Britannia Radio

Payments to EU Illegal?

Ian Pearson MP
HM Treasury
London

Dear Mr Pearson

Thank you for your defensive letter of 19 November in reply to mine about the legality of payments to and from unaudited public bodies.

The member of your staff responsible for drafting your letter managed to say nothing new or unknown, while the Court of Auditors in Brussels took a different line. They simply ignored my question and answered a totally different one.

Please try again. The question is not what should happen, but what is happening. The legality of payments from and to statutory organisations which have had their accounts qualified must raise serious questions about the paying authority, and possibly expose them to charges of negligence and/or malfeasance.

Since my first letter I have had my attention drawn to a ruling of the European Court of Justice when Italy attempted to impose a turnover tax. The ECJ upheld a challenge on the grounds that the treaties permitted VAT only. The treaties were found not even to permit such an additional tax by derogation.

Does this not indicate that any tax raised by an institution under EU law, and which can be held to be unlawful, is legally uncollectible? Certainly that would appear to be the case in the UK.

Across the EU as a whole, if institutions are held to be acting unlawfully - as my first letter argued - then the earlier ECJ ruling clearly indicates that they are not covered by the treaties. Therefore the collection and distribution of VAT is itself unlawful.

This is clearly an issue of substance and one of great importance. The consequential implications are obvious.

The facts that have now come to light bring into question the EU's authority to empower member states to raise any tax revenues, whether VAT, customs duties or anything else. They also reinforce my contention that it subsequently has no authority to receive and then distribute such public monies.

In view of these new considerations, I have alerted the Commissioners for Budgets and Budget Control, the Court of Auditors and the chairman of the Budget Control Committee.

I await a more relevant reply to these matters with great interest.

Ashley Mote