More than 70 multinationals failed to reclaim hundreds of millions of pounds from the UK Inland Revenue in a high court group litigation case on advanced corporation tax (ACT).
The legal action follows litigation initiatives after the High Court found that UK tax authorities levied advance corporation tax unlawfully, and particularly in breach of EU anti-discrimination principles. Previous cases have gone largely in favour of the claimants at great potential cost to the Inland Revenue.
But on November 24 2003 the High Court held that the Inland Revenue did not have to compensate the claimants for the ACT they were charged. They had argued that the Inland Revenue breached the provisions of non-discrimination articles in the double taxation agreements with certain countries.
The court agreed with this argument but held that the claim was not reflected in UK tax law because UK international agreements have to be incorporated in domestic law with an Act of Parliament.
"The non-EU tax treaty breach decision is helpful and indeed good news for both existing and future group litigation order actions," said Peter Cussons, international corporate tax partner at PricewaterhouseCoopers (which is acting as special tax adviser to the claimants).
The High Court granted the claimants leave to appeal. "We haven't got any money but clients permitting, we will return to the fray," said Cussons.
