Treasury escapes check for billions in taxation refunds

Alex Spence, Legal Correspondent & , : {}

The Treasury might shun a check for billions of pounds in taxation refunds after winning the ultimate turn of a closely followed exam box opposite British American Tobacco (BAT).

The UKs Court of Appeal pronounced currently that companies looking refunds for taxes that were unlawfully imposed by HMRC contingency do so inside of 6 years of the taxes being collected.

The anticipating was piece of a wider visualisation in a long-running conflict in that BAT, the tobacco group, has challenged HRMCs prior process of fatiguing division payments from unfamiliar subsidiaries.

The Treasurys guilt has been estimated at up to �5 billion. However, accountants pronounced that the Court of Appeals statute will dramatically revoke the distance of any payout, even if it in conclusion loses to BAT.

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"It"s a big win for the Government," Bill Dodwell, a taxation partner at Deloitte, said. "It boundary their guilt in a large way."

HMRC welcomed todays visualisation but pronounced that it might be appealed.

The box is expected to head to possibly the European Court of Justice (ECJ) or the UKs Supreme Court for serve argument.

BAT, that brought the exam box on interest of twenty companies, argued that HMRCs taxation of unfamiliar dividends was unsuitable with European law, as payments by UK subsidiaries were not subjected to a identical tax.

BAT succeeded at progressing stages of the fight, winning enlightened rulings in the ECJ and the High Court in London.

However, lawyers pronounced that the Court of Appeals formidable 180-page visualisation was some-more enlightened to HMRC than to the tobacco company.

Lady Justice Arden, Lord Justice Stanley Burnton and Lord Justice Etherton referred the make a difference of the legality of the taxation on unfamiliar dividends behind to the ECJ to decide.

The judges preference to shorten HRMCs guilt to payments inside of 6 years was some-more significant, lawyers said.

Unless it is overturned by the Supreme Court on appeal, the anticipating will describe the bulk of claims for refunds on taxation paid on unfamiliar dividends invalid, accountants said, as they describe to payments dating behind some-more than 6 years. Some claims date behind to the 1970s.

In July, the Government altered the law on unfamiliar division payments so that they are no longer theme to tax, in line with payments from UK subsidiaries.