Treasury faces massive refund bill on tax ruling
THE European Union’s top court ruled yesterday that a British tax on share transactions breaks EU law, leaving an already cash-strapped UK Treasury potentially facing a refund bill running to billions of pounds.
HSBC, Europe’s biggest bank, argued in the European Court of Justice that when it bought French rival CCF in 2000, it had to pay a 1.5 per cent UK stamp duty reserve tax on shares it offered to CCF shareholders through a French clearing service.
The court said the duty contravened the EU’s capital duty directive in a ruling that British firms that have been involved in a cross-border takeover will study carefully.
The directive “must be interpreted as meaning that it prohibits the levying of a duty such as that at issue in the main proceedings, on the issue of shares into a clearance service,” the court said in its ruling. The case goes back to a British court where HSBC is expected to ask for a refund of the duty, with other companies in a similar situation expected to follow suit.
Vodafone is also thought to be trawling through its records in the hope of clawing back money.
UKcompanies are thought to have paid £25bn in stamp duty on share transactions.