On 8 September, 2003, the Paymaster General announced draft legislation to be included in the Finance Bill 2004. The draft clauses contain an amendment to section 32(1)(c) of the Limitation Act 1980, to the effect that the extended limitation period does not apply to mistakes of law relating to tax. This change is to apply to all proceedings commenced in the courts on or after the date of the announcement.
The amendment would mean that people would no longer be able to recover taxes illegally levied by the Inland Revenue within six years of the pronouncement of a mistake of law. Instead, the Revenue would reimburse taxpayers who have suffered loss as the result of taxes that have been levied in contravention of European rights only if such taxes have been paid within the past six years.
