Multinationals seek ACT damages

The European Court of Justice ruled last month that ACT had breached European law and unfairly discriminated against foreign owned subsidiaries.

Under the ACT rules subsidiaries of British companies could opt into group income election while European owned subsidiaries could not.

The ECJ case, brought by German pharmaceutical company Hoechst, now known as Aventis, opens the way for other European companies to claim damages for not having the same rights as UK corporations.

However, it is unclear whether corporations from the USA and Japan, which have tax treaties with the UK, may make the same claim and therefore exacerbate the cost the Inland Revenue might have to bear.

When contacted the Inland Revenue, a spokesperson said that about 80 similar writs have now been received.

David Evans, director of international tax with KPMG, said: ‘Hoechst was no great surprise and it will be looked back as one of the more obvious decisions for the court to make.’


Aventis website

Inland Revenue website

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