BP has brought a lawsuit against the UK government to try and reclaim taxes it paid “by mistake” in 1999, City A.M. can confirm.
The oil giant is claiming almost £300m in refunds, interest and compensation for paying the controversial 1.5 per cent stamp duty reserve tax on its purchase of ARCO in 1999.
BP has started a case in the High Court arguing that the levy, intended to tax paperless share transfers, should not have been paid on new shares issued as part of the £17bn takeover of the American petrol station chain.
HM Revenue & Customs (HMRC) is named as the defendant in court papers filed in December, which ask for a repayment of £186.4m plus £96.2m interest and compensation.
The oil firm’s effective tax rate in 2010 was 31 per cent excluding the impact of the Gulf of Mexico oil spill, according to BP’s most recent results.
BP’s claim follows on from a landmark case brought by HSBC in 2009, when the bank fought for a refund of stamp duty reserve tax in the European Court of Justice.
HSBC successfully argued that the tax on share transfers should not apply to new share issues made through a EU clearing house. In that case, HSBC issued shares to pay for a takeover of Crédit Commercial de France via a clearing house and a UK agent.
EU law does not allow countries to tax the raising of capital.
HMRC invited companies to apply directly to the department for a refund after HSBC’s victory, but said it would only grant a refund of the tax within six years of the original payment.
BP yesterday declined to comment, while HMRC said it was “unable to comment on ongoing litigation cases. Statutory claims to repayment of SDRT currently need to be made within six years”.