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Big firms take on HMRC over subsidiary rules. By Dan Martin

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20th Sep 2006
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Some of the UK's biggest businesses are pursuing claims against HMRC worth millions of pounds following last week's tax victory by Cadbury Schweppes.

Court documents seen by 'The Times' show that among the 24 multinational firms making claims are Anglo American, Scottish & Newcastle, United Business Media, Prudential and Axa Sun Life.

The action follows the decision by the European Court of Justice that companies establishing subsidiaries in lower tax nations than the UK can not be treated as tax avoidance if they are set up for genuine economic reasons.

HMRC had attempted to recoup UK tax payments from subsidiaries Cadbury runs in the Republic of Ireland, where corporation tax rates are lower.

It is estimated that the case is worth £8m to the company and also throws into doubt the UK's controlled foreign company (CFC) rules which seek to claw back tax from foreign subsidiaries.

"There are two big areas here," Deloitte's Bill Dodwell told the newspaper. "The Cadbury CFC case says that the UK's rules don't quite work, and the other big area is double tax relief. The UK is not in great shape in tax terms. Corporation tax has been going up and we don't need any further badly designed measures to make life worse."

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