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

Decision

SP5/01 requires that a party asking HMRC to exercise its discretion to allow a late claim to demonstrate the strength of their case. Having considered the explanations that Rettig has provided, we do not consider that there were exceptional reasons why Rettig did not make the Claim within the two-year time limit prescribed by s83(6) FA 1996, that is,

“two years immediately following the end of the relevant period”.

Accordingly, we refuse to exercise HMRC’s discretion to extend the time limit in this case. We set out our reasons below and in doing so we respond to the points made in your 13 November 2023 letter.

Circumstances do not meet paragraph 10 of SP5/01

In its original company tax return filed on 31 March 2004, Rettig treated its overseas dividends as taxable. Later, on 22 December 2004, it amended its tax return to treat the overseas dividends as non-taxable. That change indicates that Rettig had some doubt as to the treatment of the overseas dividends when the time limit expired (31 December 2004). That means that paragraph 10 of SP5/01 is not met, because Rettig was aware that there could have been profits against which Rettig could claim relief.

Rettig did not make a claim for double tax relief (“DTR”) in its amended return, contrary to the assertion in your letter dated 13 November 2023. On 31 March 2010, and to protect its position. Rettig made a DTR claim under separate cover. This indicates that they were aware of the dividend income that should be brought into charge following the outcome of the ongoing legislation.

Claim not made as soon as possible contrary to paragraph 13 of SP5/01

Paragraph 13 of SP5/01 provides that an application should be made as soon as possible, and that a delay in making a late claim after the circumstances which caused the claim to be late have ceased to apply may result in the claim being rejected.

The judicial decisions handed down in October 2013 [Prudential Assurance Company Limited v HMRC [2013] EWHC 3249 (Ch) “2013 Prudential Ch”] and July 2018 [Prudential Assurance Company Limited v HMRC [2018] UKSC 39 July 2018 (“2018 Prudential SC”] confirmed that foreign dividends were taxable. Therefore, even if we considered that paragraph 10 applied, which we do not, the Claim was not made as soon as possible after the relevant judgments were handed down. We would therefore also reject it for that reason, applying SP5/01.

Not otherwise unreasonable for HMRC to refuse the late Claim: paragraph 12 of SP5/01

Paragraph 12 of SP5/01 states that there may be cases falling outside the general approach outlined in paragraph 10 where it would nevertheless be unreasonable, given the overall circumstances of the case, for HMRC to refuse a late claim. Based on the information provided to date, we do not consider that this case falls outside the general approach outlined in paragraph 10.

Our letter dated 28 January 2021 did ask the company to advise us of any unrelieved surplus non-trading loan relationship deficits or group relief claims however it did not indicate that any new claims made for either of these reliefs would inevitably be accepted.”