A number of firms including McGrigors, Dorsey & Whitney, Reynolds Porter Chamberlain, Linklaters, Slaughter and May and Norton Rose are representing clients in a group litigation order (GLO) seeking to recover money wrongly paid through advanced corporation tax (ACT).
After a decision in the House of Lords last week (18 July), which saw Sempra Metals win a 12-year battle, the Lords ruled that companies wrongly charged ACT should be able to recover interest on the sum on a compound interest rate rather than a lower flat rate.
Slaughters dispute resolution partner Sarah Lee led the team advising test claimant Sempra Metals, with
The decision has implications beyond tax. Norton Rose tax partner Chris Bates said: “It certainly raises the stakes because the financial consequences will be considerably greater, especially in these types of tax cases. The potential reward for tax payment increases, therefore people are more likely to pursue matters than they otherwise would be.”
Dorsey head of the
Jason Collins, head of tax litigation at McGrigors, is also representing a number of businesses in the GLO. He said: “For too long it has been a win-win situation for HMRC. The Lords have recognised that European Union (EU) law requires compound interest to be paid where tax is collected prematurely. HMRC must now recognise it must provide full recompense in all areas when it has wrongly collected tax in breach of EU law.”
He added: “The decision could signal the opening of the floodgates for other companies and multi-nationals to come forward and seek compound interest.”
However, the Lords ruled that the amount owed by the HMRC would be paid on the Government’s rate of borrowing, rather than Sempra’s.
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