Cases from the European Court of Justice, holding that national tax provisions are inconsistent with EU law, just seem to keep on coming. The most recent is a decision of the ECJ yesterday in Case C-569/07 HSBC Holdings plc and Vidacos Nominees Ltd v The Commissioners of Her Majesty’s Revenue & Customs, which held that the levying of stamp duty reserve tax on a transfer of shares in France as part of a cross-border acquisition, pursuant to section 96 of the Finance Act 1986, was inconsistent with EU law (in particular, Article 11(a) of Council Directive 69/335/EEC of 17 July 1969 (pdf) concerning indirect taxes on the raising of capital, as amended by Council Directive 85/303/EEC of 10 June 1985). The Guardian‘s report of the case is typically angst-ridden:

Treasury faces £5bn bill over European tax ruling

European court judgment over UK tax on firms that issue new shares abroad could be costly for British government

The taxpayer faces a bill potentially as high as £5bn following an obscure tax ruling on the issuance of shares by companies made today by the European court of justice. HSBC won an award of £27m plus interest from Revenue & Customs, after a long-running case in which the bank argued that the 1.5% tax it had been forced to pay on new shares it issued in 2000 in France broke EU law.

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May you live in interesting times.

This is – apocryphally – an ancient Chinese curse. Whatever its provenance, the times are certainly interesting for those who seek restitution of taxes invalidly paid contrary to EU law. In Test Claimants in the FII Group Litigation v HM Revenue & Customs [2008] EWHC 2893 (Ch) (27 November 2008) Henderson J dealt with a series of issues arising in such claims, and in Test Claimants in the VIC Group Litigation; FJ Chalke Ltd & Anor v Revenue & Customs [2009] EWHC 952 (Ch) (08 May 2009) he held that EU law required compound interest to be paid on such claims. This is in contrast to the position at national law, where the courts have held that similar claims to restitution of overpaid taxes (such as was pleaded in the more recent Bloomsbury International Ltd v Sea Fish Industry Authority [2009] EWHC 1721 (QB) (24 July 2009)) only attract simple interest (see my piece “Interesting Times. Overpaid Taxes, Restitution and Compound Interest” (2005) 27 DULJ (ns) 343-363). After Chalke, the Times reported that this could pave the pay for claims amounting to more than £1 billion, and in my previous post I noted that the Financial Times later reported that the Revenue had put aside five times this amount to deal with these and similar claims.…

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EU law has thrown up some very abstruse issues, none more so that the compatibility of national VAT regimes with European VAT Directives. Where there has been a charge to tax pursuant to national rules which infringe EU law, then that overpayment of tax can be recovered.

Sometimes the issue concerns a relatively straightforward overpayment. For example, the Irish Times reported a little while ago that GE Capital Woodchester Ltd has brought legal proceedings against the Revenue claiming it has overpaid some €19 million due to the State’s alleged failure properly to implement an EU directive related to the VAT treatment of hire purchase transactions. The principle of restitution of overpaid taxes is well established at Irish law (see O’Rourke v The Revenue Commissioners [1996] 2 IR 1 (HC, Keane J) and Harris v Quigley [2006] 1 IR 165, [2006] 1 ILRM 401, [2005] IESC 79 (01 December 2005) following Woolwich Building Society v Inland Revenue Commissioners [1993] AC 70 (HL) (pdf); see also In re Article 26 and the Health (Amendment) (No 2) Bill, 2004 [2005] IESC 7 (16 February 2005)) so the main question in the Woodchester proceedings (at least as they appear from the newspaper report) will be whether the overpayment is in fact made out.…

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Charlie Webb poses the provocative question “What is Unjust Enrichment?” in the title of an important piece just published in (2009) 29 (2) Oxford Journal of Legal Studies 215-243. His basic point is that whilst the existence of a law of Restitution concerned with reversing unjust enrichments is largely uncontroversial, the ability of unjust enrichment to account for all restitutionary claims is far less so, and he therefore addresses the question of what role a conception of unjust enrichment can and should play in presenting and justifying the modern law of Restitution. Moreover, an excellent Irish perspective on this question is provided by Laura Farrell “The Future of the Law of Restitution in Ireland – the Unjust Question” (2008) 15(10) Commercial Law Practitioner 239.

When I finished Webb’s piece, I went on to read some of the essays in The Fifth Remedies Discussion Forum published in 42 (1) Loyola of Los Angeles Law Review (2008) (currently here, but soon probably here), and whilst I was on the website, I took the opportunity to go back and look at the previous Remedies Forum also hosted by that Review. That earlier one was largely devoted to the Law of Restitution, and one of its themes was was that this subject should find a more prominent home in law school curricula, a sentiment with which I entirely agree.…

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