* High Court to examine disputed 2010 tax settlement
* Activists say taxman unlawfully saved Goldman $15 million
* Corporate tax avoidance a hot issue in Britain
By Estelle Shirbon
LONDON, May 2 Britain's tax authority faces a
court challenge on Thursday over a deal with Goldman Sachs worth
an estimated 10 million pounds ($15.5 million) to the U.S. bank,
a case aimed at pressuring the government into tougher action
against corporate tax avoidance.
The challenge by activist group UK Uncut Legal Action stems
from public anger in Britain about how big and powerful firms
succeed in paying less tax than many ordinary people struggling
to cope with a stagnating economy and government spending cuts.
The case concerns a settlement reached in 2010 between
Goldman Sachs and the tax authority (HMRC), to end a
long-running dispute over a now banned tax avoidance scheme
involving the payment of bonuses to UK staff via an offshore tax
UK Uncut Legal Action wants the High Court to declare the
settlement, which allowed Goldman Sachs to pay the principal it
owed but not the interest that had accrued during a five-year
battle with HMRC, as unlawful.
The activist group labels the settlement a "sweetheart
deal", a term rejected by the tax authority.
The risk for Goldman Sachs is further damage to its image in
Britain after a public outcry in January caused it to scrap
plans to delay paying bonuses to its bankers to make the most of
an income tax cut for high earners.
In financial terms, the disputed $15 million is a drop in
the ocean for a bank that paid its employees $12.9 billion in
compensation and benefits last year.
"At a time when the government is making huge, unjust cuts
to public spending, the rich must pay their fair share," said
Murray Worthy, director of UK Uncut Legal Action.
The High Court hearing into the Goldman Sachs deal is a
judicial review expected to last one day. The court will reserve
judgment until a later date. Goldman Sachs, which will not be an
active participant in the case, declined to comment.
At a time of budget austerity, revelations about the low tax
bills of companies ranging from Vodafone to Starbucks
have caused widespread outrage in Britain, putting
pressure on the Conservative-Liberal Democrat coalition
government to act.
Finance minister George Osborne has called aggressive tax
avoidance "morally repugnant" but critics say his new General
Anti-Avoidance Rule is not enough.
Asked to comment on the case, HMRC pointed to a 2012 report
by the National Audit Office (NAO) that said five big business
tax settlements including the Goldman deal were "reasonable" in
that HMRC may have received less if it had litigated and lost.