Dawn Primarolo, paymaster general, recently revealed the government had already paid out £32m in the cases. But companies making claims now total 400, leading experts to guess that the total payout could climb to hundreds of millions.
Primarolo was responding to a parliamentary question from MP Denzil Davies when she revealed the payouts to date. ‘I was staggered by the figure as it only covers a small number of cases,’ said Davies. Experts believe that only 10% of companies involved in the litigation have reached settlement.
The problems stem from a European Court of Justice ruling which meant ACT need not have been paid on dividends from UK subsidiaries of foreign companies in the EU. One European tax expert who worked close to the ACT case, believes the total bill for the group litigation could exceed £300m and could rise to as much as £500m, far exceeding original estimates.
Hoechst, a German manufacturer, is understood to be in the closing stages of settling with the UK government.
Does Darwin's theory apply to taxation? Colin ponders...
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