Articles by McGrigors
05 June 2005
McGrigors plan VAT attack
(Published The Sunday Herald)
The UK exchequer could be forced to hand back hundreds of millions of pounds following a High Court action being brought by Scottish corporate law firm McGrigors.
Their London office is putting together group litigation in an attempt to claim VAT refunds paid out by companies on legal and professional fees associated with flotations and share issues.
In particular McGrigors is seeking to ensure that the rebates will not just be for sales that occurred within the last three years but apply to flotations that took place earlier.
McGrigors senior associate Jason Collins told the Sunday Herald that the firm is steering clients and other businesses which might qualify for the rebates into its planned High Court claim, with a view to testing the current three-year time limit on such claims.
Between 1996 and 2002, 2500 companies floated on the Alternative Investment Market (Aim) alone. Each of these firms would have have shelled out fees which Collins estimates at “between £1m and £5m”.
If the average total fee associated with each float was £2m, it means that UK firms could be entitled to recover at least £875m in VAT rebates. But that excludes main market flotations where average fees are much higher.
Collins said: “The practice of denying recovery [of VAT paid on share sale costs] has been shown to be wrong by the European Court of Justice. The capping of refunds at three years does seem to be rather arbitrary. Its legality should, and will, be tested by the actions we are taking through the high court.”
The floodgates for such actions opened in April this year when the advocate general of the European Court of Justice ruled in favour of Marks & Spencer in its quest to set off EU subsidiary losses against UK profits.
For further information please contact :
taxlitigation@mcgrigors.com
The frequency with which McGrigors is mentioned in the press is testament to the high-profile nature of the work we do. As well as this, our lawyers are regular contributors to the broadsheets and specialist publications ensuring the level of our knowhow is well known.