HMRC could be forced to pay big businesses tens of billions of pounds in tax refunds

Dozens of big firms, including Littlewoods and Prudential, believe they paid too much in taxes decades ago.

HM Revenue and Customs could be forced to pay tax refunds worth tens of billions of pounds in court battles with big businesses.

Dozens of companies such as retailer Littlewoods , tobacco group BAT and insurers Prudential believe they paid too much tax decades ago.

The payouts could hit the exchequer so hard they could undermine Chancellor George Osborne ’s ambition to eliminate Government borrowing by the next election.

The highly complex court proceedings are taking place in London and Luxembourg at a time when the Government is being criticised over spending cuts and big businesses allegedly dodging tax.

However, the cases do not involve tax avoidance.

Chris Morgan, of professional services firm KPMG , said: “There could be tens of billions paid out by 2017-18.”

Bill Dodwell of accountancy firm Deloitte, said: “The biggest elements of this have been a long time coming. The revenue has put up the strongest possible fight.”

The HMRC confirmed it had funds set aside for possible pay outs after the court battles, which reportedly run into the tens of billions of pounds.

The UK tax authority said: “We are required for accounting purposes to include an estimated contingent liability figure of potential repayments of tax.

“There is no question of this amount or anything close to this amount ever being repaid as the figure is based on our losing every single case currently being litigated, which is not going to happen.”