Clause 228 - Overpayment relief: generally prevailing practice exclusion and EU law

Part of Finance Bill – in a Public Bill Committee at 3:30 pm on 20 June 2013.

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Photo of Chris Leslie Chris Leslie Shadow Minister (Treasury) 3:30, 20 June 2013

Clauses 228 and 229 are fairly straightforward. As every member of the Committee undoubtedly knows, overpayment relief provisions provide relief when tax has been paid, or a person is liable to tax, as a result of an assessment or determination that the taxpayer believes is not correct, meaning that the tax is not due. The provisions apply to income tax, capital gains, corporation tax, petroleum revenue tax and stamp duty land tax. The case law of the European Court of Justice confirms that EU member states should provide remedies, subject to reasonable time limits, for tax charges that are contrary to EU law. At present, that can be dealt with either in general non-legislative rights, such as under common-law remedies, or through legislation. If legislation is provided and includes reasonable time limits, general non-legislative case law arrangements are usually not accepted by the courts.

Clause 228 amends existing legislation to confirm that when a tax was levied contrary to EU law, overpayment relief will not be affected by any prevailing common-law practices. Clause 229 amends the four-year time limit for overpayment relief claims to make it clear that the four years run from the period to which the mistakes relate.

Will the Minister explain why the measures will have effect for claims received on and after the end of the six-month period following Royal Assent? I assume that that is because, under EU law, notice must be given when a relief is curtailed. Secondly, will he explain the time difference? While there is provision regarding a four-year period from the end of the relevant tax year, the residual rights for taxpayers to reclaim overpaid tax via their general non-legislative rights are slightly more generous, in that there is typically a time limit of six years from the discovery of the mistake. Why is there an anomaly in the time frames?

My questions are very specific, and I am sorry to fire them at the Minister, but I am sure that he knows the answers.