UT/2024/000060 - [2025] UKUT 00143 (TCC)

Returning to the exchanges between the parties it is relevant to back-track to pick out some of the further communications running up to the Decision to the extent this featured in the Decision or the Claimant’s grounds.

On 30 January 2020 HMRC sent the Claimant a copy of its Business Brief entitled “Settlement of Statutory Double Taxation Relief Claims Affected by the FII and CFC Dividend GLOs”.

The purpose of that was expressed to be to set out HMRC’s views on the statutory claims to DTR (Double Taxation Relief) “that may have been made or could be made by companies wanting relief against taxable foreign dividend income on the basis determined as a result of the… FII and CFC and Dividends GLOs”.

The Claimant refers to the following passage at paragraph 28. The Brief explained that a claim could be made under the extended time limit provided for within s806(2) and continued:

“However, to reduce any unnecessary administrative burden, where HMRC is able to agree, as a result of a quantified request prior to the closure notice, the quantum of the claim which the customer indicates it would then make, it will give the relief after closure of the enquiry (and after increasing the DV income [i.e. dividend income from non-resident sources under Schedule D, Case V ICTA 1988] by bringing the dividends into charge) without requiring the customer to go through the further formality of making a claim. Where HMRC is unable to accept the quantum of the claim HMRC will issue a closure notice that taxes the foreign dividends without the benefit of any relief under s806(2) and invite the customer to make its s806(2) claim as indicated. The claim can then be dealt with in the normal way in order to ascertain the correct quantum.”

On 28 January 2021 HMRC noted that it had received a purported claim under s806(2) ICTA (the one received on 31 March 2010) detailing the overseas dividend income and estimated underlying tax suffered and that pursuant to the above paragraph 28 in the briefing note that could be uplifted to the applicable FNR without the formality of making a further claim. The letter sought to agree the FNR with the Claimant (suggesting a rate of 12.5% being the Irish corporation tax rate applicable at the relevant time) and asked if the company had any unrelieved non-trading deficits to set against the additional profits arising.

The Claimant responded on 11 March 2021 as set out above with the three steps explained above at [16] and explaining its view that the FNR was 10% (the tax rate that applied to manufacturing income). In their response of 2 April 2021, HMRC noted and agreed that FNR rate.