Tax avoidance campaigners UK Uncut win High Court permission to challenge an alleged “sweetheart” deal between HM Revenue and Customs (HMRC) and Goldman Sachs.
UK Uncut Legal Action were 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.
They want £20m 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
But the campaigners would have to take further legal action in order to force Goldman Sachs to pay back the £20m allegedly owed.
The potential cost to the taxpayer is officially put at £8m but a whistleblower says the sum could be as high as £20m.
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.
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, to be released around midnight tonight, 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.
He said the UK Uncut application should at least be adjourned to see what the report contained.
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.”
The judge also rejected HMRC claims that judicial review was not appropriate because the case involved matters of confidentiality between the Revenue and taxpayers.
Murray Worthy, the director of UK Uncut legal action, said: “We welcome the court’s decision that we can take forward the case regarding the alleged sweetheart deal between the HMRC and Goldman Sachs.
“The judge agrees this case is clearly in the public interest and that HMRC have questions to answer about the legality of this deal. We agree that it is vital that this issue will be addressed in court, investigations by the National Audit Office and the Public Accounts Committee are looking at policy issues, but this is a question of legality and justice.
“This only the courts can decide. The public have the right to know why multi-billion investment banks appear to be apparently being let off the tax they owe while vital public services are being cut.”
Mr Worthy said the judicial review hearing is likely to take place in the Autumn.
But UK Uncut suffered disappointment when the judge ruled out allowing it to seek a settlement quashing order which could have directly led to Goldman Sachs having to pay back the £20m allegedly owed.
Rosa Curling, from law firm Leigh Day & Co, which represented the campaigners, said they would will consider whether to appeal the decision taken by the court in relation to the quashing order.
An HMRC spokesman said: “We will strongly contest UK Uncut’s application.
“For legal reasons we can’t comment further on the application at this stage. However, large business tax settlements are a vital part of how HMRC secures tax revenues for the country and without them Britain’s public finances would be seriously damaged.”