BAT Industries and others v HMRC

Cathya Djanogly

In BAT Industries and others v HMRC [2017] UKFTT 558 (12 July 2017) the FTT found that CTA 20101 Part 8C was lawful.

Several companies of the BAT group appealed against the deduction by HMRC of withholding tax on payments of restitution interest awarded to BAT as test claimants in the Franked Investment Income Group Litigation (‘the FII GLO’).

The appeal concerned legislation inserted by FA 2015 (2) s 38 which introduced a charge to corporation tax at the rate of 45% in place of what would otherwise be the ordinary charge to tax on restitution interest arising to a company. The charge was ‘ring-fenced’ so that no set-off against it was possible and it was levied as withholding tax on payments of restitution interests. The substantive issue was whether that legislation was incompatible with (a) BAT’s directly effective EU law rights primarily the principle of...

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