Category: Corporation Tax

Revenue and Customs v NCL Investments Ltd and Another: UTTC 8 Apr 2019

CORPORATION TAX – grant of share options to employees by an employee benefit trust – whether accounting debits arising under IFRS2 deductible as a trading expense of the employing companies – yes – whether that debit was capital in nature-no-whether s 1038 or prevents a deduction from being available-no whether s 1290 CTA 2009 prevents a deduction from being available – no

Citations:

[2019] UKUT 111 (TCC)

Links:

Bailii

Jurisdiction:

England and Wales

Corporation Tax

Updated: 12 July 2022; Ref: scu.639514

Able (UK) Ltd v Revenue and Customs: CA 22 Nov 2007

The taxpayer company had received compensation for having been excluded from its business premises for a period until a compulsory purchase process failed. It treated the receipt as capital. The revenue said it was income.
Held: The court considered how to treat mistakes of law by lower courts.
Buxton LJ said: ‘We were assured on all sides that the present issue is one of law. So be it: but it is an issue of law of a rather special sort, not least because . . . the distinction between capital and income has to be determined from a practical and business point of view. . . For my part, and whatever the technical jurisprudential position, I would think that the time has now come to leave these practical and business issues principally in the hands of the specialist tribunal that has been constituted to decide them. Parties should in future hesitate long before contending that a view taken by that specialist tribunal is apt for reconsideration by the High Court, and much less by this court.’
Lawrence Collins LJ said: ‘There is much to be said for the view, expressed in a different context, that where the answer to a question is a matter of degree, taking account of all the circumstances, then an appellate court should show some circumspection before interfering with the decision at first instance: Beynon v Customs and Excise Commissioners [2005] 1 WLR 86 at [27]. In particular, once as a matter of law a receipt or an expenditure is capable of being regarded as capital or income (as the case maybe), then the Commissioners’ decision should be capable of review only on Edwards v Bairstow 1956 AC14 principals.’

Judges:

Buxton LJ, Moses LJ, Lawrence Collins LJ

Citations:

[2007] EWCA Civ 1207

Links:

Bailii

Jurisdiction:

England and Wales

Citing:

Cited – London and Thames Haven Oil Wharves Ltd v Attwooll CA 1966
When asking whether a payment of damages was a capital or income receipt, the court should ask whether the sum which the trader ought to have received have been credited as an income receipt of the trade? . .
Appeal from – Able (UK) Ltd v Revenue and Customs ChD 19-Oct-2006
Appeal by way of case stated against a decision of the General Commissioners as to whether a certain compensation payment received by the appellant under section 31(3) of the Land Compensation Act 1961 was income or capital. The General . .
Cited – Able (UK) Holdings Ltd v HM Inspector of Taxes ChD 30-Jun-2006
. .

Cited by:

Cited – HM Revenue and Customs v Weight Watchers (UK) Ltd ChD 21-Jan-2008
The court was asked whether the weight-watchers program which included attendance at a course and a supply of supporting materials was one single standard-rated supply or separate supplies of zero-rated printed materials and standard-rated support . .
Lists of cited by and citing cases may be incomplete.

Corporation Tax

Updated: 12 July 2022; Ref: scu.261448

Vodafone 2 v Revenue and Customs: SCIT 26 Jul 2007

SCIT CORPORATION TAX – Controlled foreign companies – whether domestic legislation (ss 747 to 756 and Schs. 24 to 26) incompatible with freedom of establishment as provided for by arts. 43 EC and 48 EC of the EC Treaty – a reference to ECJ under art. 234 EC had been made by the Special Commissioners – subsequently ECJ delivered judgment in case of Cadbury Schweppes (Case C-196/04) on same general point – registrar of ECJ invited the Special Commissioners to indicate whether they wished to maintain the reference in instant case – submissions of parties invited at a hearing – whether ECJ’s judgment in Cadbury Schweppes indicated that the Special Commissioners should consider the CFC legislation as a whole, or specifically only the motive test, in order to ascertain whether judgment in Cadbury Schweppes could be ‘read down’ into the CFC legislation as a matter of conforming interpretation – held that the motive test should be considered – whether as a matter of conforming interpretation judgment in Cadbury Schweppes could, and should, be so ‘read down’ – held by a casting vote that it could and should be – whether the reference should be maintained – held by a casting vote that it should not be – decision accordingly

Citations:

[2007] UKSPC SPC00622, 10 ITL Rep 110, [2008] STC (SCD) 55

Links:

Bailii

Corporation Tax

Updated: 11 July 2022; Ref: scu.259276

Oy Aa (Freedom of Establishment): ECJ 18 Jul 2007

ECJ Opinion – Freedom of establishment Corporate tax legislation Ability of a company to deduct sums paid by way of intra-group transfer Obligation on the transferee company also to have its establishment in the Member State concerned.

Judges:

Kokott AG

Citations:

[2006] ECR I-8209, C-231/05, [2006] EUECJ C-231/05

Links:

Bailii

Cited by:

Opinion – Oy Aa (Freedom of Establishment) ECJ 18-Jul-2007
ECJ Freedom of establishment – Corporate tax legislation – Ability of a company to deduct sums paid by way of intra-group transfer – Obligation on the transferee company also to have its establishment in the . .
Lists of cited by and citing cases may be incomplete.

European, Corporation Tax

Updated: 11 July 2022; Ref: scu.259230

SSE Generation Ltd v Revenue and Customs (Income Tax/Corporation Tax : Capital Allowances): FTTTx 31 Jul 2018

Corporation tax – capital allowances – sections 11 and 21-23 Capital Allowances Act 2001 – plant and machinery allowances on expenditure incurred in construction and rectification works on underground hydroelectric power scheme – water intakes, network of aqueducts leading to reservoir, underground headrace and tailrace, caverns housing the generating equipment and various other tunnels and conduits considered – appeal allowed in part

Citations:

[2018] UKFTT 416 (TC)

Links:

Bailii

Jurisdiction:

England and Wales

Corporation Tax

Updated: 10 July 2022; Ref: scu.621424

Test Claimants In The Thin Cap Group Litigation v Commissioners of Inland Revenue: ECJ 13 Mar 2007

Europa Freedom of establishment – Free movement of capital Corporation tax Loan interest paid to a related company resident in another Member State or in a non-member country Interest treated as a distribution Cohesion of the tax system Tax avoidance).

Citations:

[2007] EUECJ C-524/04, [2006] EUECJ C-524/04

Links:

Bailii, Bailii

Jurisdiction:

European

Corporation Tax

Updated: 10 July 2022; Ref: scu.251136

Rewe Zentralfinanz eG, as universal legal successor of ITS Reisen GmbH v Finanzamt Koln-Mitte: ECJ 31 May 2006

ECJ (Opinion) Tax legislation – Corporation tax – Offsetting of losses by parent companies – Losses due to a fall in the value of shares held in subsidiaries established in other Member States

Judges:

Maduro AG

Citations:

[2006] EUECJ C-347/04

Links:

Bailii

Jurisdiction:

European

Cited by:

Opinion – Rewe Zentralfinanz eG, as universal legal successor of ITS Reisen GmbH v Finanzamt Koln-Mitte ECJ 29-Mar-2007
ECJ Freedom of establishment – Corporation tax – Immediate offsetting of losses incurred by parent companies – Losses stemming from write-downs to the book value of shareholdings in subsidiaries established in . .
Lists of cited by and citing cases may be incomplete.

Corporation Tax

Updated: 10 July 2022; Ref: scu.251132

Revenue and Customs v William Grant and Sons Distillers Ltd: HL 28 Mar 2007

The Revenue appealed findings as to the calculation of profits for corporation tax. The companies had sought to deduct sums from profits for depreciation of unsold stock in accordance with current accounting standards.
Held: ‘the profit and loss account is concerned with revenue and expenses. A fall in the value of stock to below cost, although it involves no immediate outgoing or loss of income, is something which the principle of prudence requires should be treated as an expense and reflected in a deduction from that year’s profit. There is no conceptual problem about recognising such a write-down as an immediate expense but carrying the cost of stock forward to be a future expense.’ The sums were properly deducted in accordance with recommended accounting practice.

Judges:

Lord Hoffmann, Lord Hope of Craighead, Lord Walker of Gestingthorpe, Lord Mance, Lord Neuberger of Abbotsbury

Citations:

[2007] UKHL 15, Times 02-Apr-2007, [2007] 1 WLR 1448, [2007] 2 All ER 440

Links:

Bailii

Statutes:

Companies Act 1985 228(2), Finance Act 1998 42(1), Income and Corporation Taxes Act 1988 74(1)(f)

Jurisdiction:

Scotland

Citing:

Cited – Ostime (Inspector of Taxes) v Duple Motor Bodies Ltd HL 28-Mar-1961
The practice of carrying expenditure on unsold stock forward to be set against the price for which the stock is ultimately sold involves the deduction of the whole of the expenses incurred during the accounting period but the crediting against those . .
Cited – Robert Addie and Sons v Solicitor of Inland Revenue 1875
When computing profits for tax purposes, the taxpayer is not allowed to deduct any sums for depreciation of capital assets. Lord Deas: ‘I think it is better not to run the risk of making any confusion in the grounds of judgment by adding anything to . .
Cited – Odeon Associated Theatres Ltd v Jones 1970
The court gave the formulation for the method of computing profits for corporation tax: ‘For the purposes of Case I or II of Schedule D the profits of a trade, profession or vocation must be computed on an accounting basis which gives a true and . .
Cited – Gallagher v Jones (Inspector of Taxes) Threlfall v Same CA 1-Jul-1993
Commercial Practice is to be followed in apportioning payments under a lease between different tax years. There is no requirement that expenditure must be charged to year it in which technically falls due, but tax accounts must not give a misleading . .
Cited – Commissioner of Inland Revenue v Secan Ltd 2000
(Court of Final Appeal, Hong Kong) The taxpayer company borrowed money to buy some land and build a block of flats. Construction took three years, during which no sales took place. The company’s accounts submitted to the revenue for those years . .
Appeal from – Revenue and Customs v William Grant and Sons Distillers Ltd SCS 23-Aug-2005
. .

Cited by:

Cited – Scottish Widows Plc v Revenue and Customs SC 6-Jul-2011
The taxpayer insurance company had transferred sums from accounts designated as Capital Reserves. The Revenue said that these were properly part of the profit and loss accounts for the respective tax years, and chargeable receipts.
Held: The . .
Lists of cited by and citing cases may be incomplete.

Corporation Tax

Updated: 10 July 2022; Ref: scu.251024

J Hayes Properties Ltd v Revenue and Customs (: FTTTx 1 Jun 2019

Company Tax – Schedule 18 of Finance Act 1998 (‘FA’) – flat-rate and tax-relate penalties for failure to file a CT return on time – reliance on agent – whether taxpayer had a reasonable excuse for his default – appeal dismissed.

Citations:

[2019] UKFTT 351 (TC)

Links:

Bailii

Jurisdiction:

England and Wales

Corporation Tax

Updated: 10 July 2022; Ref: scu.638531

Halsey (HM Inspector of Taxes) v Marks and Spencer Plc: CA 20 Feb 2007

The inspector appealed against a decision granting group relief to the taxpayer a UK resident company for losses by a group company in another European state.
Held: The appeal was denied. To refuse group relief in these circumstances would be in breach of European law.

Judges:

Chadwick LJ, Tuckey LJ, Jacob LJ

Citations:

[2007] EWCA Civ 117, Times 22-Feb-2007, [2008] STC 526

Links:

Bailii

Jurisdiction:

England and Wales

Citing:

At ECJ – Marks and Spencer v David Halsey (Inspector of Taxes) ECJ 13-Dec-2005
ECJ Articles 43 EC and 48 EC – Corporation tax – Groups of companies – Tax relief – Profits of parent companies – Deduction of losses incurred by a resident subsidiary- Allowed – Deduction of losses incurred in . .
See Also – Marks and Spencer Plc v Halsey (Inspector of Taxes) 2003
Marks and Spencer Plc appealed against the refusal of group relief, on the ground that the statutory limitations on the territorial scope of group relief were incompatible with, and overridden by, Community law. The Special Commissioners dismissed . .
Appeal from – Marks and Spencer plc v Halsey (Inspector of Taxes) ChD 10-Apr-2006
The court considered the implementation of the ECJ decision between the parties.
Held: The matter was to be remitted to the Special Commissioners. The ‘no possibilities’ test referred to in the ECJ’s judgment required an analysis of the . .
See Also – Marks and Spencer Plc v Halsey (HM Inspector of Taxes) ChD 2-May-2003
Order requiring reference to ECJ. . .
See Also – Marks and Spencer Plc v Halsey (HM Inspector of Taxes) ChD 10-Apr-2006
Preliminary judgment. . .

Cited by:

See Also – HM Revenue and Customs v Marks and Spencer Plc CA 14-Oct-2011
The taxpayers claimed relief for losses incurred within their European subsidiaries. The claim having been referred to the ECJ, Moses LJ summarised the issues outstanding: ‘(i) Is the test that the ECJ established to identify those circumstances in . .
See Also – Revenue and Customs v Marks and Spencer Plc SC 22-May-2013
The company wished to assign losses in its European subsidiaries against its profits. Since the losses were first claimed, the subsidiaries had gone into insolvent liquidation.
Held: Lord Hope said: ‘I would answer the first issue by rejecting . .
Lists of cited by and citing cases may be incomplete.

Corporation Tax, European

Updated: 09 July 2022; Ref: scu.248920

HM Revenue and Customs v UBS Ag: CA 21 Feb 2007

The court considered the treatment of losses in a London branch of the non-resident Bank. Had the company been resident it could have set off the losses. It claimed that the refusal was an unlawful discrimination.

Judges:

Sedley, Arden, Moses LJJ

Citations:

[2007] EWCA Civ 119

Links:

Bailii

Statutes:

UK-Switzerland Double Taxation Convention of 8 December 1977, Double Taxation Relief (Taxes on Income) (Switzerland) Order 1978, Income and Corporation Taxes Act 1988 788

Jurisdiction:

England and Wales

Citing:

At SCIT – UBS Ag v Revenue and Customs SCIT 7-Jun-2005
SCIT DOUBLE TAXATION AGREEMENT – non-discrimination – whether UK permanent establishment of Swiss company entitled to payment of the tax credit on dividends under s 243 Taxes Act 1988 – yes, on the interpretation . .
Appeal from – UBS Ag v HM Revenue and Customs ChD 7-Feb-2006
The bank, based in Switzerland sought tax credits for the activities of its London branch.
Held: Although the argument under s243 directly failed, the claim under section 788(3) had to succeed. The Swiss company was entitled to the same tax . .
Lists of cited by and citing cases may be incomplete.

Corporation Tax, International

Updated: 09 July 2022; Ref: scu.248929

Ostime (Inspector of Taxes) v Duple Motor Bodies Ltd: HL 28 Mar 1961

The practice of carrying expenditure on unsold stock forward to be set against the price for which the stock is ultimately sold involves the deduction of the whole of the expenses incurred during the accounting period but the crediting against those expenses of a closing figure for unsold stock and for work in progress is a notional receipt.

