Deutsche Morgan Grenfell Group Plc v Inland Revenue & Anor, Court of Appeal - Chancery Division, July 18, 2003, [2003] 4 All ER 645,[2003] EWHC 1779 (Ch),[2003] Eu LR 838,[2003] BTC 497,[2003] STC 1017

Reporting Judge: [2003] 4 All ER 645,[2003] EWHC 1779 (Ch),[2003] Eu LR 838,[2003] BTC 497,[2003] STC 1017

President: Deutsche Morgan Grenfell Group Plc v Inland Revenue & Anor

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Extract

Case No: HC000 4650 CH

[2003] EWHC 1779 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 18 July 2003

Before :

THE HONOURABLE MR JUSTICE PARK

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Between :

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Laurence Rabinowitz QC and Francis Fitzpatrick (instructed by Slaughter & May) for the Claimant

Ian Glick QC and Bruce Carr (instructed by The Solicitor of Inland Revenue ) for the Defendants

Hearing dates : 12.05.03 to 15.05.03

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Approved Judgment

Mr Justice Park:

1. Abbreviations, dramatis personae, glossary, etc.

Overview

2. At the times relevant for this case United Kingdom tax law provided that, where subsidiary companies paid dividends to their parents, `group income' elections could be made which enabled the dividends to be paid without the paying subsidiary having to pay ACT to the UK Revenue. Until the decision of the CJEC in Metallgesellschaft/Hoechst such elections could be made only between United Kingdom resident companies: section 247(1) of ICTA included the words: `both being bodies corporate resident in the United Kingdom'. However, in Metallgesellschaft/Hoechst the CJEC held that it was contrary to article 52 (now article 43) of the EC Treaty for United Kingdom law to deny the right to make group income elections where the parent company was resident in a Member State other than the United Kingdom. The CJEC also held that, as respects payments of ACT which had already been made in the past, Community law conferred a right of compensation or restitution which the aggrieved companies were entitled to pursue in the United Kingdom courts.

3. Many United Kingdom subsidiaries of Member State parents, including DMG, a subsidiary of a German parent, commenced actions seeking compensation or restitution accordingly. The actions are now all organised within a Group Litigation Order (as to which see the Civil Procedure Rules, rules 19.11 to 19.15), and a series of test cases is being heard to determine various questions of principle to which they, or some of them, give rise. The first such case was the Pirelli case, which concerned an issue which arose where the parent company was resident in a Member State which had a particular kind of Double Taxation Agreement with the United Kingdom. The second such case is this one, in which the test claimant is DMG.

4. The special feature of this case, and of others within the Group Litigation Order for which this is the test case, is that questions of limitation of actions arise: some of the payments of ACT which DMG made...

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