8 Aug 2016 04:00pm

UK businesses to take more cases to ECJ before EU exit

The number of cases sent to the European Court of Justice (ECJ) is expected to increase following the EU vote, Pinsent Masons has said

The law firm said UK claimants may be keen to rush their proceedings while EU rules still apply in the country.

Since 2011, there has been a 22% increase of cases taken to the ECJ. Between 2011 and 2015, there were 61 new cases every year, compared with 50 each year between 2005 and 2010, the firm said.

According to Pinsent Masons, many businesses and taxpayers have taken cases against national tax authorities - which have been under increasing pressure to maximise revenues - to the ECJ. The EJC has ruled in favour of business claimants against their home-based tax authorities in several high-profile cases over the years.

Andrew Scott, director at Pinsent Masons, said, “The reach of EU law has widened considerably and continues to do so, with the result that an increasing amount of UK tax law is affected. More businesses and other taxpayers have therefore managed to find grounds for challenging UK tax law.”

Scott noted that EU anti-discrimination rules were used to over-rule the UK’s tax treatment of dividends paid by foreign subsidiaries of British companies, by arguing that, in contravention on EU single market rules, they were being taxed more heavily than dividends from UK subsidiaries.

Following the EU referendum result, the law firm said that claimants may want to rush their proceedings to the EU court while European law still applies in the UK.

Scott said that, while it’s business as usual at present, UK claimants will be considering whether to launch proceedings now in order to increase the likelihood that their claims are protected as and when the UK does leave the EU.

“UK claimants might be concerned that, once it is out of the EU, the UK government will attempt without notice - as they have in the past- to remove the ability to bring a claim based on EU grounds even where EU law applied at the relevant time,” he added.

Jessica Fino

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