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Supreme Court rules on franked investment income

THE SUPREME COURT today handed down a judgment in the FII Group Litigation v HM Revenue & Customs case, finding section 107 of the Finance Act 2007 to be in breach of European Union law, upholding the appellants’ claims.

The British American Tobacco Group was the principal test claimant in the group litigation in which the claims of 25 company groups were enrolled.

The main issue of relevance to British American Tobacco concerned the lawfulness of retrospective legislation introduced by the Finance Act 2007; the claimants felt they were effectively subject to double taxation on their profits.

The ruling allows British American Tobacco and the other claimants to pursue claims of recovery of unlawfully imposed tax back as far as 1973.

Peter Cussons, tax partner at PwC, said: “The Supreme Court judgment is positive news for many companies with overseas investments which had seen profits taxed both in the state they originated and in the UK. The case still has a way to run in the courts but marks a step towards recovery of tax payments often dating back more than thirty years.”

 


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