Tax experts have warned that the Treasury may be hit by billions in payouts to multinational companies if the European Court of Justice decides that the UK's stamp duty reserve tax (SDRT) conflicts with EU law. Companies that have taken part in mergers and acquisitions within the EU may be eligible to reclaim tax from the Treasury. Craig Leslie, of PricewaterhouseCoopers' professional services group, told the FT that at least £2bn could be demanded from Treasury coffers by businesses that have paid out 1.5% of SDRT on transactions using systems that hold and trade shares in Europe. The UK tax system treats share transfers differently with 0.5% levied on the companies. But Leslie expects that the public purse could be hit harder - by up to £5bn in reclaims - if the court should decide that the stamp duty regime is illegal across the board. ECJ advocate-general Paolo Mengozzi said in March that the tax does not comply with the fundamental rules on free movement of capital. The UK's rules were challenged under EU law in a case involving HSBC. HM Revenue & Customs refused to repay £27m of SDRT incurred in 2000 during the bank's takeover bid of CCF. HSBC's bill arose after it agreed to pay the SDRT for CCF shareholders who opted to receive HSBC shares through a French clearance service. The Treasury said it will 'study in detail' the decision made by the ECJ.