Today’s announcement follows the department’s decision on 8 September to limit any claims for the back payment of overpaid tax to six years.
Primarolo said that some claimants who had commenced proceedings before 8 September sought to amend their claims to add in years beyond the normal time limits. ‘They are doing so because, under existing law, if the courts allow an amendment of this sort, it is deemed to be a new action started on the date of the original action.’
She said that this ‘places tax revenues at risk’ which she went on to describe as ‘unacceptable’. The amended legislation will prevent any changes being made to claims made before 8 September, although it will not affect applications made to the court before today.
However, tax experts claim that the six year time limit is in contravention of the Human Rights Act, because it did not allow for a transitional period, and would most likely be contested in the courts.
This will more than likely be addressed sometime next year, when a number of group litigation orders take place.
Chris Morgan, head of the European tax group at KPMG, said ‘lots’ of companies would be caught out by the latest legislation change.
‘Because the cases are so complicated, and because the Revenue has been changing the goal posts so much, companies have been putting in claims as soon as possible,’ said Morgan. He added that companies would make changes to their claims when they find further areas that could be addressed.
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