BP and a host of corporate giants have just two weeks remaining before they submit claims against the Inland Revenue demanding the return of hundreds of millions of pounds they say has been overpaid in tax.
The oil company’s claim comes after revealing record profits of £8.7bn and a gigantic tax bill of £4.4bn on revenues for 2004. At least £910m of that tax was charged on UK income.
The UK’s biggest company announced results on Tuesday, but still hopes to win compensation from the Revenue for overpaid advanced corporation tax on dividend payments.
Although a spokesman for BP could not confirm the company’s own figure, Accountancy Age understands that some claims in a so-called franked investment income case run into the ‘hundreds of millions of pounds’.
Barristers acting for the companies have until 23 February to lodge their final written evidence with the European Court of Justice before a hearing, which is expected early next year.
Some of the biggest companies in the FTSE index, including BP, Aegis, British American Tobacco and ICI, are seeking compensation and tax rebates because they believe they paid too much advanced corporation tax on dividend payments.
Graham Aaronson, a tax barrister with Pump Court tax chambers, said the franked income case was ‘huge’ and speculated that it could ultimately cost the government billions of pounds in rebates and compensation.
Accountancy Age understands that one particular claim alone would cost the Revenue between £400m and £600m if the GLO is ultimately successful at the European courts.
The news of such huge compensation claims from some of the UK’s most profitable companies will further incense supporters of a windfall tax on company profits.
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