BAT Industries PLC & Ors v Commissioners of Inland Revenue & Anor
[2024] EWHC 195 (Ch)
AXA SUN LIFE PLC & Ors. v COMMISSIONERS OF INLAND REVENUE & Anor.
26 April 2023
[2023] EWHC 944 (Ch)
High Court
Companies sued the government over taxes on foreign dividends. The judge said some of their arguments needed to be looked at again, rejected one claim about how the taxes were calculated, but agreed that they could get some money back because of a mistake the government made about how taxes should be calculated.
Key Facts
- •AXA Sun Life PLC and Guardian Royal Exchange Assurance plc (Claimants) brought corporation tax and ACT claims against HMRC (Defendants).
- •Claims were made under the CFC and Dividend Group Litigation Order (GLO) established in 2003.
- •Claims related to UK tax treatment of overseas dividends, particularly pre-2009 corporation tax and pre-1999 ACT regimes.
- •Claims relied on the extended limitation period under s32(1)(c) of the Limitation Act 1980.
- •Three preliminary issues were considered: Limitation, Set-off, and Pleading.
- •The Limitation Issue concerned the date of constructive discovery under FII SC2, considering the impact of Henderson J's 2014 order in Prudential HC.
Legal Principles
Group Litigation Orders (GLOs): Judgments on GLO issues are binding on all claims on the register unless the court orders otherwise (CPR 19.12).
CPR 19
Limitation Act 1980, s32(1)(c): Extended limitation period for claims based on mistake of law; constructive discovery date is when a worthwhile claim was discovered or could reasonably have been.
Limitation Act 1980
Restitutionary remedy for tax paid under mistake of law; FII SC2 overruled DMG regarding constructive discovery date.
FII SC2
No restitutionary remedy for unlawful ACT utilised against lawful MCT (Prudential SC).
Prudential SC
EU law precludes domestic legislation preventing carry-forward of unused DTR credits resulting in unjustified discriminatory treatment of foreign-sourced dividends (FII SC3, Salinen).
FII SC3, Salinen
Claim in restitution for tax paid due to inability to offset unused DTR credits; three elements: enrichment, at claimant’s expense, and unjust.
Samsoondar v Capital Insurance Co Ltd [2020] UKPC 33
Outcomes
Limitation Issue: Claimants' claims were not conclusively established as in time due to Prudential HC; date of constructive discovery must be determined under FII SC2.
Henderson J in Prudential HC did not determine a specific date of constructive discovery, only that the claims were in time under DMG; FII SC2 changed the law on constructive discovery.
Set-off Issue: Claimants are not entitled to restitution for unlawful ACT utilised against lawful tax.
Prudential SC overruled Sempra Metals, holding no restitutionary remedy is available for utilised ACT.
Pleading Issue: Claimants pleaded a valid claim in restitution for unlawful tax paid due to inability to offset unused DTR credits.
Pleadings sufficiently identified the elements of unjust enrichment; any lack of particularisation was subsequently cured.
Issue C(ii): Paragraph 51(6) of Schedule 18 of the Finance Act 1998 does not apply.
Claims were made before April 1, 2010.
Issue C(iii): AXAIUK is entitled to restitution for indirect double taxation on dividends, subject to time limits.
HMRC's notional reconstruction of AXAIUK's tax computation was inconsistent with FII SC3; focus should be on actual tax paid due to the mistaken belief that DTR credits could not be carried forward.
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