The former chief executive of Matalan was offered sympathy but not a refund at the High Court yesterday as he lost a bid to reclaim almost £1 million in mistaken tax payments.

Angus Monro, who ran the discount retailer between 1996 and 2001, was attempting to force HM Revenue and Customs to refund £846,000 — plus interest — that he overpaid in capital gains tax after selling a batch of Matalan shares in 1999.

But despite an acknowledgment from the taxman that Mr Monro had indeed paid too much and a frank admission from the judge that he had “the greatest possible sympathy” for the businessman’s plight, the case was dismissed because of technicalities in UK tax law.

Mr Monro, who made millions of pounds during his time at Matalan, was sanguine about the result. “I’ve already paid the tax and I didn’t know it was a mistake at the time so it’s a win I didn’t win rather than a loss I incurred,” he told The Times last night. He added that even though he was “pretty sure that if the boot had been on the other foot the Revenue would have been crawling all over me like a rash”, he was not sure whether he would appeal against the decision.

HMRC declined to comment, saying that it could not discuss individual cases but Sinead Reid, a tax expert at the law firm DLA Piper, said that the Revenue would be “very relieved” because “had Mr Monro have won, it could have opened the floodgates for similar claims”.

The case concerned 1.3 million share options that Mr Monro was awarded as part of his pay package while chief executive of Matalan. He exercised the options in 1998 and sold 900,000 of them a year later after they had jumped in value, netting a total of £7.4 million. Mr Monro declared the sale on his tax return and paid £2.1 million in capital gains tax.

However, in 2002, in a separate dispute concerning how gains on share options should be taxed, it emerged that the previously accepted method, which Mr Monro and thousands of others had employed, was wrong, with the result that executives were paying too much tax. Acting on this new information, Mr Monro’s advisers filed an amended tax return claiming a refund of £846,000.

Despite acknowledging the error, the Revenue refused to refund the money because the 12-month deadline for filing amended tax returns had already passed. Sir Andrew Morritt, the Chancellor of the High Court, said yesterday that although he thought the 12-month limit was unfair, the law was clear and Mr Monro was not entitled to a refund. He also dismissed Mr Monro’s other claim that he was entitled to a refund because he had paid the tax under a “mistake of law”.

He said that although the Revenue had subsequently acknowledged the mistake, tax laws did not allow for a refund if the tax was collected “in accordance with the practice generally prevailing at the time”.

Fiona Smith, of the law firm Forsters, said: “Although it is hard on the taxpayer that the Revenue were not prepared to be more flexible, technically they were in the right.”

Times Recommends

• C&G axed - 1,660 jobs to be lost
• UK house prices rise 1.1% as buyers return
• Mixed reaction to US banks repaying bailouts