Euro tax man prepares to consider UK 3-year tax rule

European tax Commissioner Mario Monti was due to be quizzed on Tuesday night about the legality of the UK’s three-year rule on VAT repayments.

Graham Watson, Lib Dem MEP for Somerset and North Devon, tabled a question in the European Parliament asking whether the UK Government’s diktat contravened the 6th VAT Directive. Monti, who has asked for a private briefing with Watson, is said to be concerned by the controversial limit, but was expected to issue a holding answer.

Watson accepted the need for a limit, but claimed it should be the same for Customs & Excise and taxpayers. ‘Ministerial heads should roll. There’s been a massive cock-up as nobody has ever sought clarification from the European Commission if this is legal.’

The development came as a string of UK companies launched a judicial review in the High Court against the ruling, which was introduced without consultation on 18 July. It is due to become law this month.

Indirect tax lawyer Malachy Cornwell-Kelly is fighting the review for the UK’s opticians. Other claimants include GUS and Kay mail-order companies.

He said: ‘It is particularly unjust after the High Court vindicated our position and Customs was unable to cope with the backlog of claims.’