The hearing that has been dubbed 'the largest tax case in UK history' began on Monday, with Pirelli as the test case.
The large scale battle between the UK's Inland Revenue and some 190 EU-based company groups, began with a recent European Court of Justice ruling in favour of German chemical company, Hoechst Aktiengesellschaft. The ECJ decided that an UK corporation should not be obliged to pay advance corporation tax on dividends to EU resident parent companies.
However, according to industry reports, this ruling opended the floodgates, and the resultant claims for compensation could end up costing the UK government billions of pounds.
This follows the November release of a PricewaterhouseCoopers survey which suggested that, on the evidence of ECJ verdicts since the 1980s, 12 out of the 15 current EU member states have in place domestic tax legislation which directly contravenes freedoms enshrined in the EC Treaty.
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