A CONTROVERSIAL tax bill totalling more than £1million has been repaid to South Somerset District Council - with interest.

The sizeable VAT sum came about as part of an SSDC project to build a £9.84m battery energy storage facility, designed to let it generate income by selling power back to the National Grid.

The batteries for the facility arrived in the UK from China in December, with the council being informed that VAT would not be charged on them.

However the advice, which came direct from HMRC, proved to be incorrect, and they were hit with a 1.35m tax bill.

To cover the shock costs, SSDC leant the money to SSDC Opium Power Ltd, which had been set up by the council to run the enterprise.

The council’s chief executive Alex Parmley said: “We sought specialist advice from a specialist in importing, and the advice was incorrect.

“It isn’t a big issue for the project – the project is on time, and it doesn’t add any additional cost to the project.”

Cllr Henry Hobhouse, portfolio holder for property, climate change and income generation, said written assurance had been given that VAT did not need to be paid.

He said: “We had advice from HMRC and our shippers, both of which said you didn’t have to pay VAT to bring them in

“We have earned a little bit of interest, and the money will be reclaimed in March.”

This all unfolded in January.

Now, SSDC Opium Enterprise has been in full by HMRC.

In turn South Somerset District Council was repaid, plus interest at a rate of 5.25 per cent, expected to be worth around £71,000

Cllr Hobhouse added: “The fact is the council is slightly better off now than before we did this.”