The oil company wants repayment of £300m stamp duty tax it paid when it took over Atlantic Richfield in 1999
The row about how much tax British companies pay to the exchequer could erupt again after it emerged that BP was reclaiming £300m of tax the oil company paid more than a decade ago. A claim filed at the high court in December shows that BP wants repayment of £186m, plus compound interest of £96.2m, and damages following the tax it paid when it took over Atlantic Richfield (Arco) in 1999.
The tax under dispute is "stamp duty reserve tax", which is paid when companies issue shares. At the time BP was advised to pay the tax, though it is now arguing that it might have misread the law because the shares in question were American shares rather than conventional shares listed in London. BP declined to comment last night, although it is thought that other companies are seeking clarity on this tax and whether it needs to be paid on American depository receipts.
The tax bills of major companies have been under scrutiny this month since it emerged Barclays paid just £113m in corporation tax in 2009 despite reporting £11.6bn of profits. Barclays is benefiting from rules allow all companies to use losses to offset against future profits. Chancellor George Osborne has ruled out introducing rules that could place a limit on how long such losses can be carried forward.
The bailed-out banks Royal Bank of Scotland and Lloyds Banking Group are not paying any corporation tax at all and analysts believe it could be many years before they do so.
HSBC, which is expected to report £12bn of profits on 28 February, can also be expected to face questions about how much corporation tax it pays in the UK.