67 Company E is a UK-resident company, and part of a multinational group of companies, group E. The Department arranged a meeting with company E’s senior staff with the aim of agreeing a way of resolving company E’s outstanding tax issues.
68 The Department and the company considered six tax issues in the meeting:
• The payment of employer’s National Insurance contributions (NICs) on adjustable share options granted by company E to employees under a plan used by the company more than a decade previously. Company E argued that under the plan, employer’s NICs were not payable. The Department argued that they were.
• Interest on the employer’s NICs if they ought to have been paid.
• Three other technical issues that arose from the specialised nature of company E’s business. Company E and the Department had been exchanging arguments on these issues for some time.
• An issue where the Department was considering challenging what company E (in common with many other companies) had assumed to be the tax treatment of an aspect of its employment arrangements.
The point that I've highlighted is the crux of the UK Uncut case - it isn't actually about being let off tax as they would have you believe, just the interest on it. This is said to be around £10 million or £20 million depending on what part of their article you read.
This next point is important:
So none of the other companies that settled had to pay interest on their liability.
After a bit of to-ing and fro-ing over in the courts as to whether or not HMRC had been assessing the correct Goldman Sachs group company, we finally have a settlement agreed over the tax issues mentioned above:
• Employer’s NICs Company E agreed to pay the full liability.
• Interest on employer’s NICs The Department agreed not to charge interest on the employer’s NICs liability.
• The three technical issues Company E conceded two of these issues. The Department conceded the other.
• Employment arrangements issue The Department agreed to discontinue their investigation of this issue.
So the settlement was in line with the 20 or so other ones on the same issue, albeit five years later. This is where the contention starts - internal procedures were not followed and the interest for the five years from when the other companies settled ended up being waived. This has been recognised in the report:
In summary, interest was waived as part of a settlement on the other five long running, larger issues and in that context can be considered reasonable. There is room for improvement in HMRC's processes though.
As well as clarifying the Vodafone case (company D), the report pretty much kills off any of the grounds for judicial review. It's hard to see from this how the decision to settle could be considered either illegal or irrational, and although procedures were not followed correctly in making the decision, these were internal rather than those prescribed by statute. I predict that the case gets quietly dropped, although on the other hand, it wouldn't surprise me that with a £20k fighting fund, they will stubbornly take it to court, lose, have enough to cover HMRC's costs, and then claim that the report and the court case were a whitewash.