Judges:

Viscount Simonds
Lord Reid, Lord Tucker, Lord Hodson, Lord Guest

Citations:

[1961] UKHL 6, [1961] 1 WLR 739, [1961] 2 All ER 167, [1961] UKHL TC – 39 – 537

Links:

Bailii, Bailii

Jurisdiction:

England and Wales

Cited by:

Cited – Revenue and Customs v William Grant and Sons Distillers Ltd HL 28-Mar-2007
The Revenue appealed findings as to the calculation of profits for corporation tax. The companies had sought to deduct sums from profits for depreciation of unsold stock in accordance with current accounting standards.
Held: ‘the profit and . .
Lists of cited by and citing cases may be incomplete.

Corporation Tax

Updated: 09 July 2022; Ref: scu.248538

HM Revenue and Customs v Vodafone 2: CA 28 Jul 2006

The inspector had sought additional information from the company with respect to its tax returns, believing that the company had not provided sufficient information about the earnings of foreign controlled companies. They now challenged the ability of the commissioners, upheld at first instance to rule on a question of law.
Held: Schedule 33 contained no such limitation on the commissioners powers. The paragraph ‘would seem to confer on the Commissioners a power to do anything that the Commissioners reasonably consider necessary to enable them to be satisfied as to the matters required by that paragraph.’ Therefore paragraph 33 confers jurisdiction on the Commissioners to decide incidental questions of law rising on an application under that paragraph.

Judges:

Mummery, Arden, Moore-Bick LJJ

Citations:

Times 08-Aug-2006, [2006] EWCA Civ 1132, [2006] STC 1530

Links:

Bailii

Statutes:

Finance Act 1998 Sch 18

Jurisdiction:

England and Wales

Citing:

At Special Commissioners – Vodafone v Revenue and Customs SCIT 24-May-2005
. .
Appeal from – HM Revenue and Customs v Vodafone 2 ChD 2006
The revenue had sought an order for disclosure of documents relating to the income of wholly controlled subsidiaries. There was no difference between the case where a question of Community law arose on which a preliminary ruling by the ECJ was . .

Cited by:

Cited – The United States of America v Nolan SC 21-Oct-2015
Mrs Nolan had been employed at a US airbase. When it closed, and she was made redundant, she complained that the appellant had not consulted properly on the redundancies. The US denied that it had responsibility to consult, and now appealed.
Lists of cited by and citing cases may be incomplete.

Taxes Management, Corporation Tax

Updated: 07 July 2022; Ref: scu.244100

Revenue and Customs v Maco Door and Window Hardware (Uk) Ltd: ChD 19 Jul 2006

The Revenue sought to disallow for industrial buildings allowance sums expended on warehouse premises which were to be used to store window products imported for use in other manufacturing processes.
Held: The Revenue’s appeal succeeded. ‘The question under s.18(1) is whether the warehouse is in use for the purposes of a trade which consists in the storage of qualifying goods and materials.’ and ‘for an operation to be part of a trade within the meaning of s.18(2) it must itself be an activity in the nature of a trade. As s.18 itself demonstrates a trade for these purposes is not limited to the selling of goods and can include both manufacturing and processing operations. But like Lightman J, I am not persuaded that storage as a trade in s.18(1) and as part of a trade in s.18(2) involve the application of quite different tests. Section 18(2) operates only to expand the definition contained in s.18(1) not to alter it. ‘ Although the storage of the qualifying goods in this case is carried out in a separate building and on a quite different scale, it is nonetheless carried out to support the company’s wholesale trading operation and not as a trading or commercial activity in itself. On my view of s.18(2) that is not enough.

Judges:

Patten J

Citations:

[2006] EWHC 1832 (Ch), Times 11-Aug-2006, [2006] BTC 829, [2006] STI 1919, [2007] STC 721

Links:

Bailii

Statutes:

Capital Allowances Act 1990, Capital Allowances Act 2001

Jurisdiction:

England and Wales

Citing:

Cited – Kay v Burrows HL 1931
The House considered whether premises (the greater part of which was used for the storage of rags awaiting processing, sorting or subsequent despatch) fell within the proviso to s.3(1) which excluded premises ‘primarily occupied and used [for the] . .
Cited – Dale (HM Inspector of Taxes) v Johnson Brothers 1951
(Year?) The taxpayer claimed an industrial buildings allowance against his tax liabilities for a warehouse used as storage as a trade in itself. Two thirds of the use was for storage of finished goods awaiting collection or delivery. The taxpayers . .
Cited – Saxone Lilley and Skinner (Holdings) Ltd v Commissioner of Inland Revenue HL 1967
The taxpayer company was the parent company of a group of subsidiaries, one of which traded as the manufacturer and retailer of shoes. The others either manufactured or sold shoes. The company built a warehouse which was let to a warehousing . .
Cited – Bestway (Holdings) Ltd v Luff (Inspector of Taxes) ChD 4-Mar-1998
The taxpayer company operated a wholesale cash and carry business from a number of self-service supermarkets. The stores sold groceries, household goods, tobacco, confectionery and various kinds of alcohol. Although the buildings were not open to . .
Wrongly Decided – Crusabridge Investments Ltd v Casings International Limited 1979
The landlord of light industrial premises sought damages from his tenant for breach of the user covenant in the lease. This permitted the premises to be used, inter alia, as an ‘industrial building or structure’ as defined by the Capital Allowances . .
Cited – Kilmarnock Equitable Co-operative Society Ltd v Inland Revenue Commissioners SCS 16-Feb-1966
Income Tax, Schedule D – Profits Tax – Capital allowances – Industrial building or structure – Building for screening and packing coal – Whether coal subjected to a process – Whether building used for purpose ancillary to a retail shop – Income Tax . .
Cited – Vibroplant Ltd v Holland (HM Inspector of Taxes) CA 1980
The use of the buildings for servicing and repairing the plant which Vibroplant wished to hire out, was an essential part of Vibroplant’s business of plant hire operators and part of their trade. Although not required to decide the point, the court . .
Cited – Rolls Royce Motors Ltd v Bamford 1976
The court was asked whether the new state owned company which took over some of the assets and undertaking of Rolls Royce Ltd following its insolvency was entitled to carry forward and set against its profits the losses of the old company up to the . .
At SCIT – Maco Door and Window Hardware (UK) Ltd v Revenue and Customs SCIT 25-Oct-2005
SCIT CAPITAL ALLOWANCES – industrial buildings allowances – building used to house goods manufactured by the Appellant’s Austrian parent company for sale to wholesalers in the UK to be used in manufacture – . .

Cited by:

Appeal from – Maco Door and Window Hardware (UK) Ltd v HM Revenue and Customs CA 19-Jun-2007
Correct classification, for the purposes of capital allowances, of expenditure on a building provided for the business of the appellant. . .
At Divisional Court – Maco Door and Window Hardware (UK) Ltd v Revenue and Customs HL 30-Jul-2008
The House was asked whether a warehouse used to store purchases made by the company from its parent company in Austria, was an ‘industrial building or structure’. It was agreed that the facility was used for the storage of materials for use in later . .
Lists of cited by and citing cases may be incomplete.

Corporation Tax

Updated: 07 July 2022; Ref: scu.243331

Cadbury Schweppes Plc and Another v Williams (Her Majesty’s Inspector of Taxes): CA 24 May 2006

The taxpayer made arrangement for the sale of securities in the form of loan notes with accrued income. It appealed a decision denying to the arrangement treatment of the full sum as capital.
Held: The appeal failed. The agreements provided for irregular repayments, they did so with an apparent standard interest rate. The agreements fell to be taxed under the regime established rather by section 719(9), the court considering that they failed to meet fully the condition that they carry interest at a fixed rate. (Sir Peter Gibson dissenting)

Judges:

Lord Justice Peter Gibson Lord Justice Tuckey

Citations:

[2006] EWCA Civ 657, Times 19-Jul-2006

Links:

Bailii

Statutes:

Income and Corporation Taxes Act 1988, Taxes Management Act 1970 41A

Jurisdiction:

England and Wales

Citing:

Appeal from – Cadbury Schweppes Plc and Another v Williams (HM Inspector of Taxes) ChD 21-Jul-2005
. .
Lists of cited by and citing cases may be incomplete.

Corporation Tax

Updated: 06 July 2022; Ref: scu.242350

Triage Services Ltd v Revenue and Customs: SCIT 12 Jan 2006

SCIT Corporation tax – Profits – Capital or income expenditure – Acquisition of taxpayer company’s first business – Whether lump sum payment to the vendor of business assets to secure right that minimum amounts of business be offered by vendor annually over seven year period was deductible as revenue expense or disallowed as capital payment – Appeal dismissed

Citations:

[2006] UKSPC SPC00519

Links:

Bailii

Corporation Tax

Updated: 05 July 2022; Ref: scu.240285

Noved Investment Co v Revenue and Customs: SCIT 23 Jan 2006

SCIT CORPORATION TAX – deductions – charges on income – qualifying donations – distributions – articles of association of company provided that the holders of the A shares could by ordinary resolution require the company to make gifts to any charity – the A shares were transferred to a charitable foundation which resolved that the company should make gifts to the charitable foundation – whether the payments were distributions ‘in respect of shares’ within the meaning of section 209(2)(b) – yes – whether section 209(4) applied to the gifts – yes – appeal allowed – ICTA 1988 Ss 209, 254, 338 and 339

Citations:

[2006] UKSPC SPC00521

Links:

Bailii

Corporation Tax

Updated: 05 July 2022; Ref: scu.240284

Burton (Collector of Taxes) v Mellham Ltd: HL 15 Feb 2006

The claimant sought interest on an overpayment of Advance Corporation Tax. The tax itself had been paid late, and the Collector claimed a set off.
Held: The claim to DTR could not be described as an attempt at self-help. It had a statutory claim to DTR which was eventually conceded in its entirety. The appeal succeded.

Judges:

Lord Nicholls of Birkenhead, Lord Hoffmann, Lord Phillips of Worth Matravers, Lord Walker of Gestingthorpe, Lord Brown of Eaton-under-Heywood

Citations:

[2006] UKHL 6

Links:

Bailii

Jurisdiction:

England and Wales

Citing:

Appeal from – Mellham Ltd v Collector of Taxes CA 17-Jan-2003
Buxton LJ: ‘The issue therefore is one of simple statutory construction. Can the expression ‘payment’ when used in section 87 of the 1970 Act, or ‘pays’ when used both in section 246N(2) of the 1988 Act and section 239 of the 1988 Act, encompass a . .
Cited – Hanak v Green CA 1958
A builder was sued for his failure to complete the works he had contracted for. The buider sought a set-off against that claim of three of his one claims. One, under the contract, was for losses from the defendant’s refusal to allow his workmen . .
Cited – Aries Tanker Corp v Total Transport Ltd; The Aries HL 1977
Claims for freight charges are an exception to the general rule that all claims between parties must be resolved in one action. A claim for freight cannot be a claim ‘on the same grounds’ as a counter-claim for loss or damage arising out of the . .
Cited – Safa Ltd v Banque Du Caire CA 20-Jul-2000
Safa claimed summary judgment as assignee of letters of credit opened by the bank. It was established by concession, and decision for the purposes of the summary judgment application, that even if payment was due under the letters of credit, the . .
Cited – Smith (Administrator of Cosslett (Contractors) Limited) v Bridgend County Borough Council; In re Cosslett (Contractors) Ltd HL 8-Nov-2001
The standard building contract allowed a contractor to take plant and equipment from a site and sell it in payment of sums due under the contract, upon the other contractor becoming insolvent. It was said that this power amounted to a charge over . .
Lists of cited by and citing cases may be incomplete.

Corporation Tax

Updated: 05 July 2022; Ref: scu.238529

Pirelli Cable Holding Nv and others v Inland Revenue: HL 8 Feb 2006

Under s247 of the 1988 Act, a company paying dividends to a parent company need not withhold ACT. This option was not offered where either subsidiary or parent was not UK resident until the decision in Hoechst which found the restriction contrary to European law. The Revenue now appealed a decision allowing recovery of the overpaid ACT.
Held: The appeal succeeded. The existence of double taxation treaties with other countries in the EC meant that a company electing not to deduct ACT could not at the same time also claim the tax credits which would be associated with such an election. Under the sceme of the double taxation treaties, entitlement to a tax credit walked hand in hand with liability to pay ACT. Advance Corporation Tax was not a withholding tax.

Judges:

Lord Nicholls of Birkenhead, Lord Hope of Craighead, Lord Scott of Foscote, Lord Walker of Gestingthorpe, Lord Brown of Eaton-under-Heywood

Citations:

[2006] UKHL 4, Times 13-Feb-2006

Links:

Bailii

Statutes:

Finance Act 1972, Income and Corporation Taxes Act 1988

Jurisdiction:

England and Wales

Citing:

Cited – Commission v Belgium ECJ 28-Jan-1992
Europa Legislation of a Member State which makes the deductibility of pension and life assurance contributions conditional on those contributions being paid in that State is contrary to Articles 48 and 59 of the . .
Cited – Bachmann v Belgian State ECJ 28-Jan-1992
Europa Legislation of a Member State which makes the deductibility of sickness and invalidity insurance contributions or pension and life assurance contributions conditional on those contributions being paid in . .
Cited – Staatssecretaris van Financien v Verkooijen ECJ 6-Jun-2000
A resident of the Netherlands owned shares in a company resident in Belgium and received dividends on those shares. If the dividends had been paid by a company resident in the Netherlands their treatment for income tax in his hands would have been . .
Cited – Metallgesellschaft Ltd and Others v Inland Revenue Commissioners and Another Hoechst Ag and Another v Same ECJ 8-Mar-2001
The British law which meant that non-resident parent companies of British based businesses were not able to recover interest on payments of advance corporation tax, was discriminatory against other European based companies. Accordingly the law was . .
Cited – Oce van der Grinten NV v Inland Revenue Commissioners ECJ 25-Sep-2003
Europa Directive 90/435/EEC – Corporation tax – Parent companies and subsidiaries of different Member States – Concept of withholding tax. . .
At first Instance – Pirelli Cable Holding NV and Others v Inland Revenue Commissioners ChD 22-Jan-2003
The Metallgesellschaft case had established that it was contrary to European law to withhold the right to ACT on dividends paid by a UK holding company to a non-Uk subsidiary. The Revenue claimed that that rule did not apply here because the non-Uk . .
Appeal from – Pirelli Cable Holding NV and others v The Commissioners of Inland Revenue CA 16-Dec-2003
. .
Lists of cited by and citing cases may be incomplete.

