Decade-old tax bills are set to be repaid

Mar 10 2010 by Adrian Pearson, The Journal

THE taxman has been forced to hand back millions of pounds to North East councils and may have to hand back more if a High Court writ for payment of interest is successful.

Newcastle Council has become the latest to benefit from an unexpected windfall, worth £3.4m, after decade-old VAT bills were returned.

City leaders had been pursuing the case after the High Court ordered the Government to hand back the cash in 2008. From 1990 to 1996, the council was made to pay VAT on leisure-related sales, including library video rentals and swimming pool charges.

But the battle with the taxman is far from over for Tyneside council treasurers. A writ is expected to be made with the High Court asking for interest on the debt to also be paid. If successful Newcastle and other North East authorities could get thousands of pounds more for council coffers.

Across the region, it is thought more than £10m is owed overall, with some councils in the middle of long-running battles to recover the full amount.

Peter Allen, Newcastle Council’s executive member for corporate resources, said the council’s gain would benefit taxpayers.

“We could have let this go but we decided it would be too big a missed chance.