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Test Claimants in the Franked Investment Income GLO v HMRC

The Supreme Court has given judgment in Test Claimants in the Franked Investment Income Group Litigation v HMRC [2021] UKSC 31.  This is the third judgment given by the Supreme Court in this complex, long-running litigation.  The Supreme Court held, in particular, that:

  • The Claimants’ remedy for claims in respect of unduly levied advance corporation tax which had been set off against lawful mainstream corporation tax lay under section 85 Finance Act 2019 (and neither compound interest nor simple interest under section 35A Senior Courts Act 1981 were available in respect of such claims). 
     
  • UK statutory provisions which prevented double taxation relief from being carried forward were in breach of EU law.  This was because they resulted in the indirect economic double taxation of the overseas dividend income.  The Claimants were entitled to restitution of the tax which had, in consequence, been unduly levied.
     
  • HMRC was not entitled to set payments of tax credits which had been made to the Claimants’ shareholders against the restitution due to the Claimants in respect of unduly levied advance corporation tax.  Nor was HMRC entitled to set off treaty credits received by a non-resident parent company to reduce the restitution due to the Claimants.
     
  • HMRC was not entitled to rely on the standstill provision in article 64(1) TFEU to resist claims to recover unlawfully levied corporation tax on third country dividend income after 30 March 2001. 

Jonathan Bremner QC appeared for the Claimants. 

A copy of the Judgment is available here