<b>Tax News:</b> Treasury faces bill under corporate tax case. By Dan Martin

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The Treasury could be hit with a rebate bill worth billions of pounds following a landmark opinion at the European Court of Justice (ECJ) affecting the corporate tax paid by UK companies with EU subsidiaries.

The ECJ's advocate general ruled yesterday that a now defunct British law imposing corporation tax on dividends from EU company subsidiaries which does not apply to companies resident in the UK breached European law.

The case was brought by tobacco company BAT and related to the treatment of "Franked Investment Income" during the 1970s under the Advanced Corporation Tax (ACT) law. The regulations were repealed by chancellor Gordon Brown in his 1997 budget.

If the ECJ follows the opinion, the UK government would be forced to rebate taxes back to firms affected. Precedents show the court f...

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