Decade-old tax bills are set to be repaid

Mar 10 2010 by Adrian Pearson, The Journal

“Taxation can be a complex subject and every now and then you see an area where you have been unfairly hit.”

He added: “We will use the money to cover us against those unexpected bills that pop up throughout the course of the year which, if we did not have this reserve, we would have maybe had to pass on to the taxpayers.

“The worst thing to do would be to just spend this on the first available project and have nothing to buffer against those unplanned-for costs that pop up every year.”

In Northumberland, the council is pursuing a £1.5m claim, of which some has already been recovered, and Sunderland Council has received more than £2.6m back from the taxman, with the potential for more to come. Their returns include excess parking charges and sports centres’ fees.

In North Tyneside, the council said a claim made in 2009 saw them eventually win a gross VAT repayment of £1.4m.

A spokeswoman said: “This potential saving was identified as part of the Value for Money Programme planning for 2009/10, therefore it is a planned receipt for the council. Each authority may deal with planning for the outcome of this claim in different ways.” The council is not taking the same legal action for interest payments but is awaiting clarity on the issue.

A Newcastle Council spokesman said: “A High Court decision in 2008 deemed such income to be exempt from VAT, which allowed local authorities to submit claims to recover this money.

“The council has been advised that it is entitled to compound interest on this overpaid VAT but must issue a writ to the High Court for a judgement. The writ has been submitted and the council awaits the outcome.”

We will use the money to cover us against those unexpected bills that pop up throughout the course of the year