Revenue fights it out in biggest ever tax case
The largest tax case in UK history got underway yesterday as solicitors battled it out with the Inland Revenue over a case which could ultimately cost the chancellor billions.
The case relates to a European Court of Justice decision in favour of German chemical company Hoechst Aktiengesellschaft. The ECJ ruled that in that case a UK corporation should not have to pay advance corporation tax (ACT) on dividends to its EU resident parent companies.
The decision opened a floodgate of claims, and over 190 company groups are seeking recompense from the UK government. The first hearings concern EU parent companies with a treaty tax credit, with Pirelli as the test case.