Corporation Tax, European

Updated: 05 July 2022; Ref: scu.238365

Boake Allen Ltd and others v HM Revenue and Customs: CA 31 Jan 2006

The claimant companies had paid corporation tax under rules which had later been found to be discriminatory. They now sought repayment by virtue of double taxation agreements with the countries in which the parent companies were based.
Held: The double agreements required the taxation provisions should not treat worse ‘other similar enterprises of that first-mentioned state’ in the UK. The claimant had submitted that ‘other similar enterprises’ had to refer to the UK subsidiaries of UK parent companies. The Revenue contended that it was the group which was being referred to. That submission was not accepted. To limit the availability of group income elections to subsidiaries of UK companies would be a discriminatory breach.
However section 788 did not operate to incoporate the double taxation agreements into UK law, and therefore there was no remedy available to the taxpayers.
The question how restitutionary relief should be assessed was not settled by La Pintada, as the claim was not for an entitlement to interest, as creditors, on a debt or on damages by way of compensation for loss of the use of the money that was unjustly demanded and retained by the defendant.
The role of pleadings has not been abolished by the CPR. Mummery LJ said: ‘While it is good sense not to be pernickety about pleadings, the basic requirement that material facts should be pleaded is there for a good reason – so that the other side can respond to the pleaded case by way of admission or denial of facts, thereby defining the issues for decision for the benefit of the parties and the court. Proper pleading of the material facts is essential for the orderly progress of the case and for its sound determination. The definition of the issues has an impact on such important matters as disclosure of relevant documents and the relevant oral evidence to be adduced at trial. In my view, the fact that the nature of the grievance may be obvious to the respondent or that the respondent can ask for further information to be supplied by the claimant are not normally valid excuses for a claimant’s failure to formulate and serve a properly pleaded case setting out the material facts in support of the cause of action. If the pleading has to be amended, it is reasonable that the party, who has not complied with well known pleading requirements, should suffer the consequences with regard to such matters as limitation.’

Judges:

Lord Justice Lloyd Lord Justice Mummery Lord Justice Sedley

Citations:

[2006] EWCA Civ 25, Times 10-Feb-2006, [2006] STC 606, [2006] BTC 266, 8 ITL Rep 819, [2006] STI 32, [2006] Eu LR 755

Links:

Bailii

Statutes:

Income and Corporation Taxes Act 1988 788(3)

Jurisdiction:

England and Wales

Citing:

Cited – Metallgesellschaft Ltd and Others v Inland Revenue Commissioners and Another Hoechst Ag and Another v Same ECJ 8-Mar-2001
The British law which meant that non-resident parent companies of British based businesses were not able to recover interest on payments of advance corporation tax, was discriminatory against other European based companies. Accordingly the law was . .
Cited – NEC Semi-Conductors Limited and Other Test Claimants v The Commissioners of Inland Revenue ChD 24-Nov-2003
UK companies were subsidiaries of companies resident abroad, and complained that they were unable to make group income elections.
Held: The prohibition infringed non-discrimination provisions of double taxation agreements – non-discrimination . .
Cited – President of India v La Pintada Compagnia Navigacia SA (‘La Pintada’) HL 1985
The house decided against altering the rule in Page -v- Newman. ‘The common law does not award general damages for delay in payment of a debt beyond the date when it is contractually due’ The power given to the court under s 35A is discretionary. It . .

Cited by:

Cited – Rhone-Poulenc Rorer International Holdings Inc and Another v Yeda Research and Development Co Ltd ChD 16-Feb-2006
The patent application had been presented to the European Patent Office and granted only after 13 years. The claimant now appealed refusal to allow amendment of its claim to allow a claim in its sole name. The defendant argued that it was out of . .
Appeal from – Boake Allen Ltd and others v Revenue and Customs HL 23-May-2007
The revenue appealed against a decision that provisions which did not allow the defendants, as companies with foreign parents, the right to make group income elections which would have allowed them to pay on their profits to their parent companies . .
Cited – Sempra Metals Ltd v Inland Revenue Commissioners and Another HL 18-Jul-2007
The parties agreed that damages were payable in an action for restitution, but the sum depended upon to a calculation of interest. They disputed whether such interest should be calculated on a simple or compound basis. The company sought compound . .
Cited – Test Claimants In The Franked Investment Income Group Litigation v Inland Revenue SC 23-May-2012
The European Court had found the UK to have unlawfully treated differently payment of franked dividends between subsidiaries of UK companies according to whether all the UK subsidiaries were themselves UK based, thus prejudicing European . .
Cited – Benedetti v Sawiris and Others SC 17-Jul-2013
The claimant appealed against reduction of the sum awarded on his claim for a quantum meruit after helping to facilitate a very substantial business deal for the defendants.
Held: The correct approach to the amount to be paid by way of a . .
Lists of cited by and citing cases may be incomplete.

Corporation Tax, Litigation Practice, Damages

Updated: 05 July 2022; Ref: scu.238206

Staatssecretaris van Financien v Verkooijen: ECJ 6 Jun 2000

A resident of the Netherlands owned shares in a company resident in Belgium and received dividends on those shares. If the dividends had been paid by a company resident in the Netherlands their treatment for income tax in his hands would have been more beneficial, because a limited exemption from income tax applied to dividends paid by Dutch companies. The first question for the court was whether the availability of this exemption only in relation to dividends paid by Dutch companies was inconsistent with Article 1 of the 1988 Directive. The Court held that the acquisition of shares in an undertaking was a capital movement within the scope of the Directive, that the receipt of dividends on such shares presupposed participation in the undertaking, and that therefore the receipt by a resident of one Member State of dividends on shares in a company resident in another Member State was within the Directive. It then held that the refusal of the first Member State to extend to such dividends an exemption from tax which applied in relation to dividends on shares in companies resident in the first Member State had the effect of dissuading nationals of the first Member State from investing their capital in companies established in other Member States and, conversely, presented an obstacle to such companies from raising capital from residents of the first Member State. Accordingly, such a provision constituted a restriction on the movement of capital prohibited by Article 1 of the Directive.

Citations:

C-35/98, [2002] ECR I-4071, [2002] STC 654, [2000] EUECJ C-35/98

Links:

Bailii

Cited by:

Cited – Pirelli Cable Holding Nv and others v Inland Revenue HL 8-Feb-2006
Under s247 of the 1988 Act, a company paying dividends to a parent company need not withhold ACT. This option was not offered where either subsidiary or parent was not UK resident until the decision in Hoechst which found the restriction contrary to . .
Lists of cited by and citing cases may be incomplete.

European, Corporation Tax

Updated: 04 July 2022; Ref: scu.231697

HM Revenue and Customs v Salaried Persons Postal Loans Ltd: ChD 7 Apr 2006

The company had ceased trading, but rental income was still generated from its former premises. The Revenue sought to include the receipt in calculations of whether the company was entitled to a small company corporation tax rate. The Revenue appealed the special commissioner’s decision that it was not a business income.
Held: The appeal failed. It could not be said, on the facts found by the Special Commissioner that ‘the only true and reasonable conclusion contradicts’ his determination. Rent might constitute income from a source consisting of a business and would do if received in the course of carrying on a business of putting property to profitable use by letting it out for rent, but the commissioners conculsion in this case the rent did not come from a source which amounted to a business.

Judges:

Lawrence Collins J

Citations:

Times 20-Apr-2006, [2006] EWHC 763 (Ch)

Links:

Bailii

Statutes:

Income and Corporation Taxes Act 13(4)

Jurisdiction:

England and Wales

Citing:

Cited – Jowett (Inspector of Taxes) v O’Neill and Brennan Construction Ltd ChD 25-Mar-1998
Wynchgate Construction Ltd, an associated company of the taxpayer company, (‘WCL’), commenced a trade in 1994 of providing the services of British construction workers to a contractor operating in Germany. The trade only lasted for about 5 months. . .
Cited – American Leaf Blending Co SDN BHD v Director-General of Inland Revenue PC 1979
(Malaysia) The taxpayer company had a cigarette making factory and a bonded warehouse for storing tobacco and cigarettes. Its business proved to be unprofitable, and it came to abandon both its manufacturing and trading businesses. It still owned . .
Cited – John M Harris (Design Partnership) Ltd v Lee SCIT 1997
Mr Harris, an architect, owned more than 75% of the taxpayer company. He also owned all the shares in John M Harris (Properties) Ltd. He wanted to buy a holiday home in France and was advised that the property should, for French legal reasons and . .
Cited – Land Management Ltd v Fox SCIT 2002
The Commisioner was asked whether receipts of an associated company, The Share and Debenture Trust Ltd, were part of a business. The company did not trade, but owned shares in the taxpayer company and a freehold property. The Special Commissioner . .
Cited – Barclays Mercantile Business Finance Ltd v Mawson (HM Inspector of Taxes) HL 25-Nov-2004
The company had paid substantial sums out in establishing a gas pipeline, and claimed those sums against its tax as capital allowances. The transaction involved a sale and leaseback arrangement which the special commissioners had found to be a . .
Cited – Town Investments Ltd v Department of the Environment HL 2-Mar-1977
The House considered the application of Orders made under the Counter-Inflation Acts 1972 and 1973 to premises let initially to the Minister of Works and then to the Secretary of State for the Environment for occupation by civil servants. Each of . .
Cited – Commissioners of Inland Revenue v McGuckian HL 21-May-1997
Steps which had been inserted into a commercial transaction, but which had no purpose other than the saving of tax are to be disregarded when assessing the tax effect of the scheme. The modern approach to statutory construction is to have regard to . .
Lists of cited by and citing cases may be incomplete.

Corporation Tax

Updated: 01 July 2022; Ref: scu.240130

Cadbury Schweppes Plc and Another v Williams (HM Inspector of Taxes): ChD 21 Jul 2005

Judges:

The Honourable Mr Justice Etherton

Citations:

[2005] EWHC 1610 (Ch), [2006] STC 210

Links:

Bailii

Statutes:

Income and Corporation Taxes Act 1988 717

Jurisdiction:

England and Wales

Cited by:

Appeal from – Cadbury Schweppes Plc and Another v Williams (Her Majesty’s Inspector of Taxes) CA 24-May-2006
The taxpayer made arrangement for the sale of securities in the form of loan notes with accrued income. It appealed a decision denying to the arrangement treatment of the full sum as capital.
Held: The appeal failed. The agreements provided . .
Lists of cited by and citing cases may be incomplete.

Corporation Tax

Updated: 01 July 2022; Ref: scu.229269

Faraday v Carmarthanshire County Council: LT 20 Oct 2003

LT TAX – corporation tax – market value in June 1988 – backland formerly part of petrol filling station – likely grant of planning permission for housing – access – comparables – value determined at andpound;900,000 – Capital Gains Tax Act 1979, s150

Citations:

[2003] EWLands TMA/89/2002

Links:

Bailii

Statutes:

Capital Gains Tax Act 1979 150

Cited by:

Appeal from – Faraday v Carmarthenshire County Council CA 10-May-2004
The claimant appealed against an award of compensation on the compulsory acquisition of his land by the defendant.
Held: The award was incorrect. The authority had wrongly deducted a sum in respect of ‘freed up time’ – which would have allowed . .
Lists of cited by and citing cases may be incomplete.

Corporation Tax, Capital Gains Tax

Updated: 30 June 2022; Ref: scu.225772

Scorer v Olin Energy Systems Ltd: HL 1985

Where an appeal against an assessment to tax had been settled by agreement, any dispute as to the scope of that agreement was to be viewed objectively, having regard to the surrounding circumstances, including all the material known to be in the Inspector’s possession.

Judges:

Lord Fraser of Tullybelton, Lord Keith of Kinkel, Lord Bridge of Harwich, Lord Brightman, Lord Templeman

Citations:

(1985) 58 TC 592, [1985] UKHL 3, [1985] 2 All ER 375, [1985] AC 645

Links:

Bailii

Jurisdiction:

England and Wales

Cited by:

Cited – Langham (HM Inspector of Taxes) v Veltema CA 26-Feb-2004
The tax inspector had sought to re-open a tax assessment outside the time limit provided. He had discovered that a house had been given to the tax payer by his employers. The taxpayer said this had been discoverable from his self-assessment tax . .
Lists of cited by and citing cases may be incomplete.

Corporation Tax

Updated: 30 June 2022; Ref: scu.225367

Able (UK) Ltd v Revenue and Customs: ChD 19 Oct 2006

Appeal by way of case stated against a decision of the General Commissioners as to whether a certain compensation payment received by the appellant under section 31(3) of the Land Compensation Act 1961 was income or capital. The General Commissioners decided that the payment was income.

Judges:

Briggs J

Citations:

[2006] EWHC 3046 (Ch)

Links:

Bailii

Statutes:

Land Compensation Act 1961 3193)

Jurisdiction:

England and Wales

Citing:

See Also – Able (UK) Holdings Ltd v HM Inspector of Taxes ChD 30-Jun-2006
. .

Cited by:

Appeal from – Able (UK) Ltd v Revenue and Customs CA 22-Nov-2007
The taxpayer company had received compensation for having been excluded from its business premises for a period until a compulsory purchase process failed. It treated the receipt as capital. The revenue said it was income.
Held: The court . .
Lists of cited by and citing cases may be incomplete.

Corporation Tax

Updated: 30 June 2022; Ref: scu.246808

Sempra Metals Ltd v Inland Revenue and Another: CA 12 Apr 2005

The court was asked whether it was contrary to Community law – specifically, the provisions then contained in article 52 of the EC Treaty (now renumbered as article 43) – for the domestic tax law in the United Kingdom to differentiate, in the treatment of advance corporation tax on dividends paid by a subsidiary company to its parent, between cases where both subsidiary and parent were resident in the United Kingdom for tax purposes and cases where the subsidiary was resident in the United Kingdom but the parent was resident in another member state.

Judges:

Chadwick, Laws, Jonathan Parker LJJ

Citations:

[2005] EWCA Civ 389, Times 26-Apr-2005, [2005] Eu LR 773, [2005] 3 WLR 521, [2005] NPC 52, [2006] QB 37, [2005] BTC 202, [2005] STC 687, [2005] 2 CMLR 30

Links:

Bailii

Jurisdiction:

England and Wales

Citing:

Appeal from – Sempra Metals Ltd (formerly Metallgesellshaft Ltd) v Inland Revenue Commissioners and another ChD 16-Jun-2004
The claimants were due to have substantial sums repaid after it had been found that the system of making premature reclaims of advance corporation tax had been was discriminatory under European Law.
Held: The sums payable were to carry . .

Cited by:

Appeal from – Sempra Metals Ltd v Inland Revenue Commissioners and Another HL 18-Jul-2007
The parties agreed that damages were payable in an action for restitution, but the sum depended upon to a calculation of interest. They disputed whether such interest should be calculated on a simple or compound basis. The company sought compound . .
Lists of cited by and citing cases may be incomplete.

