Sempra Metals Ltd v Inland Revenue & Anor

Sempra Metals Ltd v Inland Revenue & Anor

Community law requires that compensation for the loss of use of money due to premature payment of advance corporation tax must be calculated on a compound interest basis, as only this provides full restitution. Domestic law restrictions on awarding compound interest do not apply where they would undermine the effectiveness of the Community law remedy.

Parties
Claimant/respondent: Sempra Metals Limited (formerly Metallgesellschaft Limited); Defendant/appellant: Commissioners of Inland Revenue; Defendant/appellant: Her Majesty’s Attorney General
Jurisdiction
England and Wales
Judgment Date
12 April 2005
Procedural Posture
Civil Appeal / Appeal From High Court (chancery Division) to Court of Appeal
Outcome
Appeal dismissed save for variation
Legal Topics
Advance Corporation Tax, Compound Interest, Damages for Breach of EU Law, Restitution for Premature Tax Payment
Tax Law European Union Law Restitution Advance Corporation Tax Compound Interest Damages for Breach of EU Law Restitution for Premature Tax Payment

Case Brief

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Parties

Sempra Metals Limited (formerly Metallgesellschaft Limited)

Claimant/respondent

Commissioners of Inland Revenue

Defendant/appellant

Her Majesty’s Attorney General

Defendant/appellant

Procedural Posture

Civil Appeal / Appeal From High Court (chancery Division) to Court of Appeal

Legal Issues

  1. 1 Whether compensation for loss of use of money due to premature payment of advance corporation tax in breach of Community law should be calculated on a compound or simple interest basis.
  2. 2 Whether domestic law restrictions on awarding compound interest apply where Community law requires full compensation.

Ratio Decidendi

Community law requires that compensation for the loss of use of money due to premature payment of advance corporation tax must be calculated on a compound interest basis, as only this provides full restitution. Domestic law restrictions on awarding compound interest do not apply where they would undermine the effectiveness of the Community law remedy.

Court Disposition

Appeal dismissed save for variation

Orders

  • Paragraph 1 of the order of 16 June 2004 varied to clarify that interest over the premature tax period should be computed by compounding at the same periodic rests as those by reference to which the applicable rate has been fixed.
  • Otherwise, the appeal is dismissed.