Wednesday, 13 June 2012

UK Uncut in the Courts

And not in the aftermath of one of their direct actions either. I'm a pretty harsh critic of UK Uncut and with good reason, but I'll admit that this got my interest:

A High Court judge has declared that the anti-cuts campaign group UK Uncut Legal Action should be allowed to take forward their case against HMRC over its decision to let banking giant Goldman Sachs off of up to £20 million in tax- owed since December 2010.

So the taxman is in for a minor windfall? No.

The judge did not give permission for the group to take forwards a claim seeking to ‘quash’ or strike down the deal

What is now left of the case is that a judicial review will take place to see if the deal was legal. I suspect that this is a bit of a disappointment for UK Uncut as even if the court rules that it was illegal, Goldman Sachs won't be opening their wallet and HMRC will just come out with the usual "lessons will be learned" boilerplate statement kept handy for when the public sector fucks up. In short, nothing changes.

They are of course reasons why HMRC would settle. In response to the court case today, they said:

For legal reasons we can’t comment further on the application at his stage. However, large business tax settlements are a vital part of how HMRC secures tax revenues for the country and without them Britain’s public finances would be seriously damaged.

I don't buy conspiracy theories about secret deals over supper - complexity of tax law means that loopholes exist and battles are fought in court over liabilities. Until such time as Parliament simplifies matters, HMRC has to work with what it's got and protracted legal battles cost money. If victory is uncertain on both sides and time in the courts potentially costing more than the tax claimed due, settlement is pragmatic; HMRC get a guaranteed chunk of what they believed was owed and don't risk losing or more money being swallowed up in legal costs.

Another reason for settlement rather than going through the courts for a judge's decision on the interpretation of the law is the potential for precedent setting. If HMRC were to challenge and lose, there is a risk of appeal from companies that have settled up on the same issue. That could cost HMRC (read, the taxpayer) shed loads in tax refunds if it picks the wrong battle. I am sure that is not the intention of UK Uncut, but judicial reviews around the reasoning for tax settlements could indeed have this consequence.

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