HMRC's 'sweetheart' deal with Goldman Sachs is being challenged in the High Court by a grass-roots protest group, following allegations that the agreement was unlawful.

The case, brought by UK Uncut, centres around the deal personally negotiated by former HMRC chief, Dave Hartnett, that let off the investment bank from paying as much as £20m in interest charges.

Law firm, Leigh Day has advised UK Uncut that the agreement reached was in direct contradiction of HMRC's own rules which require all tax payers to be treated equally, with no discounts or deals made.

The case was granted permission to go to a full hearing in June 2012 - just one day before the National Audit Office (NAO) concluded its judge led investigation into tax settlements, which found that the Goldman Sachs deal was 'reasonable'. However, it was revealed recently that the head of the NAO, Amyas Morse, who set up the 'independent' review, appeared to undermine the process before it had even started by telling Hartnett that the inquiry would find 'nothing of substance'.

Anna Walker, spokesperson for UK Uncut Legal Action said: 'We are taking this case forward so that HMRC is no longer under the misapprehension that it is either legally, nor politically acceptable to let big business off paying the tax that they owe.'

An HMRC spokesperson said: 'We will strongly contest UK Uncut's application for a judicial review and we welcome the opportunity to demonstrate that we acted legally.'