Non-test claimants in the Franked Investment Income Group litigation v HMRC

In Non-test claimants in the Franked Investment Income Group litigation v HMRC [2019] EWHC 2014 (31 July 2019) the High Court found partially in favour of the claimants.

The non-test claimants were EMI and Chemetall. A result of the test litigation was that the then existing provisions of national law which subjected non-UK source dividends to corporation tax subject to a credit for foreign tax paid whilst exempting UK source dividends infringed EU law. However this could be remedied by granting a credit at the foreign nominal rate (FNR) where that exceeded the actual relief granted. In essence the UK was entitled to charge corporation tax only insofar as the UK rate exceeded the FNR.

It was accepted that the burden was on EMI to demonstrate that the source of the disputed dividends was profit that carried a credit at the FNR. Unfortunately for EMI ...