Magazine article Public Finance

Victory for Councils on Back Tax

Magazine article Public Finance

Victory for Councils on Back Tax

Article excerpt

Local authorities have forced the Revenue & Customs department into a U-turn over plans to standardise the tax rates paid by councils when settling backdated equal pay claims.

Public Finance has learnt that the R&C has jettisoned proposals to levy 'a representative rate of tax' on councils that might soon have to pay out more than £2bn in backdated equal pay claims, because of disputes over the tax rates involved.

Councils, the Local Government Association and the Employers' Organisation have instead convinced the R&C that the future calculation of settlements should be undertaken on a councilby-council, or individual-by-individual basis.

The LGA/EO position was accepted at a meeting between the two sides on September 23, at which the department was represented by board member Peter Gurney and tax advisers from PricewaterhouseCoopers.

Documentation obtained by PF following the meeting states: 'HMRC... outlined a proposal for calculating a representative rate of tax obtained through sampling a small number of local authorities. HMRC now seem to be moving away from this proposal in light of discussions with authorities. …

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