Western Ferries loses £3mill-plus tax appeal

Western Ferries has lost its appeal against HMRC and the court has found it is liable for over £3mill tax due to HMRC going back several years (this is in addition to any interest charges, consultants fees and legal costs that the company may be incurring or have incurred). After 20,000 words of a judgment, paragraph 216 simply says

"The Appeal is dismissed".

The company has 56 days to appeal the decision on this appeal. HMRC's attitude is likely to be vigorous if Western does appeal again since this case is seen as setting a precedent for other operators of estuary and river ferry crossings around the UK - and who are watching this with interest.

Western based their appeal on their claimed eligibility for tonnage tax rather than corporation tax, but as the Dunoon Observer said in January 2010, "Professor Kay … notes: "On the face of it, (it) would seem that Western's claim for eligibility for tonnage tax is negated by their operating in an estuary, and this point would appear to be supported by the authorities, as Western have stated themselves in 2008."

There is a strong public interest dimension here. Western already holds a virtual monopoly of vehicle-carrying over the crucial Clyde Estuary crossing and is currently a bidder to have a complete monopoly of all traffic with the current Gourock-Dunoon tender. There are therefore real public interest issues at stake here, both in terms of Western's current route (which is also defined as a public service route under EC guidelines) and its interest in the current Gourock-Dunoon tender.

Neil Kay 11th May 2011