The group was claiming that HMRC had acted illegally when it reached a settlement over the amount that investment bank Goldman Sachs needed to pay in tax. UK Uncut Legal Action said the taxpayer had been cheated of up to £20m in national insurance contributions. HMRC said the maximum lost to taxpayers was £8m.
The judge ruled the deal was "not a glorious episode in the history of the Revenue", but said it was not unlawful. HMRC said it had changed its practices since it made the agreement with Goldman Sachs in 2010.
"We are disappointed we've lost the case," Anna Walker of UK Uncut Legal Action told the BBC. "But it has exposed the truth behind these backroom deals."
The group tweeted this morning, "Thank you all for your support. We will never stop fighting for justice."
HMRC’s director general for business tax, Jim Harra, said, "The High Court’s comprehensive dismissal of UK Uncut’s claim puts to rest the fallacy that HMRC is soft on large businesses. HMRC has an exemplary record in relentlessly challenging those who avoid tax. We have recovered £34bn in additional revenues from large businesses in the last seven years.
“The High Court’s judgement confirms what HMRC has always said: that while we made errors in settling the Goldman Sachs dispute, we made the right settlement in the circumstances, and that our decision was both proper and lawful.
"This issue has been rigorously and repeatedly scrutinised – by the Public Accounts Committee, by a retired High Court judge on behalf of the National Audit Office and now by the High Court itself.
"The public can have confidence in our governance processes, which we have strengthened, providing greater levels of scrutiny, transparency and role separation. In its definitive judgement, the High Court has now drawn a line under the Goldman Sachs issue. HMRC can now get on with the critical job of working to ensure that all individuals and companies, big and small, pay the tax they owe to fund the UK’s essential public services.”
The legal case centred on the so-called “sweetheart” tax deal made in 2010. The dispute began over a tax avoidance scheme involving the payment of bonuses to UK staff via offshore tax havens. Several other banks had been using the scheme but only Goldman refused to settle in 2005. It was agreed in 2010 that Goldman should pay the principal it owed but not the interest gained over the five years.
UK Uncut alleged the deal was unlawful as it was in direct contradiction of HMRC’s own statutory duty to collect tax properly due, and its litigation settlement strategy prohibiting package deal settlements or settlements where HMRC “splits the difference” with the taxpayer.
A report by the National Audit Office said the deal was "reasonable".