Treasury faces £500m battle over stamp duty claims
Friday 29 October 2010
The Treasury is facing potential legal claims of at least £500m after the High Court let companies share costs in seeking repayment of stamp duties on share issues.
BSkyB, Virgin Media and Corus are among 16 firms that have already made claims to the High Court totalling more than £150m – a figure that would rise to at least £300m if interest were paid, according to PwC Legal, which secured the ruling.
The law firm said at least another 25 companies were standing by to bring claims and on that basis £500m was a conservative estimate for the Treasury's potential liability.
The High Court will let claimants group together, cutting potential legal bills to about one tenth of the cost they faced if they had to go it alone. The court's decision to grant a group litigation order (GLO) will attract a flood of extra claims, PwC Legal said.
Mark Whitehouse, a partner at PwC Legal, said: "The GLO makes it easier to make claims and it is a sensible way to manage those claims. It will be more difficult for HMRC to put people off on a divide-and-rule basis."
The action consists of current and former public companies which were charged 1.5 per cent capital duty on the issue of shares into foreign markets dating back as far as 1987.
The claims follow HSBC's victory over Her Majesty's Revenue & Customs a year ago when the European Court of Justice ruled against the UK's charge on share issues into Europe. The latest cases will test whether the European Court of Justice ruling applies to shares sold into other foreign markets, such as the US through depository receipts.
The UK has collected stamp duty on foreign share issues since legislation was introduced in 1986.
Mr Whitehouse said the EU rules existed at the time, but that it was not clear that they overrode British laws.
Peter Cussons, head of PwC's EU tax group, said that bringing Britain into line with the rest of the EU would help keep Britain competitive as a place for companies to base their business, despite the potential cost to the Treasury.
He said: "A GLO provides an opportunity for the UK's stamp taxes regime to be amended towards further compliance with EU Law, ensuring that the UK remains a competitive place to do business.
"Looking to the longer-term, the UK needs to avoid a further exodus of companies and future business revenues from enhanced competitiveness, should materially outweigh the future cost of claims filed today."
The granting of the GLO comes soon after the European Commission told the UK to change the 2007 Finance Act to ensure that the abolition of the "remedy for repayment of taxes paid in mistake of law" is subject to proper rules under EU law.
The Commission's request suggests that a wider 2004 Finance Act provision was likely to go against EU law, allowing claimants to potentially reclaim money paid as far back as 1986 when the tax was introduced.
- 1 Bill Clinton portrait features Monica Lewinsky reference, artist admits
- 2 What happens to your body when you give up sugar?
- 3 Delhi bus rapist blames dead victim for attack because 'girls are responsible for rape'
- 4 Have sex with your iPad thanks to the new sex toy no-one asked for
- 5 Average penis size revealed: Scientists attempt to find what is 'normal' to reassure concerned men
Bill Clinton portrait features Monica Lewinsky reference, artist admits
Japanese island overrun with cats after population explodes
China's 'Inconvenient Truth': video exposing country’s smog crisis watched 100 million times
Delhi bus rapist blames dead victim for attack because 'girls are responsible for rape'
The 'sex selfie stick' lets you FaceTime the inside of a vagina
New theory could prove how life began and disprove God
'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
This is what it's like to be dead, according to a guy who died for a bit
Durham Free School: 'Creationism taught at' free school facing closure
Ukip would cut billions from Scottish budget to fund English tax cuts
Nearly 100,000 of Britain's poorest children go hungry after parents' benefits are cut
iJobs Money & Business
£15000 - £18000 per annum: Recruitment Genius: This is a great opportunity for...
£50000 - £60000 per annum + Excellent Salary: Austen Lloyd: An outstanding new...
£20000 - £21000 per annum + uncapped commission: SThree: As a graduate you are...
£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...