eurealist.co.uk

Last week the Chancellor announced in his Pre-Budget Report that the Government would not repay tax “incorrectly” levied from more than six years ago.

Unfortunately this is a direct challenge to an earlier ruling by the ECJ, which laid down that such repayments should stretch back to 1973. The same court has made judgments in the past which have forced the Treasury to change tax law and to return tax paid by British businesses. This is not a academic debate that has nothing to do with us, if Gordon Brown is forced to return to big international companies the tax levied legally by the British government on their operations, then we have to pick up the shortfall, and this means either our taxes go up or our services are put under financial pressure.

Neither are we talking about piddling amounts; this coming week for instance the ECJ is likely to rule on a case which could cost us all several billion pounds.

Under British tax laws dividends paid between UK companies within the same group escape tax. However, if a dividend is paid by a company based outside the UK to a British firm in the same group, tax must be paid. A group of companies are challenging the British government’s right to levy these taxes under EU law, and if as expected they are successful the verdict would force the Government to pay back at least £6.7bn in tax plus interest to the companies. The Chancellor’s decision to limit the time they could claim these repayment to six years, would then be challenged, as the ECJ has already said in previous cases that their ruling can be back dated to when we joined the European project there seems very little chance that we could avoid the payments.

I know the political elite would like us all to stop talking and thinking about the affects the EU is having on our government’s powers, but it seems a bit inane of them to actually ignore it themselves. When Brown made his announcement lat week he must have known that it contravened the ECJ ruling, so what is his bottom line -is he prepared to challenge the ECJ supremacy in this matter - if he is not then his will be faced with making a humiliating climb down, I don’t suppose he will be making an announcement to that effect though.