The Prudential Assurance Company Ltd v HM Revenue and Customs

The Prudential Assurance Company Ltd v HM Revenue and Customs

Prudential is entitled to compound interest on restitution for unlawfully levied tax in all relevant periods, including open accounting periods. Where lawful ACT is set against unlawful MCT, the claim is for restitution of ACT. The evidential basis for foreign nominal rates for 1990-1993 is sufficient. Section 231 credits must be calculated by grossing up the gross dividend. HMRC's tracing methodology is impermissible. Unlawful ACT should be set off first against unlawful MCT, not pro rata, due to binding authority. Prudential is entitled to restitution of late payment interest on ACT. Repayment of ACT on carry back of FII within the same accounting period is attributable to lawful ACT.

Parties
Claimant: The Prudential Assurance Company Limited; Defendants: The Commissioners for HM Revenue and Customs
Jurisdiction
England and Wales
Judgment Date
26 January 2015
Procedural Posture
Civil / Post Trial Judgment on Outstanding Issues of Principle and Quantification
Outcome
Outstanding issues of principle resolved in favour of the Claimant on all substantive points except where agreed; quantification to proceed accordingly.
Legal Topics
Unlawful Taxation, Compound Interest, ACT and MCT Offset, Section 231 ICTA 1988 Credits, Franked Investment Income (fii), Portfolio Dividends, Quantification of Restitution, Carry Back of FII
Tax Law European Union Law Restitution Unlawful Taxation Compound Interest ACT and MCT Offset Section 231 ICTA 1988 Credits Franked Investment Income (fii) +3 more

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Parties

The Prudential Assurance Company Limited

Claimant

The Commissioners for HM Revenue and Customs

Defendants

Procedural Posture

Civil / Post Trial Judgment on Outstanding Issues of Principle and Quantification

Legal Issues

  1. 1 Entitlement to compound interest on restitution for unlawfully levied tax in open accounting periods
  2. 2 Characterisation of claims where lawful ACT is utilised against unlawful MCT
  3. 3 Proof of foreign nominal rates of tax for 1990-1993 accounting periods

Ratio Decidendi

Prudential is entitled to compound interest on restitution for unlawfully levied tax in all relevant periods, including open accounting periods. Where lawful ACT is set against unlawful MCT, the claim is for restitution of ACT. The evidential basis for foreign nominal rates for 1990-1993 is sufficient. Section 231 credits must be calculated by grossing up the gross dividend. HMRC's tracing methodology is impermissible. Unlawful ACT should be set off first against unlawful MCT, not pro rata, due to binding authority. Prudential is entitled to restitution of late payment interest on ACT. Repayment of ACT on carry back of FII within the same accounting period is attributable to lawful ACT.

Court Disposition

Outstanding issues of principle resolved in favour of the Claimant on all substantive points except where agreed; quantification to proceed accordingly.

Orders

  • Compound interest applies to all restitution claims, including open periods.
  • Claims where lawful ACT is set against unlawful MCT are for restitution of ACT.