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:
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