Corporation Tax: new statutory remedy in relation to Advance Corporation Tax
Published 29 October 2018
© Crown copyright 2018
This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: psi@nationalarchives.gov.uk.
Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned.
This publication is available at https://www.gov.uk/government/publications/new-statutory-remedy-for-advance-corporation-tax/corporation-tax-new-statutory-remedy-in-relation-to-advance-corporation-tax
Who is likely to be affected
Companies that have made common law claims against HMRC in relation to the operation of the former Advance Corporation Tax (ACT) regime.
General description of the measure
This measure provides a non-exclusive interest return for claimants that made common law claims against HMRC in respect of ACT which was paid and subsequently set-off or repaid.
Policy objective
This measure introduces a new statutory remedy in order to address the uncertainty that has arisen for both taxpayers and HMRC following a recent Supreme Court judgment.
Background to the measure
This measure was announced at Budget 2018.
On 25 July 2018, the UK Supreme Court gave its judgment in the case of Prudential Assurance Company Ltd v Commissioners for Her Majesty’s Revenue and Customs [2018] UKSC 39. The case related to the old ACT regime, which ceased to apply in April 1999, from when the Shadow Advance Corporation Tax regime came into effect.
As part of the decision in the Prudential case, the Supreme Court overruled the House of Lords in the previous case of Sempra Metals Ltd v Inland Revenue Commissioners [2007] UKHL 34.
The claims for restitution of the time value in respect of the period from payment of ACT to set-off or repayment were based on the decision in Sempra Metals, which also stated that this satisfied the requirement that an effective remedy be available. The Supreme Court in Prudential held that there was no such restitutionary common law remedy. This creates uncertainty which the proposed statutory remedy addresses.
This measure has not been subject to consultation since the Supreme Court only gave its decision on 25 July 2018.
Detailed proposal
Operative date
The measure will have effect on and after the date of Royal Assent to Finance Bill 2018-19.
Current law
There currently does not appear to be an appropriate statutory remedy.
Proposed revisions
Legislation will be introduced in Finance Bill 2018-19 to introduce a new non-exclusive statutory remedy. The remedy effectively provides an interest return on ACT that was paid and set-off or repaid, together with interest on that sum.
Summary of impacts
Exchequer impact (£m)
| 2018 to 2019 | 2019 to 2020 | 2020 to 2021 | 2021 to 2022 | 2022 to 2023 | 2023 to 2024 |
|---|---|---|---|---|---|
| nil | nil | nil | nil | nil | nil |
This measure is not expected to have an Exchequer impact.
Economic impact
This measure is not expected to have any significant economic impacts.
Impact on individuals, households and families
This measure has no impact on individuals as it only affects companies. The measure is not expected to impact on family formation, stability or breakdown.
Equalities impacts
We do not anticipate that there will be impacts on groups sharing protected characteristics.
Impact on business including civil society organisations
This measure should only impact those companies that have made common law claims against HMRC in relation to the ACT regime. There will be negligible impact from one-off familiarisation and no ongoing impacts. This measure will not affect civil society organisations.
Operational impact (£m) (HMRC or other)
Operational impacts for HMRC in implementing the proposed statutory remedy in this measure are anticipated to be negligible.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
The measure will be kept under review through communication with affected claimants.
Further advice
If you have any questions about this change, contact Martyn Rounding on telephone: 03000 589 303 or email: martyn.rounding@hmrc.gsi.gov.uk.