The Respondent was trustee of the British Coal Staff Superannuation Scheme, a registered pension fund holding a large portfolio of shares in UK and overseas companies. Between 2002 and 2008, the pension fund undertook ‘stock lending’ transactions, transferring overseas shares to borrowers on the basis that the borrowers would retransfer to it the same or equivalent shares at the end of a defined term. Where dividends were payable on the transferred shares during the term, the stock lending agreements provided for the borrowers to pay the pension fund amounts equivalent to the value of the dividend. Under UK tax law, these sums were described as ‘manufactured overseas dividends’.
Schedule 23A of the Income and Corporation Taxes Act 1988 Act required some of the borrowers to make a deduction for tax before paying a ‘manufactured overseas dividend’ to the fund. Such deductions were treated as amounts withheld on account of overseas tax, rather than amounts payable as income tax. Because the pension fund was exempt from income tax, it was not able to claim relief in respect of these deducted sums. It claims that the relevant tax rules contravened EU law relating to the free movement of capital by treating manufactured overseas dividend income less favourably than UK manufactured dividend income (in respect of which no withholding tax was payable). The First-tier Tribunal dismissed the Respondent’s claim. However, the Upper Tribunal reversed this decision. The Court of Appeal dismissed HMRC’s subsequent appeal. HMRC now appeal to the Supreme Court.
Judges:
Lord Reed, President
Lord Hodge, Deputy President
Lord Briggs
Lord Sales
Lord Hamblen
Citations:
[2022] UKSC 10
Links:
Bailii, Bailii Press Summary, Bailii Issues and Facts
Jurisdiction:
England and Wales
Citing:
At UTTx – Coal Staff Superannuation Scheme Trustees Ltd v Revenue and Customs UTTC 16-May-2018
INCOME TAX – pension fund lending overseas shares under stock lending arrangements – ICTA 1988, Sch 23A – manufactured overseas dividends (‘MODs’) representative of dividends on overseas shares – whether a difference in UK tax treatment between MODs . .
Appeal from – Revenue and Customs v Coal Staff Superannuation Scheme Trustees Ltd CA 3-Oct-2019
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Lists of cited by and citing cases may be incomplete.
Income Tax, European
Updated: 28 April 2022; Ref: scu.676356