Budget '97: Problems ahead as legal wrangles start

Windfall tax: CHALLENGE IN THE COURTS

Utility companies which do not mount a legal challenge against the windfall tax, cannot delay paying the levy on the grounds that other groups may be fighting the policy in the courts, according to legal advice received by one large multi-utility.

The company, which did not want to be identified, has already decided it will almost certainly not challenge the legality of the tax and was told by a leading tax lawyer that it would have to pay the levy whether or not other groups make a legal challenge.

The advice has emerged as the chances of serious court battle against the windfall tax increased after British Telecom made an unexpected and unprecedented public outburst.

Some electricity and water companies had hoped they may be able to defer payment of the tax pending BT's court battle in the UK or, more probably, in Europe.

But the multi-utility was told it could only avoid handing the money across if it joined any BT action.

In reality, as BT's interest in legal challenges has grown, the attraction of the move for the electricity and water groups has dimmed. In February Labour attempted to take the heat out of the debate with a legal opinion by Michael Beloff QC.

It argued that the companies would have no chance of fighting the policy through the UK courts.

"It is a fundamental principle of domestic law that Parliament is sovereign; it may make or unmake any law whatsoever." Yet behind the scenes the legality of the tax was giving the party cause for concern.

City lawyers had shifted their attention to an appeal through the European Commission. They suggested the tax could unfairly discriminate between different EU nationalities, for example in the case of Northumbrian Water, which is now owned by Lyonnaise des Eaux of France.

However, sources within DG15, the Commission arm responsible for the single market, predicted national governments would still have the final say. "From our point of view it's a UK matter," said the source.

The most hopeful area of attack for the utilities remained a challenge to the windfall tax on competition grounds, using the argument that the tax amounts to state aid in reverse, by giving rival companies an advantage.

Karel van Miert, the Competition Commissioner, has already indicated that he may have to examine this case closely.

BT claimed the windfall levy amounted to a subsidy for its main UK competitor, Mercury, which would not be included in the levy.

Even if Mr Van Miert sought to hold up the windfall tax, he cannot act in isolation.

Another EC source said: "If there was a state aid issue the Commission would have to look at it. But the final decision would be taken by the Commission as a whole, so it would be a collegiate matter."

Suggested Topics
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Arts and Entertainment
Robert De Niro, Martin Scorsese and DiCaprio, at an awards show in 2010
filmsDe Niro, DiCaprio and Pitt to star
News
i100
News
In this photo illustration a school student eats a hamburger as part of his lunch which was brought from a fast food shop near his school, on October 5, 2005 in London, England. The British government has announced plans to remove junk food from school lunches. From September 2006, food that is high in fat, sugar or salt will be banned from meals and removed from vending machines in schools across England. The move comes in response to a campaign by celebrity TV chef Jamie Oliver to improve school meals.
science
Sport
England captain Wayne Rooney during training
FOOTBALLNew captain vows side will deliver against Norway for small crowd
Life and Style
Red or dead: An actor portrays Hungarian countess Elizabeth Báthory, rumoured to have bathed in blood to keep youthful
health
News
peopleJustin Bieber charged with assault and dangerous driving after crashing quad bike into a minivan
News
peopleHis band Survivor was due to resume touring this month
News
people'It can last and it's terrifying'
Life and Style
fashionModel of the moment shoots for first time with catwalk veteran
Sport
Radamel Falcao poses with his United shirt
FOOTBALLRadamel Falcao's journey from teenage debutant in Colombia to Manchester United's star signing
Life and Style
fashionAngelina Jolie's wedding dressed revealed
Finacial products from our partners
Property search
Money is slipping through our fingers: the UK is falling behind other countries in the amount we put away

How to save money: UK is crashing down the European league table for putting money away

The UK has slipped to 11th in the latest European league table of savers. Rob Griffin checks out the best options

Energy firms found guilty of bad practice could have licences revoked under Labour government

Caroline Flint, the shadow energy secretary, says a Labour government would create a new energy regulator

A student's guide to financial survival: You don't have to drown in debt at university

Fresh from A-level delight, the moment does not have to be soured by students resigning themselves to thousands of pounds worth of debt in three years' time. Rob Griffin sees how to pass the university challenge

'Dismal' eurozone data sparks concerns

European Central Bank chief Mario Draghi is under pressure to launch promised stimulus before the EU slides further
Love but not marriage: property is one area where cohabiting couples are in danger of losing out

How couples can protect their financial interests when cohabiting

People who simply live together cannot assume they have the same rights to each other's assets as spouses or civil partners. Michelle McGagh sees how they can protect their financial interests

India could be jewel in the crown for investors

With a new government and an ambitious prime minister, the country offers the prospect of strong returns. But there may be hiccups ahead, warns Simon Read

Child Maintenance Service to replace Child Support Agency - but is it better?

