FTT rejects challenge to restitution interest provisions of the Corporation Tax Act 2010

17 Jul 2017

In a decision released on 12 July 2017, the First-tier Tribunal (Tax Chamber) has dismissed the BAT group’s EU law, ECHR and common law challenges to the restitution interest tax provisions of Part 8C of the Corporation Tax Act 2010.  Part 8C, introduced in October 2015, imposes a charge to corporation tax at the rate of 45% on restitution interest (essentially, compound and other interest awarded against the Crown in claims for restitution of unlawfully levied tax or tax paid under a mistake of law) arising to a company.  The Part 8C charge is ring-fenced and not capable of being offset by reliefs, etc.

The FTT (Judge Berner) held that the provisions were compatible with (a) BAT’s directly effective EU law rights (including the principles of effectiveness, protection of legitimate expectations and proportionality, and rights derived from the EU Charter of Fundamental Rights); (b) BAT’s Convention rights under the ECHR (including under A1P1 and Article 6); and (c) BAT’s common law rights.

The decision is available here.

Andrew Macnab and Jack Williams represented HM Revenue & Customs (led by Alison Foster QC (39 Essex Chambers) and Philip Baker QC (Field Court Tax Chambers); alongside Aparna Nathan (Devereux Chambers) and Elizabeth Wilson (Pump Court Tax Chambers)).