In Coal Staff Superannuation Scheme Trustees v HMRC [2018] UKUT 152 (16 May 2018) the UT found that the imposition of withholding tax on manufactured overseas dividends (MODs) was contrary to EU law.
The appellant was a corporate trustee which had responsibility for managing the UK Coal Staff Superannuation Scheme. It had claimed repayment of withholding tax in connection with stock lending transactions. Typical stock lending arrangements involve institutional investors transferring legal and beneficial ownership of shares to a borrower on terms that at the end of the stock loan the shares or an equivalent number of shares will be transferred back to the lender. The contractual terms of a stock lending transaction involve an obligation on the borrower to provide the lender with a payment of equivalent value to any dividends paid during the term of the loan. These payments are known as manufactured dividends (MDs);...
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