“Production of that evidence may however be required only if it does not prove virtually impossible or excessively difficult to furnish proof of payment of the tax by the subsidiaries established in the other Member States …”
“It must have been clear to Leeds on18 July 1996 (and if it was not, should have been) that the then government intended to implement a three-year limitation period for s 80claims. From that day on, Leeds could have had no more than a hope that Parliament might not enact the necessary legislation; it could certainly not assume that it would not. In fact, on3 December 1996 Parliament passed a resolution, as we have said, which brought the three-year cap into effect; and from the passing of that resolution the only possible expectation which Leeds could have held, in respect of claims arising thereafter, was that they would be affected by a three-year time limit, and that Parliament would in due course pass (as it did) the legislation which provided for it.” 29. That reasoning is, in my judgment, on the face of it impeccable. Are there any special factors which should lead to a contrary conclusion? … 35. … Mr Ghosh argues that the court [inCase C-427/10 Banca Antoniana Popolare Veneta SpA[2012] STC 526 (“Banco Antoniana”)] held that the fact that the tax authority adopts a position that is wrong in law means that it is excessively difficult for a tax payer to secure the refund of VAT to which he would otherwise be entitled. That reasoning should have been directly applied to the facts of our case … I do not agree with Mr Ghosh … If it were the case that whenever the tax authorities misinterpreted a provision of the VAT code that led to a disapplication of the time limits for making a claim, the consequences would be very far-reaching indeed. I cannot accept that that is what the CJEU decided … … 40. I can return, then, to the points on which Mr Ghosh relies as necessitating a relaxation of the limitation period in Leeds’ particular case. … 43. … there is no rule of EU law requiring the running of a limitation period to be deferred until the existence of a right to recover the payment has been judicially established. It is not uncommon for a claim to repayment to have become time-barred in national law while proceedings are still in progress to determine whether the member state was in breach of EU law: FII at [151] (Lord Sumption). Thus the fact that HMRC advanced a view of the law which is now conceded to be wrong does not preclude reliance on the limitation period. If a taxpayer is dissatisfied with HMRC's view of the law, the proper course is to appeal to the appropriate tribunal. That course has always been open to Leeds … Ignorance of one’s legal rights is not a ground for disapplying a limitation period: British Telecommunications plc v HMRC[2014] EWCA Civ 433 … at [106] and [123]. But Mr Ghosh argued that he was complaining not merely that HMRC were wrong, but that they had thrown Leeds off the scent by failing to mention article 4.5at all and focussing on what turned out to be legally irrelevant arguments. I cannot see that this makes any difference. The provisions of the Sixth Directivewere readily available and were (and were known to be) directly effective. If (as was the case) HMRC were barking up the wrong tree, Leeds could readily have identified the right tree: British Telecommunications plc v HMRC at [123] … … 46. If a limitation period were held to apply only to ill-founded claims it would serve very little purpose. It must follow that it is permissible for claims that are well-founded in law to be barred for limitation reasons alone. Moreover the principle of effectiveness means not that it must be easy to obtain a remedy, but that it must not be “excessively difficult” to do so. Where, as in the UK, there is a specialist tax tribunal system whose principal purpose is to allow the taxpayer to challenge decisions by HMRC I cannot see that it is “excessively difficult” to obtain a remedy.” “It must have been clear to Leeds on18 July 1996 (and if it was not, should have been) that the then government intended to implement a three-year limitation period for s 80claims. From that day on, Leeds could have had no more than a hope that Parliament might not enact the necessary legislation; it could certainly not assume that it would not. In fact, on3 December 1996 Parliament passed a resolution, as we have said, which brought the three-year cap into effect; and from the passing of that resolution the only possible expectation which Leeds could have held, in respect of claims arising thereafter, was that they would be affected by a three-year time limit, and that Parliament would in due course pass (as it did) the legislation which provided for it.” 72. Jazztel plc v. Revenue and Customs Commissioners[2017] EWHC 677 (Ch) (“Jazztel”)72.This case concerned restitutionary claims for the recovery of stamp duty reserve tax (“SDRT”) charged contrary to EU law and said to have been paid under a mistake. Marcus Smith J held that the application of section 320 to such claims, where the claims related to tax paid on or before8th September 2003 , was not compliant with EU law. However, where the claims related to tax paid after that date, section 320 applied, in line with the Court of Appeal’s decision in Leeds City Council. His essential reasoning was as follows:- “96. I consider that section 320 … infringes Community law both in its express retrospectivity and in its hidden retrospectivity: (i) Express retrospectivity. The effective date of the provision (8 September 2003 ) precedes by some nine months the date on which it passed into law (22 July 2004 ). The announcement in Parliament on8 September 2003 by the Paymaster General cannot have the effect of rendering the provision compliant with Community law, given that the announcement was made on the very date section 320 (retrospectively) became law. Persons affected would thus find, from one day to the next, that their rights had changed for the worse, with no transitional provisions of any sort in place. (ii) Hidden retrospectivity. The hidden retrospectivity of