According to the pressure group, the High Court judge ruled that embarrassment to George Osborne was a major factor in letting Goldman Sachs off up to £20m in tax.
The judgment in the legal challenge, brought by UK Uncut Legal Action against a “sweetheart deal” between HMRC and Goldman Sachs in 2010, found that the deal was lawful.
The High Court judgment by Mr Justice Nicol found that Dave Hartnett, then permanent secretary for tax, took into account the potential embarrassment to the Chancellor of the Exchequer if Goldman Sachs were to withdraw from the tax code.
The court also criticised HMRC’s catalogue of errors in failing to collect the tax owed. The judgment concludes that the settlement with Goldman Sachs was “not a glorious episode in the history of the Revenue”.
In declaring the deal lawful, the court found that HMRC’s top officials were legally allowed to take into account the bank’s threats to withdraw from the Code of Practice on Taxation for banks in assessing whether to pursue Goldman Sachs for the tax owed.
In evidence disclosed during the case it emerged that the investment bank was threatening to pull out of the tax code if it was forced to pay the £20m owed in interest from a failed tax avoidance scheme the bank had used in the 1990s.
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.”
“This case has exposed the lengths the government will go to look tough on tax avoidance and has been vital in holding the government to account for its shameful actions.”
Jim Harra, director general for Business Tax, said: “The High Court’s comprehensive dismissal of UK Uncut’s claim puts to rest the fallacy that HMRC is soft on large businesses.
“The High Court’s judgment confirms what HMRC has always said: that while we made errors in settling the Goldman Sachs dispute, we made the right settlement in the circumstances, and that our decision was both proper and lawful.