Goldman Sachs deal ‘cost Exchequer £20m’

THE GOLDMAN SACHS deal cost the Exchequer £20m, twice the amount previously estimated, a former HM Revenue & Customs solicitor has claimed.

Osita Mba told the Public Accounts Committee, which is investigating the deal, that the interest payments foregone by HMRC were “£20m in rough figures”. Mba claimed that evidence submitted to the committee was “significant, inaccurate and misleading”.The committee has repeatedly questioned Dave Hartnett, permanent secretary for tax, about the deal.

The deal concerned National Insurance contributions on employees’ bonuses. In 2005, 21 companies paid the full amount owed from the use of employee benefit trusts, offshore vehicles designed to avoid NI contributions, but Goldman Sachs refused. The bank was warned that it would have to pay interest when the bill was finally settled, but when it paid up in 2011, no interest was charged.

Richard Bacon, a member of the PAC, told the Daily Telegraph: “Given that Hartnett did not even know, until I told him, that HMRC had warned Goldman it would be liable for interest accruing if it refused to settle, I am not prepared to say Hartnett deliberately misled the committee. It seems to me just as likely he did not know what was going on.”

A spokesman for HMRC said: “Dave Hartnett’s evidence to the PAC is entirely consistent and accurate. Hartnett made clear that an error occurred and the Comptroller and Auditor General is on record as saying this error was between £5m and £8m.”

Related reading