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 tax payer.

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.

Related Articles

Watch out when winding up

Corporate Tax Watch out when winding up

1m Emma Rawson, ATT Technical Officer
How might Brexit affect UK tax policy?

Brexit & Economy How might Brexit affect UK tax policy?

1m Santhie Goundar
Corporation tax losses – your newly flexible friends

Corporate Tax Corporation tax losses – your newly flexible friends

4m Emma Rawson, ATT Technical Officer
HMRC large business tax enquiry duration rises to 3 years

Corporate Tax HMRC large business tax enquiry duration rises to 3 years

4m Emma Smith, Managing Editor
SMEs paying higher rate of corporation tax than big businesses

Corporate Tax SMEs paying higher rate of corporation tax than big businesses

4m Alia Shoaib, Reporter
Big names, little tax: Airbnb, Facebook, Kellogg’s, eBay

Corporate Tax Big names, little tax: Airbnb, Facebook, Kellogg’s, eBay

7m Alia Shoaib, Reporter
New trading allowance: simplicity, but not as we know it

Administration New trading allowance: simplicity, but not as we know it

8m Emma Rawson, ATT Technical Officer
EU divided over radical tax reforms targeting tech giants

Corporate Tax EU divided over radical tax reforms targeting tech giants

8m Alia Shoaib, Reporter