Experts Warn That Limitation Legislation Changes Could Infringe EU Law

by Robin Pilgrim, LawAndTax-News.com, London

11 September 2003

Tax and legal experts in the United Kingdom have expressed outrage at an Inland Revenue decision, announced on Monday, to amend UK limitation laws.

Following a recent High Court ruling which would have allowed claims for overpaid taxes to be backdated for up to 30 years, the UK tax authority this week announced its intention to effectively impose retrospective legislation in the 2004 Finance Bill which will enshrine a six-year limitation period for claims in law.

Explaining the proposed move, Paymaster General, Dawn Primarolo announced that:

'The Revenue normally has the right to go back for six years to assess outstanding tax and those who have overpaid tax have the right to make claims to repayment for a similar period. A recent High Court case has the potential to upset this balance. The proposed legislation is designed to restore this.'

However, in a statement released on Tuesday, Mark Whitehouse, director of the Tax Litigation Department at KLegal, a parallel organisation to KPMG, slammed the proposed change, arguing that:

'The Inland Revenue is seeking to remove with immediate effect a valuable right available to all taxpayers. But as the change is most directly targeted at EU tax claims, it may well itself contravene established EU law since it is without any transitional period.' He went on to add that:

'There are also powerful Human Rights arguments to raise since the legislation purports to remove established rights (and there is recent case law to support these). We recommend that taxpayers continue to make claims (including for amounts paid more than six years ago).'

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