By Amita Chohan and Rachel Garwood
Budget 2014 was announced today. A key feature of the Chancellor’s speech concerned HMRC’s draft legislation (published on 28 February 2014) to be included in the Finance Bill 2014 in respect of mistake-based time limits.
Currently, s107 of the Finance Act 2007 imposes a time limit of six years for causes of action that arose before 8 September 2003 and removes the impact of s32(1)(c) of the Limitation Act by maintaining that the limitation period for mistake-based claims runs from the time when tax was paid.
HMRC’s draft legislation will remove the application of s107 to causes of action that concern charges to direct tax contrary to EU law. Fundamentally, this amendment aims to mirror the decision of the Supreme Court in FII where it was found that s107 is incompatible with EU law in the context of a claim concerning tax that was charged in breach of the fundamental freedoms. The proposed revision will be implemented in the form of s107(5A) and (5B) in the Finance Act 2007.
This article appears in the JHA March 2014 Tax Newsletter, which also features:
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