TaxCorporate TaxTaxman triumphs in Boake Allen case

Taxman triumphs in Boake Allen case

House of Lords backs HMRC in tax battle over companies with foreign parents

The House of
Lords
today dealt a crushing blow to a group of non-EU companies
with UK subsidiaries seeking to claim back tax because their countries had tax
treaties with the UK.

The Lords ruled 5-0 in favour of HM Revenue & Customs in what has become
known as the Boake Allen case.

The companies leading the action were based in Japan, the US and Switzerland.
The claim arose because the UK subsidiary of a foreign parent which paid a
dividend, in effect paid its corporation tax earlier than it would have done if
it had a UK parent.

The Lords ruled that the tax treaties the claimants were basing their case on
were far more limited in their scope than the
EU treaty, which businesses
with EU parents had successfully used to win a similar claim.

‘This case is likely to make it very much harder for foreign multinationals
to make claims based on EU tax cases,’ said Bill Dodwell, head of tax policy at
Deloitte
.

Further reading:

Interest relief proposals delayed by Treasury

ECJ forces review of multi-national tax

Tax
relief measures ‘will make UK less attractive’

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