EXCLUSIVE: Treasury left waiting for 99% of Goldman’s tax bill

26 April 2012

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 revealed today.

Goldman Sachs International had a corporation tax bill of £422.3 million but it deferred £418.2 million — or more than 99% of the amount — that it had to pay immediately in “current tax”.

The Wall Street giant, presided over by Lloyd Blankfein, was able to postpone payment because of “timing differences”, according to the accounts. There is no suggestion GSI is seeking to avoid corporation tax by deferring payment.

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

GSI’s tax activities have come under scrutiny after it emerged last year that Inland Revenue boss Dave Hartnett had “let off” the bank to the tune of £10 million. Hartnett insisted “a mistake had been made”. He retires this summer.

The US bank’s corporation tax bill fluctuates yearly as it can be skewed by the value of its bankers’ share options, which oscillate in tandem with the stock market.

The £4.1 million GSI has paid in “current” corporation tax in 2011 is in stark contrast to the £336 million it paid in the previous financial year. The accounts showed revenues slumped 31% to £3.19 billion last year. GSI blamed “concerns surrounding European sovereign risk debt”, “lower global equity prices” and “significantly wider corporate spreads”.

But profits jumped, partly because the “paper” value of share options fell by more than £1.1 billion.

Staff numbers fell by almost 500 to 5800 by December 2011 against a year earlier.

The highest-paid director earned around £850,000 in cash and benefits but total pay is likely to be higher as GSI omitted share payments.

GSI co-chief executive Mike Sherwood received about £6 million in shares last year, according to a separate US filing.