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One rule for Goldman Sachs, and one for everyone else

Praise be to UK Uncut. It’s only due to them that we’re now learning what really lay behind the Blair-Brown policy of ‘light regulation’, now gratefully continued by the Tories, and the world of difference between the treatment of the hyper-rich on the one hand and the defenders of the poorest on the other. The case currently being heard in the High Court argues that the ‘sweetheart’ tax deal reached in 2010 between Goldman Sachs and HMRC was illegal.

The deal was struck by a ‘handshake’ – as you would expect among gentlemen – between Dave Hartnett, head of HMRC, and a senior Goldman executive, ending a long-running dispute over national insurance payments payable on bonus payments dating back to the 1990s.

Estimates vary as to the amount of tax Goldman was let off paying between £6m and £20m. But apart from the substantial sums foregone by the Treasury and whether Hartnett’s private deal was legal or not (the Revenue’s own high-risk corporate programme board almost immediately afterwards repudiated it), this legal case now throws light on two highly significant aspects of the tax authorities’ attitude to their function and their relationship with their political masters.

First, there was the policy of trying to reach ‘agreements’ over tax with the big business corporates, ostensibly to avoid long-drawn-out legal disputes in the courts and the uncertainty and costs that might be involved, but really as a means of encouraging inward direct investment and assuring Big Business that New Labour / Tories were highly accommodating to their interests and thus ensure a pro-business atmosphere conducive to political donations and general support.

The problem of course with this is that it switches the balance of power to business itself which only co-operates to the degree that suits itself, i.e. minimally. Transfer pricing and tax havens flourished and tax payments were semi-voluntary, with business paying only what it was willing to.

Compare that with the poorest families forced out of their homes by the sudden imposition of the bedroom tax – nothing voluntary about that. Or compare that with the treatment of the unions, shackled from head to toe by debilitating legal constraints to render them powerless. No cosy relationship with them to get their voluntary consent. Or just think of the small people who are relentlessly pursued for the smallest sums, or the benefit recipients who are hounded months or even years later for what are claimed to be ‘over-payments’.

Then secondly what has come to light is the way that HMRC, or its boss at least, kow-tows to Osborne, whatever the law may say, in order to get him off an embarrassing hook. Osborne had just signed an agreement with the top 15 banks, including Goldman, on a new code of conduct – voluntary of course – and Hartnett was fearful that if HMRC reopened the deal to force Goldman to pay, the bank would withdraw from the code of conduct, leaving a rfed face for Osborne. So rather than enforce the law, and contrary to legal advice, he waived the deal through. What a good thing Goldman’s not the Federation of Small Businesses, let alone Unite or the GMB.

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