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Thanks to a secret deal that’s been described as a “cock-up” on British tax officials behalf, Goldman Sachs didn’t have to pay a £10 million interest payment last December, according to documents published by the Guardian.The details of the deal show that Goldman benefitted from a relationship with the government, which is one thing the Occupy Wall Streeters protest.
It sounds like Goldman Sachs technically owed the British government £40 million because the bank tried, but failed, to use a tax deduction to avoid paying around £30 million in national insurance on bonus payouts for its London-based employees.
Fast forward a number of months and the bank owes £40 million in insurance and interest. But they only had to pay the £30 million because of a deal made in a meeting that the Guardian got a detailed account of.
What happened was back in the 1990s, Goldman set up and offshore company in the British Virgin Islands, which reportedly employed all of the bank’s London employees.
The bank, like many other firms at the time, also purchased blueprints for an avoidance scheme called an employee benefit trust (EBT), the report said.
In 2005, the HM Revenue and Customs took the matter to court and demonstrated that EBTs were illegitimate tax avoidance devices, the newspaper said. The other firms paid up what they owed, but Goldman refused to pay its £30.81 million bill.
Finally, in 2010 the bill with accumulated interest totaled £40 million. Goldman settled the bill for £30 million and didn’t pay the interest.
The reason, according to the report, is because of a secret deal struck with a top tax official.
The Guardian citing leaked documents reveals that top official of HM Revenue and Customs met privately with the bank to work out an agreement, which the paper’s sources describe as a “cock-up” on behalf of the officials.
From the Guardian:
Documents leaked to Private Eye magazine and published in full by the Guardian record that Britain’s top tax official, HMRC’s permanent secretary Dave Hartnett, personally shook hands on a secret settlement last December.
Now someone’s in trouble.