This article was first published in the March 2012 International edition of Accounting and Business magazine.
The UK government is being taken to the European Court of Justice (ECJ) with the European Commission claiming it has made it almost impossible for British taxpayers to recover some taxes levied in breach of European Union (EU) rules.
Brussels dislikes aspects of the UK Finance Act 2007, claiming it effectively abolished a ‘remedy for repayment of taxes paid in mistake of law’, making it ‘impossible or excessively difficult’ for them to recover the money where tax was paid in breach of EU legislation (which should have primacy over UK law in any case). The Commission was also upset that the abolition did not include
any transitional rules to cushion the blow.
The ECJ finds the UK has broken EU tax laws through the act; it can order reform, and levy huge daily recurring fines of thousands of euros payable until Britain complies.