Hartnett to face MPs over Goldman Sachs 'sweetheart' deal
Leaked documents suggest permanent secretary for tax shook hands on deal that lost £10m for the Exchequer
THE HEAD of HM Revenue & Customs will face MPs today over allegations he allowed investment bankers Goldman Sachs to escape £10m in interest payments.
Documents leaked to Private Eye suggest that Dave Hartnett, permanent secretary for tax, allowed the bank to forego interest payments on a failed tax avoidance scheme.
Hartnett will face the Public Accounts Committee this afternoon. The documents suggest that the previous PAC chairman, Edward Leigh, was misled when he was told that the publishing of details of such agreements was illegal.
The scheme involved employee benefits trust set up in the British Virgin Islands to avoid paying National Insurance on staff bonuses, which averaged £191,000 for a junior banker in 1999. In 2005, HMRC proved that the schemes were illegitimate, but Goldman Sachs refused to pay the £40m it was owed. According to the Guardian, In July, HMRC counsel Malcolm Gammie gave “broadly positive” advice that HMRC should be able to claim the full amount.
However, Hartnett was alleged to have shaken hands on a deal worth £30m
A HMRC statement to the Guardian said: “The picture you have been given is incomplete and therefore fundamentally flawed but taxpayer confidentiality prevents us from correcting your story in detail. Dave Hartnett’s long career in the tax service has been built on ensuring the right tax is paid by large businesses and individuals alike. HMRC does not do ‘sweetheart’ deals.”