• Service: Tax, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 1/24/2014

United Kingdom - Foreign income dividend claims, derivative contract legislation 

January 24:  The England and Wales Court of Appeal issued a decision concerning the time limits for making foreign income dividend (FID) claims and “Manninen claims” (i.e., repayment claims for tax credits in respect of FIDs and overseas dividends prior to a change in law introduced by F(No2)A 1997) in a test case for the FID and Tax Credit Group Litigation. BT Pension Scheme Trustees v HM Revenue & Customs [2014] EWCA Civ 23

The Court of Appeal rejected the pension regime's UK domestic legislation-based arguments to support the fact that claims had been made in time. The court's decision means that the number of EU law-based points that would need to be considered will not be reduced, as the claimants had hoped.

The Court of Appeal will now need to consider the other EU law-based arguments on time limits in another hearing, and it is likely that points will be referred to the Court of Justice of the European Union for consideration.

Derivative contracts and anti-avoidance legislation

Draft legislation amending the rules for derivative contracts (by adding an anti-avoidance provision which disregards debits and credits arising from arrangements to transfer profits between group companies) was updated on 23 January 2014. The publication of the updated draft legislation [PDF 166 KB] was followed with an updated guidance note [PDF 36 KB], published 24 January 2014. The updated legislation addresses topics including the following:

  • Scope of the provision (concerning ordinary commercial arrangements), including an amendment to the provisions title from “Profit transfer arrangements" to "Disguised distribution arrangements"
  • Tax treatment of debits and credits
  • Periods that straddle 5 December 2013 (the date of the original draft legislation)

Draft legislation on partnerships and bond funds has also been published as part of the ongoing consultation on the loan relationships rules.

Read a January 2014 report [PDF 675 KB] prepared by the KPMG member firm in the United Kingdom: Weekly Tax Matters (24 January 2014)

Also included in the report are the following topics:

  • HMRC’s recent guidance on SDLT and FA 2003 s 75A
  • Ibero Tours – CJEU judgment
  • UK courts update
  • Statutory Residence Test – HMRC guidance updated
  • HMRC issue draft legislation on Dual Contract Arrangements tax avoidance
  • New Real Time PAYE procedures for employees leaving or retiring
  • HMRC’s Business Tax Dashboard showing incorrect PAYE data

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