Brown to mount 'vigorous' ECJ tax defence

Gordon Brown has vowed to ‘take whatever action is necessary’ in the government’s ongoing battle to protect its tax revenues from a barrage of European claims.

Special Report: Inland Revenue in European tax threat

Speaking before a committee of MPs, Brown stressed the government would be unflinching in its attempts to stop companies using European law to erode government revenues.

‘The UK will defend vigorously any challenge to UK tax law,’ he said. ‘We will take whatever action is necessary to remove uncertainty.’

The chancellor’s statement comes amid an onslaught of claims against the Inland Revenue from large multi-national corporations.

Last year, Accountancy Age revealed that big corporates, including Marks & Spencer, Coca-Cola and IBM were involved in moves to claim back as much as £20bn from UK tax authorities as a result of the changes.

Attempts to harmonise tax law to create a single market across the European Union have resulted in the European courts striking out aspects of UK tax legislation.

‘It is legitimate to say that the single market is an objective for all of us,’ said Brown. ‘People using artificial barriers [to a single market] have got to be dealt with.’

In his annual appearance to defend his Budget before the Treasury select committee, Brown was also asked about the tax avoidance disclosure regime, introduced last year.

‘Financial institutions will always be ingenious and people will always devise new schemes. We think a disclosure rule is a responsible way to tackle [the issue],’ he said.

He was also challenged over how he intended to meet a substantial rise in corporate tax revenues over the next few years. Tory MP Michael Fallon pushed Brown over whether his estimates depended on tax increases.

Brown said that any tax commitments, would be announced in an imminent Labour manifesto.