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

Goldman Sachs International (GSI) had a corporation tax bill of £422.3m but it deferred £418.2m – 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, 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 the Chancellor George Osborne battles to reduce the Government's deficit. There is no suggestion that 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 the Inland Revenue boss Dave Hartnett had "let off" the bank to the tune of £10m.

Mr Hartnett insisted to MPs that "a mistake had been made" and he is retiring early this summer.

The bank's UK 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 m GSI has paid in "current" corporation tax in 2011 is in stark contrast to the £336m it paid in the previous financial year.

The accounts showed revenues slumped 31 per cent to £3.19 bn last year because of eurzone jitters and "lower global equity prices". But profits jumped, partly because the "paper" value of share options paid to staff fell by more than £1.1 bn, thus cutting the bank's wage bill.

Labour MP John Mann, a member of the Commons Treasury select committee, said Goldman Sachs 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 Goldman Sachs 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 Inland Revenue 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 Inland Revenue's £10m "let off" in court in June.

Goldman's London operation also came under fire earlier this year when one of its senior executives, Greg Smith, resigned. He claimed that the bank's culture was "morally bankrupt" and staff often referred to clients as "muppets".

Mr Blankfein gave his first TV interview in two years earlier this week when he insisted Mr Smith's portrayal of the bank was not accurate.

"The reaction internally was one of shock," Mr Blankfein told CNBC. "We had 30,000 people who felt the opposite and clients who were supportive."

Goldman Sachs employs around 5,800 people in London although staff numbers fell by 500 between December 2010 and 2011, according to the accounts.

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.