UK Tribunal clarifies rules for claiming double taxation relief on foreign dividends

Citation: [2024] UKUT 23 (TCC)
Judgment on


In the case of The Commissioners for HMRC v Applicants in the Post Prudential Closure Notice Applications Group Litigation & Anor (2024), the UK Upper Tribunal (Tax and Chancery Chamber), presided over by Mr Justice Richard Smith and Judge Jonathan Cannan, addressed a complex set of appeals concerning the rights of taxpayers to claim double taxation relief (“DTR”) on foreign dividends and the procedural rules governing such claims. This case law analysis explores the Tribunal’s application of legal principles to the disputes about the claims’ validity, timing, and procedural issues following established breaches of EU law in the UK’s tax treatment of foreign dividends.

Key Facts

The Taxpayers, investment funds, and an insurance company received foreign dividend income from holdings in non-UK companies. Claims were made for repayment of tax on the grounds of DTR availability and for overpaid tax concerning foreign dividends. Multiple issues were litigated, addressing whether certain claims were valid, whether HMRC was obligated to issue closure notices, and the implication of management expenses on DTR.

A range of legal principles was scrutinized by the Tribunal, including the following:

  1. Conforming Interpretation: In line with the Marleasing principle, domestic legislation was interpreted in a manner compliant with EU law. This principle was pivotal in deducing that section 790 of ICTA 1988 should provide credit for foreign tax at the foreign nominal rate (“FNR”).

  2. Procedural Autonomy: The case reiterated the principle that EU Member States have the autonomy to set procedural rules safeguarding rights derived from EU law, subject to principles of effectiveness, equivalence, legal certainty, and judicial protection.

  3. Effective Judicial Protection: Article 47 of the Charter of Fundamental Rights of the EU prescribes the right to an effective remedy before a tribunal when EU rights are violated.

  4. Principle of Equivalence: The Tribunal emphasized that domestic rules for reclaiming wrongly levied taxes must be as favorable as those applied to similar domestic claims.

  5. Principle of Effectiveness: The rule that procedural requirements should not make it excessively difficult to exercise rights conferred by EU law was key to determining whether the taxpayers had an effective legal remedy.

  6. Declaratory Theory of Law: The ruling supported the contention that retroactive tax adjustments could be made as a consequence of court decisions, aligning with the theory that courts declare, rather than create, law.


The Tribunal concluded that:

  • Claims for DTR should have been specifically made and could not be inferred from claims of tax exemption (Issue 2).
  • Taxpayers could not amend their return to reflect income as exempt after an enquiry was opened within certain time limits (Issue 5).
  • HMRC’s obligation to issue closure notices was affirmed in cases where income initially returned as exempt was later deemed taxable, entitling taxpayers to claim DTR within an extended time limit (Issue 6).
  • The DTR credit for FNR was capped at the UK tax rate (Issue 12).
  • Undisputed points established in FII SC 3, like carrying forward unused DTR, were applicable to the taxpayers’ cases (Issue 10).


The Upper Tribunal’s decision in The Commissioners for HMRC v Applicants in the Post Prudential Closure Notice Applications Group Litigation & Anor exemplifies the interplay between EU law principles and UK tax law, particularly in the arena of DTR. The Tribunal’s careful adherence to procedural nuances and EU law ensured thorough deliberation of how domestic legislation should be interpreted to fall in line with EU mandates. Notably, the decision underscores the necessity of clear procedural compliance by taxpayers when seeking tax reliefs and rebates, paired with the jurisprudential insistence on legal certainty and the right to effective legal remedies.

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