart" deal with Goldman Sachs, the National Audit Office (NAO) published a report on how HMRC settled five large tax disputes with big business, each of these being examined by retired tax judge Sir Andrew Park. We believe that, while the report acknowledges some failures of decision-making and governance in the department, it raises far more questions than it answers.

For example, the five companies in question remain unnamed, so that the truth about these huge tax deals continues to be veiled behind HMRC’s claims of taxpayer secrecy for the powerful businesses in question.

Park also judges the merits of each of the five tax deals on grounds of "reasonableness", finding that each settlement was "reasonable". Crucially, however, Park does not – and cannot – make a judgment on whether the settlements were legal.

The report does appear to cover the Goldman Sachs dispute (understood to be "Company E") and gives some indication of why HMRC chose not to collect the unpaid tax owed to it.

Previously, HMRC's outgoing tax chief, Dave Hartnett – who is understood to have shaken hands with Goldman Sachs on the deal – admitted that he "made a mistake" for which he was "entirely responsible." However, Park finds that HMRC’s decision not to charge interest on Company E’s unpaid tax bill wasn't a mistake but a "deliberate decision" and "made sense in the context of reaching a settlement on all the issues under consideration" with the company. The problem with package deals like this is that they mainly benefit the interests of corporations, which want to minimise their tax bills, and enfeeble HMRC's ability to enforce its own rules and raise the necessary revenue.

Park outlines how the department's own "High Risk Corporates Programme Board" rejected the decision waiving Goldman Sachs interest on their tax bill, but that HMRC commissioners (which included Hartnett) decided to approve the settlement anyway. No explanation was given as to why the commissioners took this course of action at the time and no reasons were recorded until three months later. Even now those reasons remain secret.

Yet somehow Park still concludes that HMRC’s settlement with "Company E" was "reasonable". This is despite Park himself affirming that there was "no legal barrier to charging interest" on the company’s outstanding tax bill and the fact that HMRC's own rules prohibit it from making package deals with businesses.

Given the clear gaps and omissions in the NAO report, it remains vital that our case against HMRC goes ahead, to judge whether the deal with Goldman Sachs was legal, and to expose the truth behind this and other deals as far as possible. It is also important that the Public Accounts Committee follows up its December 2011 report concerning tax disputes in order to challenge and ultimately end the "cosy" relationship between HMRC and big business that it identified.

The public interest in these matters is clear – people have a right to know why a multi-billion pound investment bank and other corporations appear to have been let off the tax they owe while vital public services are being cut. The government now has a choice to make. It can clamp down on the billions of pounds worth of tax avoided by big business or continue making ordinary people pay for the economic crisis with their jobs and pensions.

The entrance to Goldman Sach's office in London. Photograph: Getty Images

Tim Street is the director of UK Uncut Legal Action

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Why Podemos will defeat the Spanish Socialists

A new alliance on the Spanish Left will be stronger than the sum of its parts.

On Saturday morning, on a palm-tree lined promenade in the small city of Badalona in eastern Catalonia, a 38-year-old woman named Mar García Puig fanned herself with her speaking notes after taking her turn on the stage.

Until six months ago, Puig was a literary editor with no professional experience in politics apart from attending demonstrations and rallies. Then, in December, her life was transformed twice over. In the national election, she won a parliamentary seat for En Comú Podem, the Catalan regional ally of the anti-austerity party Podemos. Four hours after she learned of her victory, Puig gave birth to twins.

Fortunately Puig’s husband, who is a teacher, was able to take paternity leave so that she could take up her seat. In parliament, Puig “felt like an alien”, she told me over coffee. As it turned out, she had to give up her seat prematurely anyway – along with all the other Spanish MPs – when repeated attempts to form a government failed. So now, in the lead-up to Spain’s first repeat election of the modern era, to be held on 26 June, Puig was on the campaign trail once more in a drive to win a parliamentary seat.

