TaxCorporate TaxRevenue faces £50m bill after losing tax case

Revenue faces £50m bill after losing tax case

Italian tyre manufacturer, Pirelli, has won a High Court tax case which could ultimately cost the Inland revenue over £50m.

Link: ECJ ruling could mean windfall for UK multinationals

Mr Justice Park ruled that the Revenue had unlawfully levied and retained the now defunct Advanced Corporation Tax against Pirelli, which has its parent resident in another EU member state.

‘Today’s judgement completely supports our clients position that there was no reason why UK companies parented anywhere in the EU should not be treated the same,’ said Simon Whitehead, head of litigation at Landwell, the law firm representing the taxpayer.

It extends the IR’s liability from about 60 to 120 of the company groups that have made claims in the ACT Group Litigation. There are around 170 multinational company groups, in total, seeking compensation.

KPMG said the decision could lead to many companies obtaining ‘large compensation sums from the Inland Revenue on the grounds the UK tax rules were in breach of EU law.

Chris Morgan, tax partner in the firm’s International Tax Group commented: ‘The verdict confirms the overriding importance of ECJ decisions and the need for UK groups to understand the implications and act on them.’

The Revenue told AccountancyAge.com it was ‘studying the decision’ and would make a comment in due course about what its next action might be.

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