Millions rest on House of Lords tax decisions

Two tax cases that come before the House of Lords tomorrow could cost
HM Revenue & Customs hundreds of millions of
pounds if it losses.

The cases, brought by Deutsche Morgan Grenfell and Sempra Metals, will
consider the length of time – and the type of interest – that should be applied
to tax repayment claims that are based on a mistake of law.

The decisions will have significant implications for all types of EU claims,
but also apply generally to any claims for repayment of tax brought against
HMRC. The impact of the decisions on the FII GLO alone, which the ECJ will pass
judgment on in December, will run into millions of pounds.

Both cases are linked to advanced corporation tax (ACT), which was abolished
after the European Court of
Justice ruled in the Metallgesellschaft cases that ACT breached EU
law.

The Deutsche Morgan Grenfell case will challenge
Court of Appeal
decision that claims based on a mistake of law can only go back for six years
rather than indefinitely. The Sempra Metals case will consider whether HMRC
should pay simple or compound interest on any repayments.

Further reading:

Treasury evades costly tax questions

ECJ ruling could cost taxman billions

Italian defeat poses new ECJ questions