Treasury tight-lipped over cost of GLO defeats

The Treasury has refused to disclose the potential cost of the group
litigation orders brought against the government by multinationals because it
could damage the economy.

Responding to a Freedom of Information Act request from Accountancy
, the Treasury said it was withholding the numbers, which are thought to
be in the tens of billions, under exemptions in the Act.

It said the move would prejudice ‘the economic interest of the UK… and the
financial interests of the UK government’, and that it ‘would, or would be
likely to damage policy formulation in the Treasury’.

Experts have suggested the case could cost the Exchequer between £10bn and
£20bn, sums that would put key fiscal planning targets such as the golden rule
at risk.

Accountancy Age had requested information on the potential cost of
losing the group litigation orders, brought by companies such as Cadbury
Schweppes (pictured), Marks & Spencer, Vodafone, Adidas and BT. In all, at
least 1,000
companies have joined the actions, which challenge the enforceability of UK tax
law under single market rules laid down in the EC treaty.

The Treasury added: ‘The public interest in withholding the information
outweighs the public interest in disclosure because the information would or
would be likely to prejudice relations between the UK and another state, and an
international organisation or an international court, and would or would be
likely to prejudice the interests of the UK abroad and the promotion and
protection by the UK of its interests abroad.

‘These cases are now so big and so dangerous they are prejudicing the budget
arithmetic,’ David Heathcoat-Amory, the Tory eurosceptic and MP for Wells said
this week, calling for greater disclosure in this year’s pre-Budget report.
‘Parliament ought to be told even in outline terms about what is at stake here.’

Peter Cussons, the PwC tax partner who helped pilot the actions, said: ‘I can
understand why they do not want to disclose the numbers but it’s difficult to
see why the policy exemption is there. It’s more of a policy failing.’

The Treasury’s disclosures do reveal that it has calculated estimates of the
cost. Accountancy Age intends to challenge the Treasury’s decision.

Related reading