The December general election was as historic as it was inconclusive, ushering in a novel political era in Spain and leaving the country with the most fragmented parliament in its history. Fed up with corruption, austerity and a weak recovery from the global financial crisis, voters punished the mainstream parties, ending the 40-year dominance of the conservative Partido Popular (People’s Party) and the centre-left PSOE (Spanish Socialist Workers’ Party), which have held power since the death of General Franco. Neither group was able to win an absolute majority as new parties from both ends of the political spectrum garnered support from disenchanted voters.

On the left, Podemos, which was only founded in March 2014 by the ponytailed political scientist Pablo Iglesias, won 20 per cent of the vote. Ciudadanos (Citizens), formed in Catalonia a decade ago and occupying the centre left or centre right, depending on which analyst you talk to, secured a 14 per cent share.

Despite having four months to form a coalition government, the two biggest political parties could not reach a deal. The People’s Party, which had implemented a harsh austerity package over the past five years, recorded its worst electoral performance since 1989, losing 16 percentage points. It still won the most votes, however, and Prime Minister Mariano Rajoy was the first leader to be asked by King Felipe VI to form a government.

By the end of January, Rajoy conceded defeat after the PSOE refused to join his “grand coalition”. The Socialists then failed in their own attempt to form a government, leading the king to dissolve parliament and call a fresh election.

Despite the inconvenience of having to campaign nationwide once again – and being away from her twins – Mar García Puig’s enthusiasm for her new career is undiminished. “In Spain there is a window of opportunity,” she said. “There is a receptiveness to politics that there wasn’t before.”

When the repeat elections were called, some questioned whether Podemos and its regional allies could mobilise its supporters to the same extent as in December. Yet Puig believes that the party’s appeal has grown further in the six months that the country has been without a government. “We are still new and Podemos has this freshness – it can still make people join,” she told me.

The following day, as the church bells rang at noon in the Basque city of Bilbao, crowds gathered for another rally. For protection against the sun, Podemos supporters had covered their heads with purple triangular paper hats displaying the party name as it will appear on the ballot paper: Unidos Podemos, or “United We Can”.

In May, Podemos entered into an alliance with Izquierda Unida (United Left), the radical left-wing party that includes the Communist Party of Spain, and which won 3 per cent of the vote in December. Izquierda Unida is headed by Alberto Garzón, a 30-year-old Marxist economist who, according to a poll by the state-run CIS research institute, is the most highly rated party leader in Spain. Unlike Podemos’s Iglesias, who can fire up a crowd and is seen by some as divisive, Garzón is a calm and articulate politician who appeals to disaffected voters.

Nagua Alba, who at 26 is Podemos’s youngest MP, said the new alliance would be stronger than the sum of its parts, because Spain’s voting system punishes smaller parties when it comes to allocating seats in parliament. “It [the alliance] will attract all those people that aren’t convinced yet. It shows we can all work together,” Alba said.

As part of the agreement with Podemos, Izquierda Unida has agreed to drop its demands for a programme of renationalisation and withdrawing Spain from Nato. The alliance is campaigning on a platform of reversing Rajoy’s labour reforms, removing the national debt ceiling, opposing the TTIP trade deal, and increasing the minimum wage to €900 a month. A Unidos Podemos government would attempt to move the EU’s economic policy away from austerity and towards a more expansionist stance, joining a broader effort that involves Greece, Italy and Portugal. It is also committed to offering the Catalans a referendum on independence, a move that the mainstream parties strongly oppose.

The latest polls suggest that Unidos Podemos will become Spain’s second-biggest party, with 26 per cent of the vote, behind Rajoy’s Popular Party. The Socialist Party looks poised to fall into third place, with 21 per cent, and Ciudadanos is expected to hold its 14 per cent share. If the polls are accurate, the PSOE will face a difficult choice that highlights how far its stock has fallen. It can choose to enter as a junior partner into a coalition with the insurgent left, which has politically outmanoeuvred it. Or it could decide to prop up a Partido Popular-led right-wing coalition, serving as a constraint on power. 

This article first appeared in the 23 June 2016 issue of the New Statesman, Divided Britain