section 320 also infringes Community law … As regards that class of taxpayer having an accrued right to recover money mistakenly paid pursuant to an unlawfully levied demand for tax, the legal regime changes without notice from one day to the next. Where the taxpayer has commenced proceedings on or before8 September 2003 , the taxpayer can avail him or herself ofsection 32(1)(c) of the Limitation Act 1980 , and (depending on his or her “date of knowledge”) recover payments made over six years prior to the issue of the claim form. By contrast, a taxpayer commencing proceedings after8 September 2003 cannot avail him or herself of section 32(1)(c) and will be restricted to recovering payments made within six years of the issue of proceedings. Thus, by way of example: (a) Taxpayer 1 discovers that in 1985 he or she made a mistaken payment in respect of a tax unlawfully levied. Taxpayer 1 discovers this on7 September 2003 and, with commendable promptitude, issues proceedings on the same day. The payment can be recovered. (b) Taxpayer 2 makes the same discovery of a mistaken payment in 1985, but does so on9 September 2003 . Even if taxpayer 2 acts with the same speed as taxpayer 1, he or she will not be able to recover the payment, due to the intervention of section 320. It is worth noting that this is so, even if section 320 were not also expressly retrospective. Taxpayer 2 would be adversely affected by section 320 even if it had been introduced prospectively with a year’s notice. 97. It may be that the Paymaster General’s statement in Parliament was intended to be some form of transitional provision. If so, by ensuring that section 320 took effect from the date of its announcement in Parliament, there was no transitional protection for taxpayers in relation to section 320’s express retrospectivity. 98. As regards the hidden retrospectivity, there was no transitional provision at all. The issue went unaddressed. … 99. The question, therefore, is whether a remedy can be fashioned by the court so as to render section 320 Community law compliant or (to put the same question another way) to what extent must section 320 be dis-applied in order to provide the necessary transitional protection? 100. I begin with the remedy that needs to be fashioned to ameliorate section 320’s express retrospectivity, before considering the question of hidden retrospectivity. However, as will be plain from the consideration below, it is neither possible nor desirable completely to separate these questions. At the end of the day, it is a remedy to avoid section 320’s infringement of Community law—considering section 320’s effects in the round—that is required: (i) The remedy that needs to be fashioned to ameliorate the express retrospectivity of section 320 turns on the question of notice of the introduction of the provision. It will be recalled that whilst section 320 was passed into law on22 July 2004 , and was announced in Parliament on8 September 2003 , its effective date is8 September 2003 . There was therefore no prior notice of the introduction of section 320. (ii) It is necessary to differentiate between Payments 1–9 (which were all made prior to8 September 2003 and so concerned rights that had accrued as at8 September 2003 ) and Payments 10–23 (which were all made after8 September 2003 , and so accrued after that date). (iii) As regards the Payments made after8 September 2003 (Payments 10–23), it is my judgment that—with the possible exception of Payment 10, which I consider separately below—no dis-application is required at all. That is for the reasons given by Lewison LJ in Leeds City Council[2016] STC 2256 , paras 27–28: (a) In Leeds City Council, the resolution shortening the applicable limitation period and removing the extended limitation period in cases of mistake applied to payments made on or after4 December 1996 . (b) The resolution implementing this change was passed by the House of Commons on3 December 1996 . That resolution had been foreshadowed by an earlier announcement made on18 July 1996 . (c) Lewison LJ held that because all of the claims before him related to payments made on or after4 December 1996 , the payer (Leeds City Council) had a readily ascertainable prospective period of a reasonable length in which to make its claims according to the new time limit as it stood. There was no need for any dis-application of the new time limit. This is Jazztel’s position. The Paymaster General’s announcement was on8 September 2003 and—with the possible exception of Payment 10, which was made on17 December 2003 —Jazztel had plenty of time to adjust to the new dispensation. (iv) Payment 10 was made, as I have said, on17 December 2003 , three months after the Paymaster General’s announcement. Given the indication in Grundig II [2003] All ER (EC) 176, para 42 that a transitional period of six months is the minimum period required when time limits are being changed, there is a strong argument that section 320 should be dis-applied for the period8 September 2003 to8 March 2004 . (v) But this would, as it seems to me, go beyond what Community law requires. It would entail a dis-application of section 320 in circumstances where the express retrospectivity of section 320 has not affected Jazztel at all. When these proceedings were commenced (on19 December 2013 ), section 320 had been in force for a number of years. Payment 10 would be irrecoverable even on the basis of a transitional period of several years, let alone six months. (vi) The real mischief, which I consider must be addressed in order to render section 320 compliant with Community law, is the loss of accrued rights of which their owner is ignorant—that is, the hidden retrospectivity of section 320. When fashioning an appropriate remedy to deal with hidden retrospectivity, it is important to note that the mere question of notice of the introduction of section 320 is an insufficient remedy. Where the taxpayer knows he or she has a claim, then a period of adequate notice that the time within which such a claim must be brought is contracting will be sufficient. That is the basis on which Fleming[2008] 