Reforms to the vexed question of child support payments by absent parents mean extra charges for both sides. Neasa Macerlean reports

Barclays's new life insurance heralds a revolution on the high street

The new product marks a shift towards 'clear, straightforward and standardised' banking products, says Simon Read

How to protect your assets if the stock markets begin to head south again

Are you worried about your portfolio? Nick Paler asks fund managers and investment insiders for advice
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Front-Office Developer (C#, .NET, Java,Artificial Intelligence)

    £30000 - £45000 per annum + benefits+bonus+package: Harrington Starr: Front-Of...

    C++ Quant Developer

    £700 per day: Harrington Starr: Quantitative Developer C++, Python, STL, R, PD...

    Java/Calypso Developer

    £700 per day: Harrington Starr: Java/Calypso Developer Java, Calypso, J2EE, J...

    SQL Developer

    £500 per day: Harrington Starr: SQL Developer SQL, C#, Stored Procedures, MDX...

    Day In a Page

    Chief inspector of GPs: ‘Most doctors don’t really know what bad practice can be like for patients’

    Steve Field: ‘Most doctors don’t really know what bad practice can be like for patients’

    The man charged with inspecting doctors explains why he may not be welcome in every surgery
    Stolen youth: Younger blood can reverse many of the effects of ageing

    Stolen youth

    Younger blood can reverse many of the effects of ageing
    Bob Willoughby: Hollywood's first behind the scenes photographer

    Bob Willoughby: The reel deal

    He was the photographer who brought documentary photojournalism to Hollywood, changing the way film stars would be portrayed for ever
    Hollywood heavyweights produce world's most expensive corporate video - for Macau casino

    Hollywood heavyweights produce world's most expensive corporate video - for Macau casino

    Scorsese in the director's chair with De Niro, DiCaprio and Pitt to star
    Angelina Jolie's wedding dress: made by Versace, designed by her children

    Made by Versace, designed by her children

    Angelina Jolie's wedding dressed revealed
    Anyone for pulled chicken?

    Pulling chicks

    Pulled pork has gone from being a US barbecue secret to a regular on supermarket shelves. Now KFC is trying to tempt us with a chicken version
    9 best steam generator irons

    9 best steam generator irons

    To get through your ironing as swiftly as possible, invest in one of these efficient gadgets
    England v Norway: Wayne Rooney admits England must ‘put on a show’ to regain faith

    Rooney admits England must ‘put on a show’ to regain faith

    New captain vows side will deliver for small Wembley crowd
    ‘We knew he was something special:’ Radamel Falcao's journey from teenage debutant to Manchester United's star signing

    ‘We knew he was something special’

    Radamel Falcao's journey from teenage debutant to Manchester United's star signing
    'I’ll tell you what I would not serve - lamb and potatoes': US ambassador hits out at stodgy British food served at diplomatic dinners

    'I’ll tell you what I would not serve - lamb and potatoes'

    US ambassador hits out at stodgy British food
    Radio Times female powerlist: A 'revolution' in TV gender roles

    A 'revolution' in TV gender roles

    Inside the Radio Times female powerlist
    Endgame: James Frey's literary treasure hunt

    James Frey's literary treasure hunt

    Riddling trilogy could net you $3m
    Fitbit: Because the tingle feels so good

    Fitbit: Because the tingle feels so good

    What David Sedaris learnt about the world from his fitness tracker
    Saudis risk new Muslim division with proposal to move Mohamed’s tomb

    Saudis risk new Muslim division with proposal to move Mohamed’s tomb

    Second-holiest site in Islam attracts millions of pilgrims each year
    Alexander Fury: The designer names to look for at fashion week this season

    The big names to look for this fashion week

    This week, designers begin to show their spring 2015 collections in New York