Treasury sets out defence for tax cases
The government has finally acknowledged the threat posed by legal challenges under EC law to UK corporation tax receipts.
The government has finally acknowledged the threat posed by legal challenges under EC law to UK corporation tax receipts.
Link: Budget 2003
The admission follows the loss of high-profile tax cases, such as Hoechst/Pirelli and Lankhorst-Hohorst, as well as the ongoing Marks & Spencer hearings, which could cost the Treasury up to £1bn thanks largely to a £750m group litigation order launched this month. The Treasury will now produce a document in the summer detailing its strategy to safeguard corporation tax revenues.
European tax experts gave a cautious welcome to the news. Peter Cussons, international corporate tax partner at PricewaterhouseCoopers, said: ‘On the bright side, it is the first overall government acknowledgement that there is an issue. The bad news is the attitude is one of determination to protect the status quo.’
The government’s approach could range from one of staunch refusal to accept European decisions to one of flexibility, where it would be willing to discuss taxation situations with businesses and bodies such as the Confederation of British Industry.
Others said the Revenue’s willingness to consult should be welcomed.
GOVERNMENT FACES HUGE TAX LOSS
Receipts and estimates of losses from current court cases include: