Banking giant Goldman 'defers' £418m in tax

LLOYD BLANKFEIN: The CEO and chairman has defended Goldman against recent attacks (Getty Images)

The London arm of Goldman Sachs paid only £4.1 million in corporation tax to the Treasury last year despite making pre-tax profits of £1.92 billion, annual accounts have revealed.

Goldman Sachs International (GSI) had a corporation tax bill of £422.3 million but it deferred £418.2 million – or more than 99 per cent of the amount – that it had to pay immediately in "current tax".

The Wall Street giant, presided over by Lloyd Blankfein, pictured, was able to postpone payment because of "timing differences", according to the accounts.

Goldman's decision will be a blow to the Treasury's coffers as Chancellor George Osborne battles to reduce the Government's deficit.

There is no suggestion GSI is seeking to avoid corporation tax by deferring payment. However, GSI's tax activities have come under scrutiny after it emerged last year that Inland Revenue (IR) boss Dave Hartnett had "let off" the bank to the tune of £10 million. Hartnett insisted to MPs that "a mistake had been made". He is retiring this summer.

Labour MP John Mann, a member of the Commons Treasury Select Committee, said GSI should not defer tax payments when it could hand over the cash now. "It's morally and ethically wrong. These are people who are at the heart of the problem in the financial world who've paid extraordinary bonuses to their partners and aren't prepared to pay a fair amount of tax. It's pure unadulterated greed."

A GSI spokesman said: "The firm has set aside $684m [£422m] for tax , but has no discretion over the timing of actual tax paid in any one year, as this is determined by UK accounting and tax rules."

GSI's dispute with the IR, which led to the £10m "let-off", was thought to involve national insurance on UK staff bonuses and did not cover corporation tax.

UK Uncut Legal Action, which campaigns against tax avoidance, is reported to be planning to challenge the IR's £10m "let-off" in court in June.