Dear Colleagues,

The UK Supreme Court has today given judgment in the Franked Investment Income appeal:

[2012] UKSC 19 http://www.supremecourt.gov.uk/docs/UKSC_2010_0085_Judgment.pdf. This is a very important decision, which will take some digesting, but the main issues, as summarised by the Court, are resolved as follows (with some significant differences from the Court of Appeal's approach):


The appeal is allowed on the first two points:

1) The Woolwich principle by itself is not sufficient to meet the EU requirements of a remedy for the taxpayer, and an action based on mistake must therefore be available. Lords Brown and Lord Sumption dissent on this point, and a reference is made to the ECJ. The Supreme Court is unanimous that s 107 of the Finance Act 2007 was not lawful as it was contrary to the legitimate expectation of the Companies.

2) s 3 of the Taxes Management Act 1970 does not exclude the common law claim in the EU context.

The appeal was then dismissed on the following two points:

3) s 32(1)(c) is not to be given a broad interpretation, so as to read widely 'an action for relief from the consequences of a mistake.

4) The Woolwich principle does not require a formal demand, but applies to tax which is unlawfully exacted more generally.

The judgments also contain some reference to broader questions about the relevance of absence of basis. Change of position, which was in issue in the lower courts, was not an issue on the appeal. We have not reached the final stage of the litigation, as a reference to the European Court of Justice has had to be made. The saga continues.

Best wishes,

James

--
James Lee
Lecturer and Director of Careers
Academic Fellow of the Inner Temple
Birmingham Law School
University of Birmingham
Edgbaston
Birmingham
B15 2TT, United Kingdom

Tel: +44 (0)121 414 3629
E-mail: j.s.f.lee@bham.ac.uk<mailto:j.s.f.lee@bham.ac.uk>



Web: http://www.birmingham.ac.uk/staff/profiles/law/lee-james.aspx

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