Pentagon Seeks Back Taxes In Fight With U.K. Authorities

May 19 2009 | 2:00am ET

In its fight with British tax authorities, hedge fund Pentagon Capital Management may have a new weapon.

The London firm, which decided to liquidate last year after it was sued by the U.S. Securities and Exchange Commission, has filed a claim against the U.K.’s Revenue & Customs, seeking £1.27 million (US$1.9 million) in “erroneously paid” taxes. The move comes in the wake of a court case that forced the British government to ditch its stance that value-added tax overpayments could only be claimed for three years.

Pentagon’s claim is dependent on yet another court case, involving Scottish Equitable, but it’s taking its shots now anyway.

“HM Revenue & Customs are querying the tax allowability of certain deductions within the company's tax computations in earlier years,” the hedge fund wrote in a regulatory filing. “The company's tax advisers strongly believe that HMRC have no statutory basis for disallowing such deductions and are prepared to defend the company's position vigorously.”

For their part, British tax authorities say that Pentagon owes them £7.6 million (US$11.5 million).

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