Corporation Tax, European

Updated: 29 June 2022; Ref: scu.224101

Relkobrook Ltd v HM Inspector of Taxes: SCIT 15 Dec 2004

SCIT PROCEDURE – postponement of hearing – taxpayer failing to comply with directions and not preparing itself for hearing – postponement refused
CORPORATION TAX – relief for compensation payment and pension contribution – no evidence of payment within relevant year of account – compensation payment gratuitous – relief correctly refused – appeal dismissed

Citations:

[2004] UKSC SPC00452

Links:

Bailii

Jurisdiction:

England and Wales

Corporation Tax

Updated: 28 June 2022; Ref: scu.221421

Claimants under the Loss Relief Group Litigation Order v Inland Revenue Commissioners: ChD 3 Mar 2004

Various claimants sought to have issues of law on group relief and other issues settled under a group litigation order.
Held: The High Court had no jurisdiction to hear such matters until they had first been raised in ordinary tax appeals before the special or general commissioners. Courts do not decide questions of principle which went as to liability. Such questions were for the commissioners first. The application was refused.

Judges:

Park J

Citations:

Times 10-Mar-2004, Gazette 25-Mar-2004

Jurisdiction:

England and Wales

Citing:

Applied – Glaxo Group Ltd and Others v Inland Revenue Commissioners ChD 21-Nov-1995
A tax adjustment can be made by the Inland Revenue on an open assessment following transfer pricing enquiry and direction, even after many years. The court considered that the jurisdiction of the special and the general commissioners to determine . .
Cited – Regina v Her Majesty’s Commissioners of Inland Revenue ex parte Bishopp (for and on Behalf of Partners In Price Waterhouse (a Firm)) Admn 27-Apr-1999
A court cannot answer questions in abstract form. An accountancy practice seeking an answer to how it would be taxed if incorporated as a limited partnership off-shore could not rely upon the court to answer a hypothetical question. . .
See Also – NEC Semi-Conductors Limited and Other Test Claimants v The Commissioners of Inland Revenue ChD 24-Nov-2003
UK companies were subsidiaries of companies resident abroad, and complained that they were unable to make group income elections.
Held: The prohibition infringed non-discrimination provisions of double taxation agreements – non-discrimination . .

Cited by:

Appeal from – Loss Relief Group, Test Claimants In v Inland Revenue CA 28-May-2004
The taxpayers sought determination by the court of their various claims for group tax relief. The High Court had declined jurisdiction.
Held: The appeal was allowed. The judge’s attitude was one which would perhaps appeal to most lawyers . .
See Also – NEC Semi-Conductors Limited and Other Test Claimants v The Commissioners of Inland Revenue ChD 24-Nov-2003
UK companies were subsidiaries of companies resident abroad, and complained that they were unable to make group income elections.
Held: The prohibition infringed non-discrimination provisions of double taxation agreements – non-discrimination . .
At First Instance – Autologic Holdings Plc and others v Commissioners of Inland Revenue HL 28-Jul-2005
Taxpayer companies challenged the way that the revenue restricted claims for group Corporation Tax relief for subsidiary companies in Europe. The issue was awaiting a decision of the European Court. The Revenue said that the claims now being made by . .
Lists of cited by and citing cases may be incomplete.

Litigation Practice, Taxes Management, Corporation Tax

Updated: 28 June 2022; Ref: scu.194525

Union Corporation, Ltd v Inland Revenue; Johannesburg Consolidated Investment Co Ltd v Inland Revenue; Trinidad Leaseholds, Ltd v Inland Revenue: HL 9 Mar 1953

HL Profits Tax – Companies registered or operating abroad but also resident in the United Kingdom – Whether ‘ordinarily resident outside the United Kingdom’ – Finance Act, 1947 (10 and 11 Geo. VI, c. 35), Section 39 (1).

Citations:

[1953] UKHL TC – 34 – 207

Links:

Bailii

Statutes:

Finance Act 1947

Jurisdiction:

England and Wales

Corporation Tax

Updated: 28 June 2022; Ref: scu.560151

Inland Revenue v Dowdall O’Mahoney and Co, Ltd: HL 25 Feb 1952

HL Excess Profits Tax – Branch business in United Kingdom carried on by company resident in Eire – Eire taxes paid on profits of main business and of United Kingdom branches-Whether deduction from profits of United Kingdom branches permissible in respect of proportion of such taxes attributable to those profits.

Citations:

[1952] UKHL TC – 33 – 259

Links:

Bailii

Jurisdiction:

England and Wales

Corporation Tax

Updated: 28 June 2022; Ref: scu.560157

Inland Revenue v J B Hodge and Co (Glasgow), Ltd (In Liquidation): HL 13 Jul 1961

Profits Tax – Trade or business transferred – Election under Section 36 (4), Finance Act, 1947 – Transferor company wound up after selling shares in successor – Distributions exceed paid-up share capital – Whether distribution charge incurred – Finance Act, 1947 (10 and 11 Geo. VI, c.35), Section 30(3), 35 (1) (c), 36 (4) and 43 (1).

Citations:

[1961] UKHL TC – 39 – 707

Links:

Bailii

Jurisdiction:

England and Wales

Corporation Tax

Updated: 28 June 2022; Ref: scu.559964

Lawson (Inspector of Taxes) v Johnson Matthey: HL 14 May 1992

HL Corporation Tax – Insolvency of taxpayer company’s subsidiary – Purchase of subsidiary by Bank of England subject to injection by parent of andpound;50m into subsidiary – Whether such payment of a capital or revenue nature.

Citations:

[1992] UKHL TC – 65 – 39

Links:

Bailii

Jurisdiction:

England and Wales

Corporation Tax

Updated: 27 June 2022; Ref: scu.559855

Slater Ltd and others v Beacontree Commissioners for the General Purposes of Income Tax: CA 20 Feb 2002

Application for leave to appal against penalties imposed for failing to complay with notices requiring the production of documents to the Commissioners.

Judges:

Robert Walker LJ

Citations:

[2002] EWCA Civ 259

Links:

Bailii

Jurisdiction:

England and Wales

Corporation Tax, Taxes Management

Updated: 23 June 2022; Ref: scu.216855

BMBF (No 24) Ltd v Inland Revenue Commissioners: ChD 26 Nov 2002

Equipment in Illinois was transferred to a UK company within the same group, then sold and leased back in order to take advantage of capital allowances. The Act provided for a reduction in the allowance where machinery was let to a foreign company, but subsection 3 removed the allowance altogether where the machinery was not used for a qualifying purpose. Whilst the drafting may be deficient, it was the case that the provisions applied to sub-leases, and the arrangement was caught and was not effective.

Judges:

Etherton J

Citations:

Times 12-Dec-2002, Gazette 23-Jan-2003

Statutes:

Capital Allowances Act 1990 24 42(1) 42(2) 42(3)

Jurisdiction:

England and Wales

Citing:

Appealed to – BMBF (No 24) Limited v the Commissioners of Inland Revenue CA 6-Nov-2003
The taxpayer, a non-resident, operated a sale and lease back scheme of machinery to be used in its business within the UK. There had been a chain of leases.
Held: The court had first to identify the ‘relevant lease’. It was the head lease . .

Cited by:

Appeal from – BMBF (No 24) Limited v the Commissioners of Inland Revenue CA 6-Nov-2003
The taxpayer, a non-resident, operated a sale and lease back scheme of machinery to be used in its business within the UK. There had been a chain of leases.
Held: The court had first to identify the ‘relevant lease’. It was the head lease . .
Lists of cited by and citing cases may be incomplete.

Corporation Tax

Updated: 23 June 2022; Ref: scu.178415

Simpson (HM Inspector of Taxes) v The Grange Trust, Ltd: HL 15 Mar 1935

Income Tax – Investment trust company not assessable under Case I of Schedule D – Claim for relief in respect of expenses of management – Income Tax Act, 1918 s 8
Wright L said: ‘An ordinary trading company assessed on the balance of its profits and gains for the year under Schedule D, Case I, is entitled, in order to arrive at the balance, to an allowance for outlays incurred for the purpose of earnings its profits: the companies or concerns enumerated in the section whose income is in the main taxed by deduction, would be placed at a disadvantage if no allowance was made to them for management expenses.’

Judges:

Wright L

Citations:

(1935) 19 TC 231, [1935] UKHL TC – 19 – 231

Links:

Bailii

Statutes:

Income Tax Act 1918 33(1)

Jurisdiction:

England and Wales

Cited by:

Cited – Camas Plc v HM Inspector of Taxes ChD 7-Jul-2003
An investment company sought to set against its liability to corporation tax, the various costs of taking over another company. They argued that as an investment company these were not costs of the purchase and could be set against tax.
Held: . .
Lists of cited by and citing cases may be incomplete.

Corporation Tax, Financial Services

Updated: 21 June 2022; Ref: scu.184469

Barrett (HM Inspector of Taxes) v Royal London Mutual Insurance Society Ltd: ChD 5 Jul 2002

Paragraph 57(2) of Schedule 8 to the Finance Act 1995, which provides that section 442A of the Taxes Act 1998 ‘does not apply in relation to the reinsurance of a policy or contract where the policy or contract was made, and the reinsurance arrangement effected, before 29 November 1994’, provided an indication that the opening clause of paragraph 55(2) referred to the underlying policy or contract. A reinsurance contract was not a ‘policy or contract’ within the relevant provisions.

Judges:

Peter Smith J

Citations:

[2002] STC 1020

Statutes:

Finance Act 1995 Sch8 Par55

Jurisdiction:

England and Wales

Citing:

Appealed to – Barrett (HM Inspector of Taxes) v Royal London Mutual Insurance Society Ltd CA 12-Jun-2003
The question arising was whether paragraph 55(2) of Schedule 8 to the Finance Act 1995, a reinsurance treaty entered into on 25 November 1994 by the taxpayer reinsurer with a non-resident cedant is, by virtue of the fact that policies of life . .

Cited by:

Appeal from – Barrett (HM Inspector of Taxes) v Royal London Mutual Insurance Society Ltd CA 12-Jun-2003
The question arising was whether paragraph 55(2) of Schedule 8 to the Finance Act 1995, a reinsurance treaty entered into on 25 November 1994 by the taxpayer reinsurer with a non-resident cedant is, by virtue of the fact that policies of life . .
Lists of cited by and citing cases may be incomplete.

Corporation Tax, Insurance

Updated: 21 June 2022; Ref: scu.183866

Slater Ltd and Others v Beacontree General Commissioners and Another: ChD 6 Dec 2001

When the general commissioners were investigating an appeal against the imposition of penalties, it was open to them to ask the company to present more detailed accounts than would be provided under the rules which allowed smaller companies to file short accounts. It was not enough to offer access to the companies books. The commissioners were entitled to require a profit and loss account in one of the four statutory formats. The defaults in this case were deliberate, and inexcusable, and the penalties should be sufficiently substantial to mean something. The penalties here were modest and the companies could make no legitimate complaint of them.

Judges:

Justice Lightman

Citations:

Times 18-Dec-2001, Gazette 06-Feb-2002

Statutes:

Companies Act 1985 248, General Commissioners (Jurisdiction and Procedure) Regulations 1994 (1994 No 1812) 10(3)

Jurisdiction:

England and Wales

Taxes Management, Company, Corporation Tax

Updated: 21 June 2022; Ref: scu.167112

Simmons (Liquidator of Lionel Simmons Properties) v Inland Revenue Commissioners: HL 19 Jun 1980

HL Corporation tax – Shortfall – Finance Act 1965, s 77 – Acquisition and development of properties by group of associated companies – Decision to liquidate – Sales of properties – Whether trade or investment – Whether properties appropriated to trade.

Citations:

[1980] UKHL TC – 53 – 461

Links:

Bailii

Statutes:

Finance Act 1965 77

Jurisdiction:

England and Wales

Corporation Tax

Updated: 18 June 2022; Ref: scu.559788

O’Brien (Inspector of Taxes) v Benson’s Hosiery (Holdings) Ltd: HL 25 Oct 1979

HL Corporation tax – Chargeable gains – Meaning of ‘property’ and ‘assets’ under Part III of Finance Act 1965 (c 25) – Whether andpound;50,000 received from director to secure release from service agreement a chargeable gain – Finance Act 1965, s 22(1), (3) and (4)(b).

Citations:

[1979] UKHL TC – 53 – 241, [1980] AC 562, [1979] 3 All ER 652, [1979] 3 WLR 572, 53 TC 241, [1979] STC 735, [1979] TR 335

Links:

Bailii

Statutes:

Finance Act 1965

Jurisdiction:

England and Wales

Corporation Tax

Updated: 18 June 2022; Ref: scu.559838

Inland Revenue Commissioners v Laird Group Plc: ChD 13 Mar 2001

It was difficult to reconcile different decisions of the higher courts. Nevertheless, the declaration and payment of a dividend which did not involve any transaction in securities, or alteration of rights attaching to securities, was not itself a dealing in securities. The arrangement involved the declaration of abnormally large dividends in purchasing another company so as to create franked income which it could then set off against its own liability to tax at tax rates applicable to its group. If a payment operated to extinguish a security, it might become such a transaction, but in this case it had not.

Citations:

Times 13-Mar-2001, Gazette 20-Apr-2001

Statutes:

Income and Corporation Taxes Act 1988 706

Jurisdiction:

England and Wales

Taxes Management, Corporation Tax

Updated: 17 June 2022; Ref: scu.82347

Sun Life Assurance Society v Davidson: HL 4 Jul 1957

The court considered the question of what was meant by the phrase ‘expenses of management’
Held: The phrase (s75) could be seen ‘as apt to cover the expenses which would normally be deductible in respect of its life assurance business if an assurance company carrying on life assurance business was assessed as a trade.’ Section 33(1) ‘makes it clear that some only of the expenses which would be deductible under Case I and the relevant rules are deductible under this special method.’ Lord Reid: ‘I do not think that it is possible to define precisely what is meant by ‘expenses of management’. It has not been argued that these words have any technical or special meaning in this context. They are ordinary words of the English language, and, like most such words, their application in a particular case can only be determined on a broad view of all relevant matters . . . looking to the purpose and content of the section it appears to me that the phrase has a fairly wide meaning so that, for example, expenses of investigation and consideration whether to pay out money either in settlement of a claim or in acquisition of an investment must be held to be expenses of management . . . It seems to me more reasonable to ask, with regard to a payment, whether it should be regarded as part of the cost of acquisition, on the one hand, or, on the other hand, something severable from the cost of acquisition which can properly be regarded as an expense of management.’

Judges:

Lord Somervell, Lord Reid

Citations:

[1958] AC 184, [1957] UKHL TC – 37 – 330

Links:

Bailii

Statutes:

Income Tax Act 1918 33(1) 75

Jurisdiction:

England and Wales

Citing:

Appeal from – Sun Life Assurance Society v Davidson CA 1956
The phrase ‘general management’ extended further than ‘management’ and included what was done at the lower levels of a company’s executive structure.
Romer LJ said: ‘The ratio decidendi of Golder’s Case (Capital and National Trust Ltd. v. . .

Cited by:

Cited – Camas Plc v HM Inspector of Taxes ChD 7-Jul-2003
An investment company sought to set against its liability to corporation tax, the various costs of taking over another company. They argued that as an investment company these were not costs of the purchase and could be set against tax.
Held: . .
Cited – Hoechst Finance Limited v Gumbrell CA 1983
The issue was whether the appellant company, a member of an international group of trading companies, could recover as expenses of management a commission of 0.25% per annum it had to pay to its parent as the price of obtaining a guarantee for the . .
Cited – Atkinson (HM Inspector of Taxes) v Camas Plc CA 6-May-2004
An investment company made an abortive attempt to take over another. It sought to set off against its Corporation Tax, the costs of the professional advice incurred.
Held: The expenses were deductible. . .
Lists of cited by and citing cases may be incomplete.

