LONDON A tax deal between the British government and Goldman Sachs (GS.N) worth up to 20 million pounds ($30 million) to the U.S. bank was lawful but "not a glorious episode" for the tax authority, a judge ruled on Thursday.
UK Uncut Legal Action, a group campaigning against tax avoidance, had taken HMRC to court arguing that the 2010 settlement was an unlawful "sweetheart deal".
High Court Judge Andrew Nicol dismissed the group's overall claim on Thursday, but criticized the way HMRC had reached the deal.
"The settlement with Goldman Sachs was not a glorious episode in the history of the Revenue," the judge wrote, before listing a litany of errors by HMRC.
"However, my task is to decide whether the decisions of HMRC under challenge were unlawful," he wrote, citing a previous ruling that said "maladministration and illegality are separate issues".
Some lawmakers have accused HMRC of being "too cozy" with big business, and a Reuters investigation has revealed that the tax take from big companies fell sharply in the past 12 years, despite profits rising, while income taxes from individuals and small businesses have risen.
UK Uncut Legal Action said it was disappointed by the ruling but said the court case had helped expose how the taxman dealt with big businesses.
"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," said Anna Walker, the group's campaigns director.
Goldman Sachs, which was not a party to the court case, declined to comment. HMRC said the ruling had vindicated it's position.
"The High Court's comprehensive dismissal of UK Uncut's claim puts to rest the fallacy that HMRC is soft on large businesses," said HMRC's Director General for Business Tax, Jim Harra.
(Editing by Erica Billingham)