In The claimants listed in Class 8 of the CFC and dividend GLO v HMRC [2019] EWHC 338 (20 February 2019), the High Court found that the common law claims were ousted by FA 1998 Sch 18 para 51(6).
The claimants in both the CFC and FII GLOs are UK resident corporate groups that have paid tax on foreign dividend income pursuant to the advance corporation tax (ACT) and Case V provisions. Their claim is, essentially, that these provisions were incompatible with EU law. They seek repayment and interest on the grounds that the tax was paid under a mistake of law and under the unjust enrichment principle established in Woolwich [1993] AC 70 and/or damages in respect of the overpaid tax under Francovich (Case C-6/90 and Case C-9/90).
The claimant groups in the CFC GLO are mostly investment funds, because claims were allocated to the CFC GLO (as opposed to the FII GLO) where they concerned tax paid on dividends received from companies in which the claimant held less than 10% of the shares or only under the Case V provisions and not the ACT provisions. The hearing related to the CFC GLOs Class 8 claims. Those claims raised limitation issues which had not yet arisen in the other classes of claim. The main question was whether the claimants’ common law claims in unjust enrichment under Woolwich and mistake and in damages, including claims for compound interest, issued after March 2010, were ousted by FA 1998 Sch 18 para 51(6).
The court found that para 51(6) did operate to oust the claimants’ common law claims issued after March 2010, and that this did not contravene the EU law principle of effectiveness for the following reasons (inter alia):
Autologic [2006] 1 AC 118 provides no basis to hold that common law claims can proceed where specifically ousted by statute.
Haribo (Case C-436/08 and Case C-437/08)is authority for the proposition that the principle of effectiveness is not violated when, in order to make a claim to recover overpaid tax, a taxpayer has to state how much tax the foreign company has paid, but cannot in fact find out.
Section 790 (double tax relief) provides an effective remedy.
Why it matters: Sir Geoffrey Vos observed in his opening remarks that this was the latest in a line of cases which commenced in 2003 and that the claims were, as yet, ‘far from concluded’. For now, this decision confirms that the combined effect of para 51(6) and s 790 is that common law claims, issued after March 2010, are ousted.
In The claimants listed in Class 8 of the CFC and dividend GLO v HMRC [2019] EWHC 338 (20 February 2019), the High Court found that the common law claims were ousted by FA 1998 Sch 18 para 51(6).
The claimants in both the CFC and FII GLOs are UK resident corporate groups that have paid tax on foreign dividend income pursuant to the advance corporation tax (ACT) and Case V provisions. Their claim is, essentially, that these provisions were incompatible with EU law. They seek repayment and interest on the grounds that the tax was paid under a mistake of law and under the unjust enrichment principle established in Woolwich [1993] AC 70 and/or damages in respect of the overpaid tax under Francovich (Case C-6/90 and Case C-9/90).
The claimant groups in the CFC GLO are mostly investment funds, because claims were allocated to the CFC GLO (as opposed to the FII GLO) where they concerned tax paid on dividends received from companies in which the claimant held less than 10% of the shares or only under the Case V provisions and not the ACT provisions. The hearing related to the CFC GLOs Class 8 claims. Those claims raised limitation issues which had not yet arisen in the other classes of claim. The main question was whether the claimants’ common law claims in unjust enrichment under Woolwich and mistake and in damages, including claims for compound interest, issued after March 2010, were ousted by FA 1998 Sch 18 para 51(6).
The court found that para 51(6) did operate to oust the claimants’ common law claims issued after March 2010, and that this did not contravene the EU law principle of effectiveness for the following reasons (inter alia):
Autologic [2006] 1 AC 118 provides no basis to hold that common law claims can proceed where specifically ousted by statute.
Haribo (Case C-436/08 and Case C-437/08)is authority for the proposition that the principle of effectiveness is not violated when, in order to make a claim to recover overpaid tax, a taxpayer has to state how much tax the foreign company has paid, but cannot in fact find out.
Section 790 (double tax relief) provides an effective remedy.
Why it matters: Sir Geoffrey Vos observed in his opening remarks that this was the latest in a line of cases which commenced in 2003 and that the claims were, as yet, ‘far from concluded’. For now, this decision confirms that the combined effect of para 51(6) and s 790 is that common law claims, issued after March 2010, are ousted.
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