Corporation Tax

Updated: 16 June 2022; Ref: scu.184471

Inland Revenue Commissioners v Land Securities Investment Trust Ltd: HL 29 Apr 1969

HL Profits tax – Deduction – Property company – 10-year rentcharges payable as consideration for lessor’s interest in properties leased to company – Finance Act 1937 (1 Edw. 8 and l Geo. 6, c. 54), .v. 20(1) and Sch. 4, para. 4; Finance (No. 2) A ct 1940 (3 and 4 Geo. 6. c. 48), s. 14; Incom e T ax A ct 1952 (15 and 16 Geo. 6 candpound; 1 Eliz. 2, c. 10), s. 177.

Citations:

[1969] UKHL TC – 45 – 495, 45 TC 495, [1969] TR 173, [1969] 2 All ER 430, [1969] 1 WLR 604

Links:

Bailii

Jurisdiction:

England and Wales

Corporation Tax

Updated: 14 June 2022; Ref: scu.559810

Brimheath Developments Ltd and Another (T/A M J Bradleys) v Revenue and Customs: FTTTx 25 Mar 2014

Income tax/Corporation tax – Discovery assessments – pounds 97,970 held in safety deposit box – Unexplained lodgements into bank accounts – Whether undeclared trading profits – Burden of proof – Whether sufficient evidence to displace assessments

Citations:

[2014] UKFTT 301 (TC)

Links:

Bailii

Jurisdiction:

England and Wales

Corporation Tax

Updated: 11 June 2022; Ref: scu.525251

Sempra Metals Ltd (formerly Metallgesellshaft Ltd) v Inland Revenue Commissioners and another: ChD 16 Jun 2004

The claimants were due to have substantial sums repaid after it had been found that the system of making premature reclaims of advance corporation tax had been was discriminatory under European Law.
Held: The sums payable were to carry interest calculated on a compound interest basis.

Judges:

Park J

Citations:

Times 25-Jun-2004, [2004] EWHC 2387 (Ch), [2004] STI 1495, [2004] Eu LR 939, [2004] BTC 358, [2004] STC 1178

Links:

Bailii

Jurisdiction:

England and Wales

Cited by:

At First Instance – Sempra Metals Ltd v Inland Revenue Commissioners and Another HL 18-Jul-2007
The parties agreed that damages were payable in an action for restitution, but the sum depended upon to a calculation of interest. They disputed whether such interest should be calculated on a simple or compound basis. The company sought compound . .
Appeal from – Sempra Metals Ltd v Inland Revenue and Another CA 12-Apr-2005
The court was asked whether it was contrary to Community law – specifically, the provisions then contained in article 52 of the EC Treaty (now renumbered as article 43) – for the domestic tax law in the United Kingdom to differentiate, in the . .
Lists of cited by and citing cases may be incomplete.

Damages, European, Corporation Tax

Updated: 11 June 2022; Ref: scu.198393

Loss Relief Group, Test Claimants In v Inland Revenue: CA 28 May 2004

The taxpayers sought determination by the court of their various claims for group tax relief. The High Court had declined jurisdiction.
Held: The appeal was allowed. The judge’s attitude was one which would perhaps appeal to most lawyers experienced in tax matters if Community law considerations could be left out of account, but Community law obliges the High Court to entertain the claims. If a remedy was available through the commissioners, statute required the taxpayer to take their case before the commissioners.

Judges:

Lord Justice Peter Gibson Lord Justice Longmore

Citations:

[2003] EWCA Civ 680, [2005] 1 WLR 52

Links:

Bailii

Statutes:

Taxes Management Act 1970 30A

Jurisdiction:

England and Wales

Citing:

Appeal from – Claimants under the Loss Relief Group Litigation Order v Inland Revenue Commissioners ChD 3-Mar-2004
Various claimants sought to have issues of law on group relief and other issues settled under a group litigation order.
Held: The High Court had no jurisdiction to hear such matters until they had first been raised in ordinary tax appeals . .
Appeal from – NEC Semi-Conductors Limited and Other Test Claimants v The Commissioners of Inland Revenue ChD 24-Nov-2003
UK companies were subsidiaries of companies resident abroad, and complained that they were unable to make group income elections.
Held: The prohibition infringed non-discrimination provisions of double taxation agreements – non-discrimination . .

Cited by:

Appeal from – Autologic Holdings Plc and others v Commissioners of Inland Revenue HL 28-Jul-2005
Taxpayer companies challenged the way that the revenue restricted claims for group Corporation Tax relief for subsidiary companies in Europe. The issue was awaiting a decision of the European Court. The Revenue said that the claims now being made by . .
Lists of cited by and citing cases may be incomplete.

Corporation Tax, Taxes Management

Updated: 11 June 2022; Ref: scu.197933

Aberdeen Construction Group Ltd v Inland Revenue Commissioners: HL 1978

The House gave guidance on the interpretation of Tax statutes.
Held: The consideration at issue had been paid both for shares and for something else, the waiver of a loan the seller had made to the company. Lord Wilberforce emphasised the need to consider each asset disposed of separately in the light of the rules which apply to that particular asset.
TC Corporation tax – Chargeable gains – Disposal by holding company of its shares in subsidiary company on condition that holding company waived repayment of its loans to the subsidiary – Whether consideration given for shares alone or shares and loans – Whether the loans were debts on a security and an allowable loss accrued – Whether the amount o f the loans was an allowable deduction in computing the gain or loss on the disposal – Finance Act 1965 (c 25), Sch 7, para 11; Sch 6, paras 4(1) (b), 8.
Capital gains tax is a tax on gains, or gains less losses. It is not a tax on arithmetical differences. To say that a loss (or gain) which appears to arise at one stage in an indivisible process, and which is intended to be and is cancelled out by a later stage, so that at the end of what was bought as, and planned as, a single continuous operation, is not such a loss (or gain) as the legislation is dealing with is well, and indeed essentially, within the judicial function.

Judges:

Lord Wilberforce

Citations:

[1978] AC 885, [1978] UKHL TC – 52 – 281, [1978] 1 All ER 962, (1978) 52 Tax Cas 281

Links:

Bailii

Statutes:

Finance Act 1965

Jurisdiction:

England and Wales

Cited by:

Cited – Jerome v Kelly (Her Majesty’s Inspector of Taxes) HL 13-May-2004
In 1987, trustees holding land for various beneficiaries in undivided shares entered into a contract to sell it to a purchaser. In 1989 Mr and Mrs Jerome, who were absolutely entitled to interests in the land, assigned part of their beneficial . .
Lists of cited by and citing cases may be incomplete.

Capital Gains Tax, Corporation Tax

Updated: 10 June 2022; Ref: scu.196889

Lessex Ltd v HM Inspector of Taxes: SCIT 6 Nov 2003

SCIT Corporation tax – late filing of company tax returns – penalty provisions – transitional provisions – whether fixed penalty under Schedule 18, paragraph 17 to the Finance Act 1998 for a third late filing of a company tax return should be the higher penalty of andpound;1000 where one or more of the previous late filings was penalised under section 94 of the Finance Act Taxes Management Act 1970 and not under paragraph 17 – yes.

Citations:

[2003] UKSC SPC00391

Links:

Bailii

Corporation Tax

Updated: 10 June 2022; Ref: scu.195443

M Freeman (Plant) Ltd v HM Inspector of Taxes: SCIT 11 Aug 2003

CAPITAL ALLOWANCES – first year allowances – expenditure incurred by parent company on the provision of machinery and plant – machinery and plant used by subsidiary company who paid the parent company an annual charge – annual charge a proportion of the charges made by the subsidiary to its customers – whether expenditure by parent company was on the provision of machinery or plant ‘for leasing’ – yes – appeal dismissed – CAA 1990 Ss 22 (6B) (d)

Citations:

[2003] UKSC SPC00376

Links:

Bailii

Corporation Tax

Updated: 10 June 2022; Ref: scu.195435

Forthright (Wales) Limited v A L Davies (HM Inspector of Taxes): ChD 18 Mar 2004

The inspector disallowed a claim for enterprise investment relief, saying that not all the funds raised were to be used for a qualifying purpose.
Held: The proceeds of a share issue had been used in part to pay a dividend. The issue did not qualify. The inspector’s refusal yto authorise exemption was a decision refusing the claim, and gave rise to the same right sof appeal as a decision.

Judges:

The Hon Mr Justice Lightman

Citations:

[2004] EWHC 524 (Ch), Times 01-Apr-2004

Links:

Bailii

Statutes:

Taxes Management Act 1970 1A, Incom,e and Corporation Taxes Act 1988 306

Jurisdiction:

England and Wales

Citing:

Cited – Strong and Co of Romsey Ltd v Woodifield HL 30-Jul-1906
The company sought to deduct from its trading profits a sum expended paying damages for personal injuries to a visitor to the taxpayer’s Inn. The claim had been rejected.
Held: The company’s appeal failed. Lord Davey said: ‘I think that the . .
Appeal From – Forthright (Wales) Ltd v Hm Inspector of Taxes SCIT 29-Sep-2003
. .
Lists of cited by and citing cases may be incomplete.

Taxes Management, Corporation Tax

Updated: 10 June 2022; Ref: scu.194573

Unilever Plc, Regina (on The Application of) v Inland Revenue: CA 13 Feb 1996

Corporation tax – Losses – Relief Time-limit – Substantive Fairness – Judicial review-Claims for relief against other profits of same period-Claims refused-Whether estimated figures delivered within two-year time-limit constituted claims-Express claims made after expiry of time-limit-Previous late claims admitted without question-Whether Revenue wrongly refused claims-Income and Corporation Taxes Act 1970, s 177(2) and {10), Taxes Management Act 1970, s 1, Income and Corporation Taxes Act 1988, ss 393(2) and (11) and 393A(10).

Citations:

[1996] EWCA Civ 68 – TC – 205, [1994] STC 841, 68 TC 205, [1994] STI 1023, [1996] STC 681

Links:

Bailii

Statutes:

Income and Corporation Taxes Act 1970

Jurisdiction:

England and Wales

Corporation Tax

Updated: 09 June 2022; Ref: scu.625425

MacDonald (HM Inspector of Taxes) v Dextra Accessories Ltd and others: CA 28 Jan 2004

The company had set up a trust for the benefit of its employees. The Inspector sought to tax the payments made into the trust as ’emoluments’
Held: The appeal was allowed. The payments were ‘potential emoluments’ which were held by the trustees ‘with a view to their becoming relevant emoluments’. The employers were not allowed to deduct the payments from their income for Corporation Tax purposes.

Judges:

Lord Justice Jonathan Parker Lord Justice Potter Mr Justice Charles

Citations:

Times 03-Feb-2004, [2004] EWCA Civ 22, Gazette 04-Mar-2004, [2004] STC 339

Links:

Bailii

Statutes:

Finance Act 1989 43

Jurisdiction:

England and Wales

Citing:

Appeal from – MacDonald (Inspector of Taxes) v Dextra Accessories Ltd and Others ChD 16-Apr-2003
The inspector sought to disallow charging to current tax period payments made by the employer to an employee benefit trust.
Held: The payments were not made and held by the trustees ‘with a view to becoming relevant emoluments’ within the . .
Cited – MacNiven (Inspector of Taxes) v Westmoreland Investments Ltd HL 15-Feb-2001
The fact that a payment of interest was made only to create a tax advantage did not prevent its being properly claimed. Interest was paid for the purposes of setting it against tax, when the debt was discharged. A company with substantial losses had . .
Cited – Peat -v Gresham Trust Ltd HL 1934
The phrase ‘with a view of’ in the context of an assertion of making a faudulent preference required it to be established what the person’s dominant intention was to make such. In order to determine what, on the probabilities, was the ‘dominant, . .
Cited – In re Cutts (a bankrupt); Ex parte Bognor Mutual Building Society CA 1956
Decisions are often made not for a single reason but for a number.
The phrase ‘with a view of’ a fraudulent preference was given to one creditor over others, it required it to be established what the person’s dominant intention was.
Lord . .
Cited – EMI Group Electronics Ltd v Coldicott (Inspector of Taxes) CA 16-Jul-1999
A payment made by an employer on the termination of a contract in lieu of notice was taxable as an emolument, where the right to notice was reserved by the employment contract The reason for a notice period from an employee’s point of view was not . .
At Special Commissioners – Dextra Accessories Ltd and others v Inspector of Taxes SCIT 25-Jul-2002
SXIT EMPLOYEE BENEFIT TRUST – whether deduction of contributions postponed until taxable as emoluments under FA 1989 s.43(11) – no – whether sub-funds in favour of directors who controlled the company taxable as . .

Cited by:

Appeal from – HM Inspector of Taxes v Dextra Accessories Ltd HL 7-Jul-2005
The taxpayer companies had paid funds into a trust for employees. They sought to set off the payments against their liability to corporation tax. The revenue argued that they were deductible only in the year in which they were paid to the employees. . .
Lists of cited by and citing cases may be incomplete.

Corporation Tax, Income Tax

Updated: 09 June 2022; Ref: scu.192287

Taylor (Her Majesty’s Inspector of Taxes) v MEPC Holdings Limited: HL 18 Dec 2003

The taxpayer company made a smaller profit than its charges, and sought to reallocate the charges against income for other companies within the group. It could do so, but the difference arose over the period for which surrender would be alowed.
Held: The term ‘relief’ is not a term of art. The Income and chargeable gains elements of profits were calculated separately and then aggregated. The annual computation required a system of alowing a trading loss in one year to be set off against a profit in a following year. ‘losses’ meant losses allowed by way of relief against profits and not losses, such as allowable losses, deducted in the computation of profits.

Judges:

Lord Nicholls of Birkenhead Lord Slynn of Hadley Lord Hoffmann Lord Millett Lord Walker of Gestingthorpe

Citations:

[2003] UKHL 70, Times 09-Jan-2004, Gazette 29-Jan-2004, [2004] 1 WLR 82, Gazette 29-Jan-2004

Links:

House of Lords, Bailii

Statutes:

Income and Corporation Taxes Act 1988 402(1) 403(7) 403(8)

Jurisdiction:

England and Wales

Citing:

Appeal from – Taylor (Inspector of Taxes) v MEPC Holdings Ltd CA 20-Jun-2002
The taxpayer sought to include in the amounts to be set off by surrender against the group’s liability for corporation tax, chargeable gains in respect of allowable losses of a preceding accounting period. They appealed a decision against them at . .

Cited by:

Cited – Atkinson (HM Inspector of Taxes) v Camas Plc CA 6-May-2004
An investment company made an abortive attempt to take over another. It sought to set off against its Corporation Tax, the costs of the professional advice incurred.
Held: The expenses were deductible. . .
Lists of cited by and citing cases may be incomplete.

