NEC appeal to be heard by Lords

NEC appeal to be heard by Lords

A multimillion-pound case led by NEC Semiconductors is set to go to the House of Lords

The UK’s highest court has allowed NEC Semiconductors to appeal its case,
which relates to the payment of advanced corporation tax, abolished in the late
1990s.

The case, which is known as the ACT Class 3 action, involved around 50
companies arguing that charging advanced corporation tax on a dividend from a
UK-resident subsidiary to a parent company in the US, Japan or Switzerland is
discriminatory.

The payment of the tax in different ways for different companies led to a
cashflow disadvantage for the claimants, they allege. That went against EU rules
designed to allow free movement of capital.

The Court of Appeal had ruled it was down to the UK to introduce legislation
allowing such countries to apply EU law in this manner, and that these laws had
not been set.

Bill Dodwell, corporate tax partner at Deloitte, said the tone of the Court
of Appeal judgment suggested it was unlikely that NEC Semiconductors would be
given a chance to challenge the Court of Appeal ruling.

‘The decision to allow an appeal to the House of Lords has come as a
surprise,’ Dodwell said.

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