GKN Holdings Plc & Ors v Inland Revenue & Anor

GKN Holdings Plc & Ors v Inland Revenue & Anor

The court held that GKN is entitled to an interim payment, subject to a reduction reflecting uncertainty about the carry-forward of tax credits, because the Supreme Court’s ruling renders section 107 of the Finance Act 2007 unlawful, removing the Revenue’s limitation defence. The stay in the GLO does not bar meritorious interim payment applications by non-test claimants, and the defence of change of position is not available to the Revenue in relation to mistake-based San Giorgio claims under current law.

Parties
Claimants: GKN Holdings PLC & GKN Industries Limited; Defendants: Commissioners of Inland Revenue & Commissioners for Her Majesty’s Revenue & Customs
Jurisdiction
England and Wales
Judgment Date
31 January 2013
Procedural Posture
Civil (group Litigation) / Ruling on Cross Applications: Interim Payment and Stay
Outcome
Interim payment application allowed (in part); stay application refused; directions for case management of future applications indicated
Legal Topics
Franked Investment Income, Interim Payments, Group Litigation Orders, Limitation Periods, Restitution of Unlawfully Levied Tax, Principle of Effectiveness, Change of Position Defence
Tax Law Civil Procedure EU Law Franked Investment Income Interim Payments Group Litigation Orders Limitation Periods Restitution of Unlawfully Levied Tax +2 more

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Parties

GKN Holdings PLC & GKN Industries Limited

Claimants

Commissioners of Inland Revenue & Commissioners for Her Majesty’s Revenue & Customs

Defendants

Procedural Posture

Civil (group Litigation) / Ruling on Cross Applications: Interim Payment and Stay

Legal Issues

  1. 1 Whether GKN is entitled to an interim payment following the Supreme Court's ruling on section 107 of the Finance Act 2007
  2. 2 Whether the stay in the FII GLO should be amended to prevent non-test claimants from making interim payment applications
  3. 3 Whether the Revenue can rely on the defence of change of position to resist the interim payment

Ratio Decidendi

The court held that GKN is entitled to an interim payment, subject to a reduction reflecting uncertainty about the carry-forward of tax credits, because the Supreme Court’s ruling renders section 107 of the Finance Act 2007 unlawful, removing the Revenue’s limitation defence. The stay in the GLO does not bar meritorious interim payment applications by non-test claimants, and the defence of change of position is not available to the Revenue in relation to mistake-based San Giorgio claims under current law.

Court Disposition

Interim payment application allowed (in part); stay application refused; directions for case management of future applications indicated

Orders

  • GKN’s application for an interim payment succeeds, subject to a reduction for uncertainty about carry-forward of tax credits; quantum to be agreed by parties or determined by court if not agreed
  • No blanket stay imposed on non-test claimants; stay to be lifted as necessary for meritorious interim payment applications