Corporation Tax

Updated: 08 June 2022; Ref: scu.188921

BMBF (No 24) Limited v the Commissioners of Inland Revenue: CA 6 Nov 2003

The taxpayer, a non-resident, operated a sale and lease back scheme of machinery to be used in its business within the UK. There had been a chain of leases.
Held: The court had first to identify the ‘relevant lease’. It was the head lease which was the lease of the machinery on which the expemse was reclaimed. In falling foul of section 52, it operated to disallow attraction to the capital allowance claimed.

Judges:

Lord Justice Chadwick Lord Justice Rix Lord Justice Simon Brown

Citations:

[2003] EWCA Civ 1560, Times 27-Nov-2003

Links:

Bailii

Statutes:

Capital Allowances Act 1990 42(3)(a), Taxes Management Act 1970 56A

Jurisdiction:

England and Wales

Citing:

Appeal from – BMBF (No 24) Ltd v Inland Revenue Commissioners ChD 26-Nov-2002
Equipment in Illinois was transferred to a UK company within the same group, then sold and leased back in order to take advantage of capital allowances. The Act provided for a reduction in the allowance where machinery was let to a foreign company, . .
Awaiting Appeal – Barclays Mercantile Business Finance Ltd v Mawson (Inspector of Taxes) ChD 22-Jul-2002
The taxpayer sought to claim for capital allowances of andpound;91 million for gas pipelines. The claimant had provided the equipment through a leasing scheme.
Held: The leases were unusual, but did not appear to be merely part of a tax . .
Cited – W T Ramsay Ltd v Inland Revenue Commissioners HL 12-Mar-1981
The taxpayers used schemes to create allowable losses, and now appealed assessment to tax. The schemes involved a series of transactions none of which were a sham, but which had the effect of cancelling each other out.
Held: If the true nature . .
Cited – MacNiven (Inspector of Taxes) v Westmoreland Investments Ltd HL 15-Feb-2001
The fact that a payment of interest was made only to create a tax advantage did not prevent its being properly claimed. Interest was paid for the purposes of setting it against tax, when the debt was discharged. A company with substantial losses had . .

Cited by:

Appealed to – BMBF (No 24) Ltd v Inland Revenue Commissioners ChD 26-Nov-2002
Equipment in Illinois was transferred to a UK company within the same group, then sold and leased back in order to take advantage of capital allowances. The Act provided for a reduction in the allowance where machinery was let to a foreign company, . .
Lists of cited by and citing cases may be incomplete.

Taxes Management, Corporation Tax

Updated: 08 June 2022; Ref: scu.187539

Her Majesty’s Commissioners of Inland Revenue v Laird Group plc: HL 16 Oct 2003

Was the payment of a dividend in respect of shares ‘a transaction in securities’ or ‘a transaction relating to securities’ within the meaning of section 703.
Held: ‘As a matter of ordinary language, the creation, issue, sale, purchase, exchange, redemption and extinguishment of shares or debentures are all ‘transaction[s] in securities’. The word ‘securities’ includes not only stocks and shares of every description, including preference shares, but also debentures and unsecured loan notes. Appeal allowed.

Judges:

Lord Nicholls of Birkenhead, Lord Hoffmann, Lord Millett, Lord Rodger of Earlsferry, Lord Walker of Gestingthorpe

Citations:

[2003] UKHL 54, Gazette 13-Nov-2003

Links:

House of Lords, Bailii

Statutes:

Income and Corporation Taxes Act 1988 703

Jurisdiction:

England and Wales

Citing:

Appeal from – Inland Revenue Commissioners v Laird Group plc CA 30-Apr-2002
The taxpayer had sources of foreign income. Arrangements were made to take the benefit through the payment of interim dividends, which it intended to use to set off against liability for advance corporation tax. The Commissioner contended that these . .
Cited – Inland Revenue Commissioners v Joiner HL 26-Nov-1975
HL Surtax – Tax advantage – Transaction in securities – Company recon- struction – Surplus assets o f old company distributed in voluntary liquidation – Agreement for liquidation providing for agreed methods o f . .
Cited – Inland Revenue Commissioners v Parker HL 1966
A company capitalised a sum standing to the credit of its profit and loss account and applied it in issuing redeemable debentures to its members in proportion to the amounts paid up on their shares. The company subsequently redeemed the debentures . .
Cited – Greenberg v Inland Revenue Commissioners HL 1972
A company created a new class of preferred shares which it issued credited as fully paid to its two shareholders. They sold the shares to a purchaser on terms that the price was to be paid by instalments. Under arrangements made between the parties . .
Cited – Borland’s Trustee v Steel Brothers and Co Ltd 1901
Mr Borland was a shareholder. The company’s articles contained pre-emption rights, such that on a shareholder’s bankruptcy, he had, on receiving a transfer notice from the directors, to transfer his shares to a manager or assistant at a fair value . .
Cited – Short v Treasury Commissioners CA 1948
‘shareholders are not, in the eye of the law, part owners of the undertaking’ A share is classified as a chose in action, a species of intangible personal property. . .
Lists of cited by and citing cases may be incomplete.

Corporation Tax, Company

Updated: 08 June 2022; Ref: scu.186772

Inland Revenue Commissioners v Scottish and Newcastle Breweries Ltd: HL 4 Mar 1982

Expenditure on refurbishment, decor and fittings in hotels was held to be plant though forming part of the setting of the hotels. The House considered the interpretation of undefined expressions in fiscal legislation, such as ‘trade’, ‘income’, ‘office’ and ‘plant’. Lord Wilberforce said: ‘It naturally happens that as case follows case, and one extension leads to another, the meaning of the word gradually diverges from its natural or dictionary meaning. This is certainly true of ‘plant.’ No ordinary man, literate or semi-literate, would think that a horse, a swimming pool, moveable partitions, or even a dry dock was plant-yet each of these has been held to be so: so why not such equally improbable items as murals, or tapestries, or chandeliers?’ and ‘There is no universal formula which can solve these puzzles. In the end each case must be resolved, in my opinion, by considering carefully the nature of the particular trade being carried on, and the relation of the expenditure to the promotion of the trade. I do not think that the court should shrink, as a backstop, from asking whether it can really be supposed that Parliament desired to encourage a particular expenditure out of, in effect, taxpayers’ money, and perhaps ultimately, in extreme cases, to say that this is too much to stomach.’

Judges:

Lord Wilberforce

Citations:

[1982] 1 WLR 322, (1982) 55 TC 251, [1982] UKHL TC – 55 – 252

Links:

Bailii

Jurisdiction:

England and Wales

Cited by:

Cited – Shove (Inspector of Taxes) v Lingfield Park 1991 Ltd ChD 21-Jul-2003
The taxpayer, a race track owner, sought to claim the cost of laying an artificial all-weather race track surface as a capital allowance. The commissioners had found that it retained a separate identity from the grass, requiring maintenance and so . .
Cited – Lingfield Park (1991) Limited v Shove CA 31-Mar-2004
The taxpayers sought capital allowances on the costs of installing an artificial all-weather race track.
Held: The track was not either plant or machinery, and the taxpayer was not eligible for the relief. The only reasonable conclusion was . .
Lists of cited by and citing cases may be incomplete.

Corporation Tax

Updated: 08 June 2022; Ref: scu.185849

Deutsche Morgan Grenfell Group Plc v The Commissioners of Inland Revenue, HM Attorney General: ChD 18 Jul 2003

The taxpayer sought to bring an action for restitution by the revenue of sums paid under a mistake of law. Under the Metallgesellschaft decision, rights of election for recovery of overpaid tax applied only between UK resident companies.
Held: The limitation period began only upon the decision which stated the law, and not upon the parties first presenting the arguments which were upheld. The payment had been made under a mistake of law, and was recoverable by way of restitution.

Judges:

The Hon Mr Justice Park

Citations:

[2003] EWHC 1779 (Ch), Times 30-Jul-2003, [2003] EWHC 1866 (Ch)

Links:

Bailii, Bailii

Statutes:

Limitation Act 1980 32(1)(c)

Jurisdiction:

England and Wales

Citing:

Cited – Metallgesellschaft Ltd and Others v Inland Revenue Commissioners and Another Hoechst Ag and Another v Same ECJ 8-Mar-2001
The British law which meant that non-resident parent companies of British based businesses were not able to recover interest on payments of advance corporation tax, was discriminatory against other European based companies. Accordingly the law was . .
Cited – Hazell v Hammersmith and Fulham London Borough Council HL 1991
Swap deals outwith Council powers
The authority entered into interest rate swap deals to protect itself against adverse money market movements. They began to lose substantial amounts when interest rates rose, and the district auditor sought a declaration that the contracts were . .
Cited – Kleinwort Benson Ltd v Lincoln City Council etc HL 29-Jul-1998
Right of Recovery of Money Paid under Mistake
Kleinwort Benson had made payments to a local authority under swap agreements which were thought to be legally enforceable when made. Subsequently, a decision of the House of Lords, (Hazell v. Hammersmith and Fulham) established that such swap . .

Cited by:

Appeal from – Inland Revenue and Another v Deutsche Morgan Grenfell Group Plc CA 4-Feb-2005
The company sought repayment of excess advance corporation tax payments made under a mistake of law. The question was the extent of the effect of the ruling in Klienwort Benson, in particular whether it covered sums paid as taxation, and how the law . .
At First Instance – Deutsche Morgan Grenfell Group Plc v Inland Revenue and Another HL 25-Oct-2006
The tax payer had overpaid Advance Corporation Tax under an error of law. It sought repayment. The revenue contended that the claim was time barred.
Held: The claim was in restitution, and the limitation period began to run from the date when . .
Lists of cited by and citing cases may be incomplete.

Corporation Tax, Equity, Equity

Updated: 07 June 2022; Ref: scu.184887

Mellham Ltd v Collector of Taxes: CA 17 Jan 2003

Buxton LJ: ‘The issue therefore is one of simple statutory construction. Can the expression ‘payment’ when used in section 87 of the 1970 Act, or ‘pays’ when used both in section 246N(2) of the 1988 Act and section 239 of the 1988 Act, encompass a set-off of the sort that the appellant asserts? In order to succeed, the appellant has to establish, both that those statutory references to payment or paying can potentially include a situation of set-off; and that also that in this case ‘set-off’ was in fact available to the appellant. In my judgment, the appellant fails on both of those scores.’

Judges:

Buxton LJ

Citations:

[2003] EWCA Civ 173

Links:

Bailii

Statutes:

Taxes management Act 1970 87

Jurisdiction:

England and Wales

Citing:

Cited – Hanak v Green CA 1958
A builder was sued for his failure to complete the works he had contracted for. The buider sought a set-off against that claim of three of his one claims. One, under the contract, was for losses from the defendant’s refusal to allow his workmen . .
Cited – Aries Tanker Corp v Total Transport Ltd; The Aries HL 1977
Claims for freight charges are an exception to the general rule that all claims between parties must be resolved in one action. A claim for freight cannot be a claim ‘on the same grounds’ as a counter-claim for loss or damage arising out of the . .

Cited by:

Appeal from – Burton (Collector of Taxes) v Mellham Ltd HL 15-Feb-2006
The claimant sought interest on an overpayment of Advance Corporation Tax. The tax itself had been paid late, and the Collector claimed a set off.
Held: The claim to DTR could not be described as an attempt at self-help. It had a statutory . .
Lists of cited by and citing cases may be incomplete.

Corporation Tax

Updated: 07 June 2022; Ref: scu.181110

Glapwell Football Club Ltd v Revenue and Customs: FTTTx 30 Sep 2013

FTTTx CORPORATION TAX – Group relief – whether the trade of the loss-making company was being carried on in the relevant accounting periods with a view to the realisation of gain in the trade, or so as to afford a reasonable expectation of gain in the trade – sections 393A(3)and 393A(4) ICTA 1988 – loss-making company carrying on the trade of running a football club or fielding a football team – found on the facts that the trade was not being carried on at the relevant times so as to afford a reasonable expectation of gain in the trade – appeal dismissed

Citations:

[2013] UKFTT 516 (TC)

Links:

Bailii

Jurisdiction:

England and Wales

Corporation Tax

Updated: 07 June 2022; Ref: scu.516875

Lankhorst-Hohorst GmbH v Finanzamt Steinfurt: ECJ 12 Dec 2002

German law taxed interest paid on loan repayments made by a company against a loan from a shareholder, but only where the shareholder was not resident in the same country as the company. The tax authority took the view that the payments were a equivalent to a covert distribution of profits.
Held: This was discriminatory, and offended the principal of freedom of establishment. It was wrong to compare the position of a company trading for profit with corporations exempt from corporation tax. Reduction in tax revenue is not an overriding reason in the public interest capable of justifying a measure contravening a fundamental principle.

Judges:

Wathelet, President, Timmermans, Edward, Jann and Rosas JJ

Citations:

Times 27-Dec-2002, C-324/00, [2002] EUECJ C-324/00, [2002] ECR I-11779, [2003] STC 607

Links:

Bailii

Jurisdiction:

European

Cited by:

Cited – Foulser and Another v HM Inspector of Taxes ChD 20-Dec-2005
The taxpayer company entered into an arrangement in which shares were purchased by a company based in Ireland and resold. A claim was made for holdover relief.
Held: The scheme failed. The restriction imposed did not infringe the right of . .
Lists of cited by and citing cases may be incomplete.

European, Corporation Tax, Company

Updated: 06 June 2022; Ref: scu.178612

Gallaher Limited v HM Revenue: UTTC 11 Dec 2020

CORPORATION TAX – whether the UK legislation in relation to intra-group disposals is compliant with EU law – the applicable freedoms, whether or not the provisions in question restrict a freedom – whether or not any restriction can be justified -proportionality of restrictions – conforming interpretation and disapplication – consideration of movements of capital – whether to refer questions of EU law to the Court of Justice of the European Union

Citations:

[2020] UKUT 354 (TCC)

Links:

Bailii

Jurisdiction:

England and Wales

Corporation Tax, European

Updated: 06 June 2022; Ref: scu.657043

Regina v Dimsey: HL 11 Oct 2001

The defendant provided financial services, including the provision of offshore companies for a co-defendant. They were used to secrete assets abroad. Misleading information was provided to the revenue by the applicant and others. They were charged with conspiracy. Only one charge remained effective, but it was argued that since, under s 739(2) that income was deemed, in any event, to be that of one of the defendants, but the case had been presented on the basis that it was the income of the companies which had been hidden. If the presumption against double taxation applied, it was not also the income of the company, and the prosecution failed. The Act contained separate definitions of Income Tax Acts and Corporation Tax Acts, and it was counter-argued that deeming provisions for the one, did not exclude the other. No such distinction could apply in this section. The double taxation possibility remained theoretical. The revenue was left with a choice as to how the income might be treated and taxed. That was argued to be a breach of the human right to enjoy one’s goods free of interference from the State. That discretion was held to be within the State’s margin of appreciation. The companies were liable to corporation tax, and the conviction stood.

