HMRC v First Nationwide

In HMRC v First Nationwide (Upper Tribunal – 18 April) a UK investment company (F) entered into an ‘overseas securities lender’s agreement’ with a Netherlands bank (AB) which carried on business through a UK branch and was an ‘approved UK intermediary’ within Income Tax (Manufactured Overseas Dividends) Regulations 1993 SI 1993/2004 reg 2(1).

Under the agreement F became the legal and beneficial owner of certain preference shares in a Cayman Islands company (B) until 29 March 2004 and was required to pay a ‘manufactured dividend’ to AB in respect of any dividend paid on the shares during the currency of the loan.

The agreement was a contract for the transfer of overseas securities within ICTA 1988 Sch 23A. F subsequently entered into an agreement with B under which it agreed to subscribe for an identical batch of...