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I have a question concerning Deutsche Morgan Grenfell v IRC. It is a tax question and one I am not competent to answer. Can anyone answer it? (Offlist if preferred).

Under section 247 of the Income and Corporation Taxes Act 1988 the law is that where a parent receives a dividend from its parent they can make a 'group income election.' If they make the election then Advance Corporation Tax is not payable. If they don't make the election, the Advanced Corporation Tax is payable but is set off against mainstream corporation tax payable later. So making the election means that payment of the tax is delayed.

My question is whether there is any good reason why a company/group which can make the election would choose not to do so? I can see why you would choose to pay later, but why choose to pay earlier?

If you do have to choose/elect before getting the delay, I cannot see how the CA's conclusion that the tax was not due can be correct.

Robert Stevens