Judges:

Lord Bingham of Cornhill Lord Nicholls of Birkenhead Lord Steyn Lord Hutton Lord Scott of Foscote

Citations:

[2001] UKHL 46

Links:

House of Lords, Bailii

Statutes:

Finance Act 1936 36, Income and Corporation Taxes Act 1988 739 746

Jurisdiction:

England and Wales

Citing:

Appeal from – Regina v Frank Adam Moran (Attorney General’s Reference No 25 of 2001) CACD 27-Jul-2001
The defendant pleaded guilty to making false statements, and cheating the public revenue by understating his profits as a market trader over a protracted period. The judge made a confiscation order equal to the amount of undeclared profit. On . .
Lists of cited by and citing cases may be incomplete.

Taxes Management, Income Tax, Corporation Tax, Human Rights

Updated: 04 June 2022; Ref: scu.166569

Regina v Allen: HL 11 Oct 2001

The defendant appealed against a finding that he had concealed an emolument, namely accommodation. He said that, as a shadow director of the company within the extended meaning of that phrase under the Act, the deeming provisions under Income Tax law did not apply. The defendant argued that a shadow director could not be an office holder, since he was neither appointed, and nor could he resign. Even if he was an office holder, the employment was not one under which income was assessable under Schedule E. To hold otherwise would make no distinction between benefits associated with the ownership of a company, and those attributable to employment within it, and ignore territorial limitations.
Held: Both arguments failed. It was clearly the intention of Parliament to collect tax in such situations, and the territorial limitations were explicitly recognised. The defendant argued that the notice requiring him to provide information which might lead to his prosecution breached the right of silence. He had had read to him the Hansard statement which was intended to encourage co-operation. No promise had been made, and it was not involuntary, and in an any event, the information provided was false.

Judges:

Lord Bingham of Cornhill, Lord Nicholls of Birkenhead, Lord Steyn, Lord Hutton, Lord Scott of Foscote

Citations:

[2001] UKHL 45, [2002] 1 AC 509, [2002] HRLR 4, [2001] 4 All ER 768, [2001] STC 1537, 4 ITL Rep 140, [2002] 1 Cr App Rep 18, [2001] BTC 421, [2001] STI 134, [2001] UKHL TC – 74 – 263

Links:

House of Lords, Bailii, Bailii

Statutes:

Income and Corporation Taxes Act 1988 145, 154, 167(1), 167(2), 739(2), Taxes Management Act 1970 8(1) 20(1)

Jurisdiction:

England and Wales

Citing:

Cited – Funke v France ECHR 25-Feb-1993
M. Funke successfully challenged his conviction for failing to provide documents which the customs authorities had demanded of him, on the grounds that his rights under Article 6 had been infringed: ‘The Court notes that the customs secured Mr. . .
Not followed – Regina v Barker CCA 1941
In the course of investigating the defendant for tax faud, he was interviewed by the Inland Revenue. Relying upon a standard statement by the revenue, the appellant produced two ledgers which had been fraudulently prepared in order to induce the . .

Cited by:

Cited – Regina v Sewa Singh Gill and Paramjit Singh Gill CACD 31-Jul-2003
The appellants sought to challenge their convictions for cheating the Inland Revenue. They were accused of having hidden assets and income from the revenue. The appellants objected to the use at trial of material obtained in a ‘Hansard’ interview. . .
Lists of cited by and citing cases may be incomplete.

Corporation Tax, Income Tax, Company, Taxes Management, Human Rights

Updated: 04 June 2022; Ref: scu.166568

Eurowings Luftverkehrs AG v Finanzamt Dortmund-Unna: ECJ 26 Oct 1999

Freedom to provide services – Commercial tax on capital and operating profit – Reinstatement in tax base – Exemption not applicable to lessee of property whose owner is established in another Member State and therefore not subject to tax

Citations:

C-294/97, [1999] EUECJ C-294/97, [1999] ECR I-7447

Links:

Bailii

Jurisdiction:

European

Cited by:

Cited – Foulser and Another v HM Inspector of Taxes ChD 20-Dec-2005
The taxpayer company entered into an arrangement in which shares were purchased by a company based in Ireland and resold. A claim was made for holdover relief.
Held: The scheme failed. The restriction imposed did not infringe the right of . .
Lists of cited by and citing cases may be incomplete.

Corporation Tax

Updated: 04 June 2022; Ref: scu.162207

Manufacturers Life Assurance Company v Cummins (Inspector of Taxes): ChD 22 Nov 2000

The tax exemption attracted to interest on some government securities in favour of foreign residents was lost by a foreign resident company when it carried on a long term life assurance business here on a mutual basis through an office here. The interest was taxable under Schedule C. The business profits restriction in the Act was the income minus expenditure basis. The business described was a trade.

Citations:

Times 22-Nov-2000

Statutes:

Finance Act 1940 60

Jurisdiction:

England and Wales

Corporation Tax

Updated: 04 June 2022; Ref: scu.83390

Imperial Chemical Industries v Colmer: ECJ 16 Jul 1998

A member state was not allowed to impose a tax regime which discriminated against the subsidiaries of a company based in that state where they were based in other member states, but discrimination was allowed where the subsidiaries were based outside EU. United Kingdom legislation restricting fiscal reliefs or advantages to cases where the relevant companies are resident in the United Kingdom may be inconsistent with the EC Treaty. ICI remained bound by domestic legislation upon its ordinary meaning notwithstanding that in certain circumstances such a construction would be incompatible with European Community rights.
Europa In the context of the preliminary ruling procedure under Article 177, it is solely for the national courts before which proceedings are pending, and which must assume responsibility for the judgment to be given, to determine in the light of the particular circumstances of each case both the need for a preliminary ruling to enable them to give judgment and the relevance of the questions which they submit to the Court. A request for a preliminary ruling from a national court may be rejected only if it is manifest that the interpretation of Community law or the examination of the validity of a rule of Community law sought by that court bears no relation to the true facts or the subject-matter of the main proceedings.
Article 52 of the Treaty precludes legislation of a Member State which, in the case of companies established in that State belonging to a consortium through which they control a holding company, by means of which they exercise their right to freedom of establishment in order to set up subsidiaries in other Member States, makes a particular form of tax relief subject to the requirement that the holding company’s business consist wholly or mainly in the holding of shares in subsidiaries that are established in the Member State concerned.
Such legislation, which makes a tax advantage in the form of consortium relief available solely to companies which control, wholly or mainly, subsidiaries whose seat is in the national territory, applies the test of the subsidiaries’ seat to establish differential tax treatment of consortium companies established in that Member State and is not justified in terms of a need to ensure the cohesion of the national tax system arising from the fact that the revenue lost through the granting of tax relief on losses incurred by resident subsidiaries cannot be offset by taxing the profits of non-resident subsidiaries, since there is no direct link between the consortium relief granted for losses incurred by a resident subsidiary and the taxation of profits made by non-resident subsidiaries.
When deciding an issue concerning a situation which lies outside the scope of Community law, the national court is not required, under Community law, either to interpret its legislation in a way conforming with Community law or to disapply that legislation. Where a particular provision must be disapplied in a situation covered by Community law, but that same provision could remain applicable to a situation not so covered, it is for the competent body of the State concerned to remove that legal uncertainty in so far as it might affect rights deriving from Community rules.

Citations:

Times 20-Aug-1998, C-264/96, [1999] 1 WLR 108, [1998] ECR I-4695, [1998] STC 874, [1998] EUECJ C-264/96

Links:

Bailii

Statutes:

EC Treaty 52

Jurisdiction:

European

Citing:

Reference from – ICI Plc v Colmer (Inspector of Taxes) HL 15-Mar-1996
A ‘Holding company’ under the Act meant a company resident in the UK; A reference was made of the issues to the European Court. . .
At Court of Appeal – Imperial Chemical Industries v Colmer (Inspector of Taxes) CA 9-Aug-1993
Group tax relief was available despite other subsidiary companies within the same group being offshore. . .

Cited by:

At ECJ – Imperial Chemical Industries Plc v Colmer (Inspector of Taxes) (No 2) HL 18-Nov-1999
Where a group of companies sought consortium group relief, but the majority of the companies within the group were based outside the European Union, the court need not apply European Union standards to the test, but could instead apply the standards . .
Cited – Autologic Holdings Plc and others v Commissioners of Inland Revenue HL 28-Jul-2005
Taxpayer companies challenged the way that the revenue restricted claims for group Corporation Tax relief for subsidiary companies in Europe. The issue was awaiting a decision of the European Court. The Revenue said that the claims now being made by . .
Cited – Foulser and Another v HM Inspector of Taxes ChD 20-Dec-2005
The taxpayer company entered into an arrangement in which shares were purchased by a company based in Ireland and resold. A claim was made for holdover relief.
Held: The scheme failed. The restriction imposed did not infringe the right of . .
Cited – Hurst, Regina (on the Application of) v Commissioner of Police of the Metropolis v London Northern District Coroner HL 28-Mar-2007
The claimant’s son had been stabbed to death. She challenged the refusal of the coroner to continue with the inquest with a view to examining the responsibility of any of the police in having failed to protect him.
Held: The question amounted . .
Cited – Hurst, Regina (on the Application of) v Commissioner of Police of the Metropolis v London Northern District Coroner HL 28-Mar-2007
The claimant’s son had been stabbed to death. She challenged the refusal of the coroner to continue with the inquest with a view to examining the responsibility of any of the police in having failed to protect him.
Held: The question amounted . .
Lists of cited by and citing cases may be incomplete.

Corporation Tax

Updated: 03 June 2022; Ref: scu.161925

HM Revenue and Customs v Lloyds TSB Equipment Leasing (No1) Ltd: UTTC 14 Aug 2013

UTTC CORPORATION TAX – Claim for capital allowances in respect of ships where the end sub-lease was to a non-UK resident user – Time charter to that end user granted by a UK resident company that claimed that its role (as the disponent owner under the time charter) satisfied the terms of section 123 Capital Allowances Act 2001, and therefore constituted a ‘qualifying user’ so preserving the Respondent finance leasing company’s entitlement to 25% writing-down allowances – Three issues the subject of the appeal by HMRC, and one the subject of a cross-appeal by the Respondent

Citations:

[2013] UKUT 368 (TCC), [2013] BTC 2016, [2013] STI 2985, [2014] STC 191

Links:

Bailii

Jurisdiction:

England and Wales

Corporation Tax

Updated: 03 June 2022; Ref: scu.521007

Sheppard and Another v Inland Revenue Commissioners, Inland Revenue Commissioners v Sheppard: ChD 23 Feb 1993

A Charity Tax avoidance plan was lawful. A company made payments to a charity which then employed them as charity trustees. Since the result was clearly to benefit the charity, and its purposes. The obtaining of a relief from tax, and the making use of an exemption are different for this purpose. The claiming of a tax credit is not a claiming of a relief.

Citations:

Ind Summary 05-Apr-1993, Times 23-Feb-1993, Gazette 07-Apr-1993

Statutes:

Income and Corporation Taxes Act 1988 703 709, Income and Corporation Taxes Act 1970 460(3)

Jurisdiction:

England and Wales

Charity, Corporation Tax

Updated: 02 June 2022; Ref: scu.89221

Able (UK) Holdings Ltd v HM Inspector of Taxes: ChD 30 Jun 2006

Judges:

Lightman J

Citations:

[2006] EWHC 1535 (Ch)

Links:

Bailii

Jurisdiction:

England and Wales

Cited by:

See Also – Able (UK) Ltd v Revenue and Customs ChD 19-Oct-2006
Appeal by way of case stated against a decision of the General Commissioners as to whether a certain compensation payment received by the appellant under section 31(3) of the Land Compensation Act 1961 was income or capital. The General . .
Cited – Able (UK) Ltd v Revenue and Customs CA 22-Nov-2007
The taxpayer company had received compensation for having been excluded from its business premises for a period until a compulsory purchase process failed. It treated the receipt as capital. The revenue said it was income.
Held: The court . .
Lists of cited by and citing cases may be incomplete.

Corporation Tax

Updated: 02 June 2022; Ref: scu.243048

Commissioners of Inland Revenue v The Crown Court at Kingston, Robin Wayne John Interested Party: QBD 24 Jul 2001

The Crown Court dismissed charges again the interested party alleging conspiracy to defraud the claimants. Tax-saving crosses the border from lawful to criminal when it involves the deliberate and dishonest making of false statements to the Revenue. The Revenue contended that he had created documents to do that precise thing. Companies with cash assets but liability for Corporation tax were purchased. They were lent substantial sums for the purposes of investment, and the interest charges had the effect of allowing reclaims of Corporation tax. They were then to move offshore. The Inland Revenue contended that the loan arrangements were a sham, and that documents had been falsely dated. The defendant was a tax adviser to the scheme.
Held: None of the documentary evidence constituted an admission by the Defendant, nor informed him of any fraudulent activity. It could not be said that the judge’s decision was perverse.

Judges:

Lord Justice Kennedy, Mr Justice Stanley Burton

Citations:

[2001] EWHC Admin 581, [2001] 4 All ER 721

Links:

Bailii

Statutes:

Criminal Justice Act 1987

Jurisdiction:

England and Wales

Corporation Tax, Taxes Management, Crime

Updated: 01 June 2022; Ref: scu.159918

Eagerpath Ltd v Edwards (HM Inspector of Taxes): CA 14 Dec 2000

Where the special commissioner had determined that the dispute had been concluded by agreement, the taxpayer was precluded from appealing that decision claiming an ‘error or mistke’ That issue was not one relating to the computation of profits in such a way as to bring the matter within the exception to the section.

Citations:

Times 23-Jan-2001, Gazette 01-Feb-2001, [2000] EWCA Civ 327, [2000] EWCA Civ 328

Links:

Bailii, Bailii

Statutes:

Taxes Management Act 1970 54 33

Jurisdiction:

England and Wales

Citing:

Cited – Carrimore Six Wheelers Ltd v Inland Revenue Commissioners 1944
. .
Appeal from – Eagerpath Ltd v Edwards (Inspector of Taxes) ChD 21-May-1999
Once a dispute on an assessment has been settled between the taxpayer and the Inspector, the taxpayer cannot subsequently appeal against refusal of relief for a claim of an error. There was no point of law in such an error. . .
See Also – Eagerpath Ltd v Edwards (HM Inspector of Taxes) CA 1999
. .

Cited by:

Appealed to – Eagerpath Ltd v Edwards (Inspector of Taxes) ChD 21-May-1999
Once a dispute on an assessment has been settled between the taxpayer and the Inspector, the taxpayer cannot subsequently appeal against refusal of relief for a claim of an error. There was no point of law in such an error. . .
Cited – Inland Revenue and Another v Deutsche Morgan Grenfell Group Plc CA 4-Feb-2005
The company sought repayment of excess advance corporation tax payments made under a mistake of law. The question was the extent of the effect of the ruling in Klienwort Benson, in particular whether it covered sums paid as taxation, and how the law . .
See Also – Eagerpath Ltd v Edwards (HM Inspector of Taxes) CA 1999
. .
Lists of cited by and citing cases may be incomplete.

