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The scheme in question had been used by various investment banks, but after litigation, most of the banks accepted that the scheme was not successful and paid the disputed tax together with interest to HMRC.  It is alleged that Goldmans refused to pay until a so-called sweetheart deal was done under which Goldmans paid the back tax but unlike the other banks did not pay any of the interest which was also due.

It is well established that, in exercising their powers to collect tax, HMRC has a managerial discretion to enter into agreements with taxpayers to settle historic tax liabilities even where, in doing so, it might be said that HMRC has waived some of the tax that might have been due.  However, HMRC can only enter into such agreements where it is "the best manner of obtaining …the highest net return that is practicable". 

Even if UK Uncut can show that HMRC has acted outside the scope of its powers, will HMRC be able to collect the unpaid interest from Goldman Sachs?  Assuming that any HMRC claim is not already out of time, we have to expect that Goldmans will argue that it has done a deal with HMRC and it has a legitimate expectation that the agreement will be respected.  While there is clear authority that a taxpayer cannot have a legitimate expectation that HMRC will be held to an agreement as regards future liabilities that is outside the scope of its powers, the position as regards an agreed settlement of historic liabilities is not clear cut.  If anything, the balance of authority is that HMRC will be held to those agreements in the absence of non-disclosure of relevant facts by Goldman Sachs.  In the final analysis, much may turn on the courts' views of the appropriateness of Goldmans' conduct in negotiating the settlement.

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