Treasury faces EU probe on Rover tax

Chancellor Gordon Brown faces a battle with the EU over a rescue deal for MG Rover that involves a multi-million pound tax break, reports the Times.

Link: Traders await ECJ verdict on VAT clampdown

Brown is in China lobbying for a conclusion to talks between MG Rover and Shanghai Automotive Industry Corporation (SAIC). He said yesterday that MG Rover will get special ‘tax flexibility’.

‘I do understand that discussions between Rover and Customs & Excise have been helpful,’ Brown said. ‘I can confirm that Rover can benefit from flexibility in the tax system.’

But preferential treatment given to individual companies is illegal under EU competition rules. The European Commission yesterday said that any financial support by the government would be scrutinised by its competition lawyers.

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