Corporation Tax, Taxes Management

Updated: 31 May 2022; Ref: scu.147360

Commissioners of Inland Revenue v Kahn and Another: CA 23 Mar 2000

Appeal against an order of Mr Justice Evans-Lombe on an application made pursuant to section 112(1) of the Insolvency Act 1986 by the joint liquidators of Toshoku Finance UK Plc (‘the Company’) for directions in relation to the discharge of an alleged liability to corporation tax on interest receivable after the commencement of the winding up.

Citations:

[2000] EWCA Civ 86

Links:

Bailii

Statutes:

Insolvency Act 1986 112(1)

Jurisdiction:

England and Wales

Corporation Tax, Insolvency

Updated: 31 May 2022; Ref: scu.147119

GDF Suez Teesside Led v Revenue and Customs: CA 5 Oct 2018

This case concerns a tax avoidance scheme by which the appellant taxpayer, then called Teesside Power Limited (‘TPL’) and subsequently renamed GDF Suez Teesside Limited, sought to reduce its potential liability to United Kingdom corporation tax (‘CT’) in respect of contingent and unrealised, but nevertheless very valuable, claims which it had against certain companies in the insolvent Enron Group. When the relevant transactions were entered into, between December 2006 and March 2007, the open market value of the unrealised claims is agreed to have been approximately pounds 200 million, but in accordance with UK generally accepted accounting practice (or ‘GAAP’) the claims still had a carrying value of nil in TPL’s accounts. Accordingly, if nothing were done, TPL would in principle become liable to CT on profits equivalent to the full amount of the sums received as and when the claims were realised.

Citations:

[2018] EWCA Civ 2075

Links:

Bailii

Jurisdiction:

England and Wales

Corporation Tax

Updated: 29 May 2022; Ref: scu.625413

Test Claimants In The Franked Investment Income Group Litigation v Inland Revenue: SC 23 May 2012

The European Court had found the UK to have unlawfully treated differently payment of franked dividends between subsidiaries of UK companies according to whether all the UK subsidiaries were themselves UK based, thus prejudicing European subsidiaries, breach of EU Treaty guarantees of freedom of establishment and of movement of capital. The court was now asked as to the calculation of damages. Two remedies might be available: a demand for repayment of tax unlawfully demanded (under Woolwich), or for tax paid under a mistake of law (under DMG). The first would be time barred. The limit had been relaxed under the 1980 Act for the second. The Court of Appeal had found the Woolwich type remedy the appropriate one. The taxpayer appealed.
Held: As to whether Parliament had the right to amend the law in a way which disallowed access to both types of claims, the principle issue, a reference was made back to the European Court. The claimants’ appeal were dismissed on the issues of the application of section 32(1)(c) of the 1980 Act applied to their claims, and as to the significance of the difference between tax paid under demand or on filing a tax return.
The appeal succeeded in arguing that section 33 can be given an interpretation which conforms with EU law by not construing it as impliedly setting itself up as an exclusive provision. The common law claim in unjust enrichment remains available to the appellants. The appeal on this issue was allowed.
Lord Hope said: ‘I would hold that Parliament could not lawfully curtail without notice the extended limitation period under section 32(1)(c) of the Limitation Act 1980 for the mistake cause of action by section 320 FA 2004.’

Judges:

Lord Hope, Deputy President, Lord Walker, Lord Brown, Lord Clarke, Lord Dyson, Lord Sumption, Lord Reed

Citations:

[2012] UKSC 19, [2012] WLR(D) 161, [2012] STC 1362, [2012] 2 WLR 1149, [2012] 3 All ER 909, [2012] BTC 312, [2012] 2 AC 337, [2012] Bus LR 1033, [2012] STI 1707, UKSC 2010/0085

Links:

Bailii, SC, SC Summary

Statutes:

Limitation Act 1980 32(1)(c), Finance Act 2007 107

Jurisdiction:

England and Wales

Citing:

At First Instance – Test Claimants In the FII Group Litigation v HM Revenue and Customs ChD 27-Nov-2008
The claimants were companies with parent companies in the UK and other subsidiaries not so resident, both in the EU and outside. They complained of the differences in treatment under corporation tax of the payment of dividends between the . .
Appeal from – Franked Investment Group Litigation Test Claimants v Inland Revenue and Another CA 23-Feb-2010
. .
Cited – Amministrazione Delle Finanze Dello Stato v Spa San Giorgio ECJ 9-Nov-1983
ECJ Questions submitted for a preliminary ruling – reference to the court – right of every national court – stage of the proceedings before the national court – nature of the decision to be given by the national . .
Cited – ACF Chemiefarma v Commission ECJ 15-Jul-1970
ECJ 1. The provisional character conferred by article 9(3) of Regulation no 17 on steps taken by national authorities in connexion with the implementation of article 85 of the EEC Treaty cannot call in question . .
Cited – Woolwich Equitable Building Society v Inland Revenue Commissioners (2) HL 20-Jul-1992
The society had set out to assert that regulations were unlawful in creating a double taxation. It paid money on account of the tax demanded. It won and recovered the sums paid, but the revenue refused to pay any interest accrued on the sums paid. . .
At ECJ – Test Claimants In The FII Group Litigation v CIR ECJ 12-Dec-2006
ECJ (Opinion of Geelhoed AG) Interpretation of Articles 43 and 56 EC and Articles 4(1) and 6 of Council Directive 90/435/EEC of 23 July 1990 on the common system of taxation applicable in the case of parent . .
Cited – Brooksbank v Smith 24-Feb-1836
In this case, trustees under a will, who were solicitors, had by mistake transferred stock to a person not entitled. Baron Alderson said, this being under circumstances of mistake, it appeared clear to him that the Plaintiffs were entitled to . .
Cited – Baker v Courage and Co 1910
The plaintiff had owned a public house. On selling the leasehold to the defendants brewers, they had overpaid him by andpound;1,000. He deposited a sum at interest with the defendants. When he came to withdraw the last of the deposit (by coincidence . .
Cited – Phillips-Higgins v Harper QBD 1954
A claim was made to recover monies due under a contract where the plaintiff had failed to realise that the balance was due to her, and by that mistake the action was concealed from her.
Held: Pearson J said: ‘But that is not sufficient. . .
Cited – Marleasing SA v La Comercial Internacional de Alimentacion SA ECJ 13-Nov-1990
Sympathetic construction of national legislation
LMA OVIEDO sought a declaration that the contracts setting up Commercial International were void (a nullity) since they had been drawn up in order to defraud creditors. Commercial International relied on an EC . .
Cited – Brasserie du Pecheur v Bundesrepublik Deutschland; Regina v Secretary of State for Transport, ex parte Factortame and others (4) ECJ 5-Mar-1996
Member states may be liable to individuals for their failure to implement EU laws. The right of individuals to rely on directly applicable provisions of the EC Treaty before national courts is not sufficient in itself to ensure full and complete . .
Cited – Morgan Guaranty v Lothian Regional Council SCS 1-Dec-1994
. .
Cited – HM Treasury v Ahmed and Others SC 27-Jan-2010
The claimants objected to orders made freezing their assets under the 2006 Order, after being included in the Consolidated List of suspected members of terrorist organisations.
Held: The orders could not stand. Such orders were made by the . .
Cited – Deutsche Morgan Grenfell Group Plc v Inland Revenue and Another HL 25-Oct-2006
The tax payer had overpaid Advance Corporation Tax under an error of law. It sought repayment. The revenue contended that the claim was time barred.
Held: The claim was in restitution, and the limitation period began to run from the date when . .
Cited – Boake Allen Ltd and others v HM Revenue and Customs CA 31-Jan-2006
The claimant companies had paid corporation tax under rules which had later been found to be discriminatory. They now sought repayment by virtue of double taxation agreements with the countries in which the parent companies were based.
Held: . .
Cited – Kleinwort Benson Ltd v Lincoln City Council etc HL 29-Jul-1998
Right of Recovery of Money Paid under Mistake
Kleinwort Benson had made payments to a local authority under swap agreements which were thought to be legally enforceable when made. Subsequently, a decision of the House of Lords, (Hazell v. Hammersmith and Fulham) established that such swap . .
Cited – NEC Semi-Conductors Limited and Other Test Claimants v The Commissioners of Inland Revenue ChD 24-Nov-2003
UK companies were subsidiaries of companies resident abroad, and complained that they were unable to make group income elections.
Held: The prohibition infringed non-discrimination provisions of double taxation agreements – non-discrimination . .

Cited by:

Cited – Revenue and Customs v The Investment Trust Companies SC 11-Apr-2017
Certain investment trust companies (ITCs) sought refunds of VAT paid on the supply of investment management services. EU law however clarified that they were not due. Refunds were restricted by the Commissioners both as to the amounts and limitation . .
Cited – Littlewoods Ltd and Others v Commissioners for Her Majesty’s Revenue and Customs SC 1-Nov-2017
The appellants had overpaid under a mistake of law very substantial sums in VAT over several years. The excess had been repaid, but with simple interest and not compound interest, which the now claimed (together with other taxpayers amounting to 17 . .
Cited – FMX Food Merchants Import Export Co Ltd v Revenue and Customs SC 29-Jan-2020
This appeal concerns the meaning and effect of the phrase ‘Customs Debt’ in article 221(4) of the former Customs Code of the EU, contained in Council Regulation (EEC) No 2913/92. Customs duties may be due under ‘post-clearance demands’ and the Court . .
Lists of cited by and citing cases may be incomplete.

European, Corporation Tax, Limitation, Taxes Management, Damages

Leading Case

Updated: 27 May 2022; Ref: scu.459618

Volkerrail Plant Ltd and Others v Revenue and Customs: FTTTx 16 Nov 2020

Income Tax/Corporation Tax – Group Relief – Whether s 403D(1)(c) Income and Corporation Taxes Act 1988 unlawful restriction on freedom of establishment – If so, whether it should be disapplied or a conforming construction applied – Appeals allowed

Citations:

[2020] UKFTT 476 (TC)

Links:

Bailii

Jurisdiction:

England and Wales

Corporation Tax

Updated: 21 May 2022; Ref: scu.656873

Walker (Her Majesty’s Inspector of Taxes) v Centaur Clothes Group Limited: HL 16 Mar 2000

Where a company which had ceased trading and fallen outside the tax regime, subsequently declared a dividend, it was deemed to be a new accounting period, and the dividend did fall to be taxed, and any advance corporation tax could be set off against any corporation tax payments made whilst previously trading.
Lord Hoffmann said: ‘I seldom think that an argument from redundancy carries great weight, even in a Finance Act. It is not unusual for Parliament to say expressly what the courts would have inferred anyway.’

Judges:

Lord Hoffmann

Citations:

Times 07-Apr-2000, [2000] 1 WLR 799, [2000] UKHL 23, [2000] 2 All ER 589

Links:

House of Lords, House of Lords, Bailii

Statutes:

Income and Corporation Taxes Act 1988 12(2)(a)

Jurisdiction:

England and Wales

Citing:

Appeal from – Walker (Inspector of Taxes) v Centaur Clothes Group Ltd CA 25-Jun-1998
After the transfer of a business to a subsidiary with payment left outstanding and no provision for interest but receiving dividends, it was not able to recover Advance Corporation Tax on that payment since it was no longer trading and had no income . .

Cited by:

Cited – Evans Dorothy, Regina v CACD 6-Dec-2004
The defendant appealed her conviction for having breached a restraining order under the 1997 Act. The order required her not to be ‘abusive by words or actions’ towards her neighbour. She had regularly parked her car so as to block her neighbour’s . .
Cited – O’Brien v Department for Constitutional Affairs CA 19-Dec-2008
The claimant was a part time recorder. He claimed to be entitled to a judicial pension.
Held: The Employment Appeal Tribunal was wrong to find an error of law in the decision of the Employment Tribunal to extend time; but the court declined to . .
Lists of cited by and citing cases may be incomplete.

Corporation Tax

Updated: 20 May 2022; Ref: scu.131544

Walker (Inspector of Taxes) v Centaur Clothes Group Ltd: CA 25 Jun 1998

After the transfer of a business to a subsidiary with payment left outstanding and no provision for interest but receiving dividends, it was not able to recover Advance Corporation Tax on that payment since it was no longer trading and had no income source.

Citations:

Gazette 09-Sep-1998, [1998] EWCA Civ 1098

Statutes:

Income and Corporation Taxes Act 1988 239

Jurisdiction:

England and Wales

Cited by:

Appeal from – Walker (Her Majesty’s Inspector of Taxes) v Centaur Clothes Group Limited HL 16-Mar-2000
Where a company which had ceased trading and fallen outside the tax regime, subsequently declared a dividend, it was deemed to be a new accounting period, and the dividend did fall to be taxed, and any advance corporation tax could be set off . .
Lists of cited by and citing cases may be incomplete.

Corporation Tax

Updated: 20 May 2022; Ref: scu.90242

Regina v Dimsey; Regina v Allen: CA 14 Jul 1999

A deeming section could create a taxation liability, even where the liability appeared to be duplicated. The clause under which the foreign income of a company came to be chargeable did not affect the existing liability to pay tax on the sums so charged, and charges of conspiracy to cheat the public revenue stood by seeking to evade such additional taxation. Laws LJ: ‘However, it is plain from authorities cited by the Crown that the corporate veil may fall to be lifted where companies are used as a vehicle for fraud. Here the companies in question were the appellant’s alter ego’.

Judges:

Laws LJ

Citations:

Times 14-Jul-1999, Gazette 28-Jul-1999, [2000] QB 744, [1999] EWCA Crim 1917, [1999] EWCA Crim 1917, [2000] 1 Cr App R (S) 497

Links:

Bailii

Statutes:

Income and Corporation Taxes Act 1988 739(2) 831(1)(b)

Jurisdiction:

England and Wales

Cited by:

Cited – Regina v Smith (David Cadnam) HL 13-Dec-2001
Smith had bought a motor vessel, The Vertine, with andpound;55,000 provided by his co-defendant, John Marriott. In the words of the judge when imposing sentence, the respondent allowed himself to be used as Marriott’s ship owner and captain. The . .
Cited – Walkley v Precision Forgings Ltd HL 1979
The plaintiff tried to bring a second action in respect of an industrial injury claim outside the limitation period so as to overcome the likelihood that his first action, although timeous, would be dismissed for want of prosecution.
Held: He . .
Cited – Regina v Foggon CACD 14-Feb-2003
The defendant appealed against a confiscation order, after conviction for cheating the public revenue. Funds had been diverted from his company to avoid payment of taxes.
Held: Tax which was avoided would fall under the section and be a . .
Cited – Regina v Stannard CACD 1-Nov-2005
The defendant had been convicted of offences in which he had operated to purchase companies and use false debentures to evade corporation tax. Compensation had been sought under the 1988 Act. It was argued that the confiscation order should be . .
Lists of cited by and citing cases may be incomplete.

Corporation Tax

Updated: 19 May 2022; Ref: scu.85225