Royal Bank of Canada v HMRC

In Royal Bank of Canada v HMRC [2023] EWCA Civ 695 (21 June 2023) the Court of Appeal (CA) overturned the decision of the Upper Tribunal (UT) and found that the Canadian company’s receipts of oil related payments were not chargeable to UK corporation tax.  

The Royal Bank of Canada (RBC) had lent money (from its Canadian operations) to a company Sulpetro to fund exploration in the UK continental shelf. Following Sulpetro’s insolvency Sulpetro’s rights to receive (what was described as) ‘royalty’ payments in respect of oil extracted from an oil field in the UK sector of the continental shelf were assigned to RBC by the receiver. RBC wrote off its original loan to Sulpetro in its Canadian banking business accounts as a bad debt and treated the payments as recoveries of that bad debt but HMRC considered that the payments were taxable in the UK...