Prudential: the end of the road for compound interest?

On 25 July, the Supreme Court handed down its judgment in Prudential Assurance Company Ltd v HMRC. This was a test case in the controlled foreign company (CFC) and dividend group litigation order (GLO). HMRC had appealed against the High Court and Court of Appeal’s findings that taxpayers had a right to the restitution of compound interest in respect of corporation tax which had been levied in breach of EU law. The court held that there was no such right. In doing so, it took the highly unusual step of overturning the 2007 decision of the House of Lords in Sempra Metals Ltd v IRC.