CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. UK Set For New Clash With EU Over Tax Legislation, KPMG Warns

UK Set For New Clash With EU Over Tax Legislation, KPMG Warns

by Robert Lee, Tax-News.com, London

11 December 2006


Draft legislation issued by the United Kingdom government last week seeking to limit the ability of companies to claim back overpaid tax "almost certainly" contravenes EU law, according to accounting firm KPMG.

The legislation comes in response to a recent House of Lords ruling involving Deutsche Morgan Grenfell, which potentially paved the way for corporates to receive rebates for overpaid tax going back to 1973.

KPMG said that under current rules, where a claim is pursued directly through the courts, a company has a six year period in which to reclaim tax that it has paid in error. The key point challenged in the Deutsche Morgan Grenfell case is that of when this six year time period begins. In this case, the House of Lords held that the six year period should commence from the date that the taxpayer knew that the payment was made by mistake.

Potentially, this ruling meant that the Treasury was open to claims for repayments of tax dating back to 1973 – when the UK joined the EU – provided the claims were made prior to blocking legislation introduced in 2003.

The UK government is now legislating to change the date at which the six year period commences to that of the date on which the tax is paid, which would act retrospectively from 8 September 2003, thus covering periods not already dealt with by the blocking legislation introduced that year.

“HMRC had estimated that the ruling in Deutsche Morgan Grenfell could cost the treasury billions of pounds," commented Jonathan Bridges of KPMG’s International Tax team.

"The retrospective nature of this proposed legislation closes the door to many taxpayers seeking a rebate of an overpayment of tax paid in error. This omission of any transitional period, in our view, clearly contravenes EU law," he concluded.


To see today's news, click here.

 















Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »



Stay Updated

Please enter your email address to join the Tax-News.com mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.


To manage your mailing list preferences, please click here »