Tobacco giant wins ruling on tax

BAT has warned an appeal could drag on for at least four years.

British American Tobacco (BAT) has said it may get £1.2bn of tax back after a High Court judge ruled it had overpaid.

Europe's biggest cigarette maker said a preliminary judgement found it should not have paid UK tax on dividends received from European subsidiaries.

The judge said that HM Revenue and Customs should refund the tax paid on the dividends plus other bills.

The Treasury said it would consider the case before deciding whether or not to lodge an appeal.

BAT said that if an appeal was taken to either the European Court of Justice or Britain's Court of Appeal, the process could take up to four years.

In this week's pre-Budget report, the government abandoned a plan to tax British companies on the profits they generate overseas.

Chancellor Alistair Darling also said that dividends paid by companies' overseas subsidiaries would be exempt from tax from next year.

BAT shares closed 2.3% lower on Thursday.