Corporate Tax – Overseas Dividends Case
In an important judgement the High Court has opened the door for huge taxpayer claims. This case gives companies the right to make repayment claims going back as far as 1973 which have been estimated could be for as much as five billion pounds.
In a complex judgement which spanned over 150 pages, the High Court found for the taxpayer on most of the important issues holding that overseas dividends from EU subsidiaries could not be taxed under Schedule D Case V.
The High Court also ruled that the cap on the time limit imposed in FA 2004 and FA 2007 was unenforceable. The High Court took a similar position to the recent case relating to overpaid VAT claims where the absence of proper transitional measures for imposing a time limit also opened the door for VAT claims going back to 1973.
The High Court found that HRMC acted within the law in relation to the treatment of overseas dividends from non-EU member states.
There are two main areas where businesses may be able to make claims:-
– The Foreign Income Dividend (FID) regime
– Advance Corporation Tax (ACT)
It is likely to be several more years before the case is fully resolved, however businesses who are affected should look to take action as soon as possible.