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The latest decision in the test case for the Foreign Income Dividend (“FID”) and Tax Credit Group Litigation were delivered on 9 July 2015 by the Court of Appeal (“CA”), [2015] EWCA Civ 713. The decision follows appeals and cross appeals from a 2013 decision of the Upper Tribunal (“UT”), [2013] UKUT 0105 (TCC).

In the UT, the Trustees of the BT Pension Scheme (“Trustees”) were successful in establishing that the UK breached EU law by denying tax credits to UK pension funds in respect of foreign income dividends (“FID Claims”) and overseas dividends (“Manninen Claims”) paid by UK companies. HMRC were also successful however in arguing that all but one of the Trustee’s claims (for the 1997/1998 tax year) were out of time. Permission to appeal to the CA was granted to both parties to allow:

1. HMRC to attempt to overturn the Trustee’s win on the Manninen and FID claims; and
2. The Trustees to submit arguments that all of their claims were in time.

Following a two stage hearing, the CA agreed with the UT that all claims except the 1997/1998 claim were time-barred. The CA decided to refer certain questions arising in the in-time claim to the Court of Justice of the European Union (“CJEU”). The questions to be referred relate to:

1. Whether the Trustees as shareholders of the paying company have had their EU rights infringed or can rely on the infringement of the paying company’s EU rights; and
2. The nature of any relief, should the CJEU find that EU rights have been infringed.

Parties must now consider the form of such questions which are to be included in the reference to the CJEU.

This article appears in the JHA Summer 2015 Tax Newsletter, which also features:

1. EU Tax Law Group Meeting, Basel
2. Advocate General considers VAT treatment of Bitcoins by Katy Howard
3. Holding companies, input VAT and VAT grouping by Katy Howard

You can download the complete newsletter as a PDF here: August 2015 – Tax Newsletter