ExxonMobil: FTT Decision Released

09 March 2020
Author: JHA

The First-Tier Tribunal (“FTT”) decision in Esso Exploration and Production UK Limited and others v HMRC, which relates to pre-2006 claims for Cross Border Group Relief, has now been released.

In its decision, the FTT did ultimately reject the claims but, whilst doing so it concluded that nothing in the case law of the CJEU challenges the Supreme Court ruling in Marks & Spencer Plc v Revenue and Customs Commissioners [2013] UKSC 30 that the “no possibilities” test should be applied as at the date of the claim.

The claim concerned an application for group relief of a UK company from an EU sister company joined by a common US parent. The claimants sought to rely on the non-discrimination article of the USA-UK Double Tax Convention on the grounds that group relief would have been available if the common parent was UK resident. The Tribunal, however, found that group relief provisions did not engage the NDA in DTCs.

Finally, in applying the “no possibilities” test, the Tribunal adopted a very strict test which does not appear to accord with the far more practical and liberal approach taken in recent EU cases (see for example C-607/17 Skatteverket v Memira Holding AB and C-608/17 Skatteverket v Holmen AB).

Should you be interested in the application of this decision to your claims for Cross Border Relief, please contact any member of our team who will be able to advise further.

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Increased Investment in Personal Tax Compliance in the UK (Published in Thought Leaders 4 Private Client)

Advances in technology and increased international fiscal co-operation have made global personal tax compliance initiatives pop up in abundance in recent years. To compound the issue, the Russian invasion of Ukraine and the corresponding economic fallout prompted domestic governments to increase transparency in relation to investments held by wealthy foreign individuals (with a focus on oligarchs).

In the UK, in the context of the cost-of-living crisis, public opinion certainly seems to be in favour of increased accountability for high-net-worth individuals (eg, on 9 October 2022, 63% of Britons surveyed thought that “the rich are not paying enough and their taxes should be increased”).1

HMRC is one of the most sophisticated tax collection authorities in the world and the department is making significant investments in technology in the field of compliance work; they are well placed to take advantage of new international efforts to increase tax compliance, particularly considering the already extensive network of 130 bilateral tax treaties in the UK (the largest in the world).2 The UK was also a founding member of the OECD’s Joint International Taskforce on Shared Intelligence and Collaboration (JITSIC) forum.

This article discusses the main developments in support of the increased focus on international transparency and personal tax compliance in the UK. There are other international fiscal initiatives, particularly in the field of corporate taxation, but such initiatives are beyond the scope of this article.

It should be noted that a somewhat piecemeal approach, with constant tinkering makes compliance difficult for the taxpayer and is often criticised for lacking the certainty that a stable tax system needs to thrive.

This article was first published with ThoughtLeaders4 Private Client Magazine

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