UK Uncut - demonstrating that bias need not be consistent

UK Uncut have been a thorn in the side of the Coalition since their emergence from anti-Vodafone demonstrations in October 2010, with their message that spending cuts were unnecessary and evil. And whilst one might agree with that, even if I don't for the most part, their argument has gone beyond politics and into sterile partisanship.

This is demonstrated by their response to the failure of their application for a judicial review on grounds concerning the governance and tax liabilities involved in an HMRC settlement with Goldman Sachs in 2010.

Anna Walker, campaigns director of UK Uncut Legal Action, said;

Obviously, while we are deeply disappointed that this deal has not been declared unlawful, the judge's ruling that top HMRC officials played politics with major tax deals to protect Osborne's reputation is a major victory in exposing the truth behind these secret deals.

Despite not having won the case today, we still feel that this judgment has demonstrated that the government is making a political choice to cut legal aid, public services and the welfare system, rather than take action to make corporate giants … pay their fair share of tax.

This case has exposed the lengths the government will go to to look tough on tax avoidance and has been vital in holding the government to account for its shameful actions.

And yet, a closer look at the judgement in this matter exposes an uncomfortable truth. At paragraph 12, Mr Justice Nicol states;

The Claimant's case is that the agreement on 19th November 2010 infringed this guidance. Contrary to paragraph 14 it was a package deal which traded a promise to pay 100% of the NICs for HMRC's promise to forego interest on those contributions. Principal and interest were effectively a single issue. In county court proceedings against Goldman Sachs which had been issued in 2003 the Revenue claimed both. The 19th November agreement "split the difference", contrary to paragraph 14. Likewise, contrary to paragraph 15, this was a situation where HMRC's case was strong, but it had accepted a settlement for less than 100% of the tax and interest.

Furthermore, Goldman Sachs had gained an advantage over the companies who settled with HMRC in 2005. It had retained the money which was due to the Revenue for another 5 years without having to pay interest. It had done so because of its aggressive behaviour. This settlement did the opposite of encouraging taxpayers to behave positively and was therefore contrary to paragraph 13 of the Litigation and Settlement Strategy.

I highlight one phrase.

Goldman Sachs had gained an advantage over the companies who settled with HMRC in 2005

Yes, this was a case taken out against a group of financial institutions, all but one of whom had settled in 2005, some five years before the Coalition came to power.

So, when Anna Walker says that the case demonstrates that;

the government is making a political choice to cut legal aid, public services and the welfare system, rather than take action to make corporate giants … pay their fair share of tax

she is wrong, and either carelessly wrong, or maliciously wrong to make such a claim based on this one case. The argument put by UK Uncut's barrister makes it clear that HMRC was treating each financial institution the same, the only difference being that Goldman Sachs resisted for rather longer than anyone else, and exposes the fact that the legal argument commenced prior to 2005.

Their argument also suggests that HMRC takes party politics into account in settling cases, yet Mr Justice Nicol confirms that this was not, and should not have been, a factor - despite David Hartnett's unfortunate turn of phrase and apparent misjudgement.

It is, in many ways, unfortunate that her bias obscures a genuinely important question, i.e. what should a tax regime seek to achieve? Are rates of corporate taxation appropriate in the United Kingdom, and what action should be taken to prevent large companies from playing one tax authority off against another, or simply playing the system for personal gain or advantage?

But if UK Uncut want to take a partisan stance, opposing an administration which has done more on corporate and other tax abuse than most in the past three decades, they may not achieve much more than notoriety...