1 WLR 195 and Leeds City Council proceed. This case is different. Although Jazztel and taxpayers in Jazztel’s position have (prior to8 September 2003 ) an accrued right to recover overpaid SDRT, they do not know about this right. A transitional provision giving them notice of the introduction of section 320 will not give such taxpayers any notice of the claims that they have. (vii) In my judgment, it is necessary to have regard to this basic fact—that the taxpayer has a claim that he or she knows nothing about—when fashioning a remedy to render section 320 compliant with Community law. The only remedy that will sufficiently protect the rights that have already accrued is to exclude from the section 320 regime those accrued rights. I therefore dis-apply section 320 in relation to: (a) Claims accruing on or prior to8 September 2003 , which (b) Would be time-barred according to the ordinary six-year limitation period, and which can only be vindicated by the taxpayer relying uponsection 32(1)(c) of the Limitation Act 1980 . Put the other way round, section 320 can apply to all claims accruing after8 September 2003 and to all claims accruing on or prior to 8 September (i) Express retrospectivity. The effective date of the provision (8 September 2003 ) precedes by some nine months the date on which it passed into law (22 July 2004 ). The announcement in Parliament on8 September 2003 by the Paymaster General cannot have the effect of rendering the provision compliant with Community law, given that the announcement was made on the very date section 320 (retrospectively) became law. Persons affected would thus find, from one day to the next, that their rights had changed for the worse, with no transitional provisions of any sort in place. (ii) Hidden retrospectivity. The hidden retrospectivity of section 320 also infringes Community law … As regards that class of taxpayer having an accrued right to recover money mistakenly paid pursuant to an unlawfully levied demand for tax, the legal regime changes without notice from one day to the next. Where the taxpayer has commenced proceedings on or before8 September 2003 , the taxpayer can avail him or herself ofsection 32(1)(c) of the Limitation Act 1980 , and (depending on his or her “date of knowledge”) recover payments made over six years prior to the issue of the claim form. By contrast, a taxpayer commencing proceedings after8 September 2003 cannot avail him or herself of section 32(1)(c) and will be restricted to recovering payments made within six years of the issue of proceedings. Thus, by way of example: (a) Taxpayer 1 discovers that in 1985 he or she made a mistaken payment in respect of a tax unlawfully levied. Taxpayer 1 discovers this on7 September 2003 and, with commendable promptitude, issues proceedings on the same day. The payment can be recovered. (b) Taxpayer 2 makes the same discovery of a mistaken payment in 1985, but does so on9 September 2003 . Even if taxpayer 2 acts with the same speed as taxpayer 1, he or she will not be able to recover the payment, due to the intervention of section 320. It is worth noting that this is so, even if section 320 were not also expressly retrospective. Taxpayer 2 would be adversely affected by section 320 even if it had been introduced prospectively with a year’s notice. (i) The remedy that needs to be fashioned to ameliorate the express retrospectivity of section 320 turns on the question of notice of the introduction of the provision. It will be recalled that whilst section 320 was passed into law on22 July 2004 , and was announced in Parliament on8 September 2003 , its effective date is8 September 2003 . There was therefore no prior notice of the introduction of section 320. (ii) It is necessary to differentiate between Payments 1–9 (which were all made prior to8 September 2003 and so concerned rights that had accrued as at8 September 2003 ) and Payments 10–23 (which were all made after8 September 2003 , and so accrued after that date). (iii) As regards the Payments made after8 September 2003 (Payments 10–23), it is my judgment that—with the possible exception of Payment 10, which I consider separately below—no dis-application is required at all. That is for the reasons given by Lewison LJ in Leeds City Council[2016] STC 2256 , paras 27–28: (a) In Leeds City Council, the resolution shortening the applicable limitation period and removing the extended limitation period in cases of mistake applied to payments made on or after4 December 1996 . (b) The resolution implementing this change was passed by the House of Commons on3 December 1996 . That resolution had been foreshadowed by an earlier announcement made on18 July 1996 . (c) Lewison LJ held that because all of the claims before him related to payments made on or after4 December 1996 , the payer (Leeds City Council) had a readily ascertainable prospective period of a reasonable length in which to make its claims according to the new time limit as it stood. There was no need for any dis-application of the new time limit. This is Jazztel’s position. The Paymaster General’s announcement was on8 September 2003 and—with the possible exception of Payment 10, which was made on17 December 2003 —Jazztel had plenty of time to adjust to the new dispensation. (iv) Payment 10 was made, as I have said, on17 December 2003 , three months after the Paymaster General’s announcement. Given the indication in Grundig II [2003] All ER (EC) 176, para 42 that a transitional period of six months is the minimum period required when time limits are being changed, there is a strong argument that section 320 should be dis-applied for the period8 September 2003 to8 March 2004 . (v) But this would, as it seems to me, go beyond what Community law requires. It would entail a dis-application of section 320 in circumstances where the express retrospectivity of section 320 has not affected Jazztel at all. When these proceedings were commenced (on19 December 2013 ), section 320 had been in force for a number of years. Payment 10 would be irrecoverable even on the basis of a transitional period of several years, let alone six months. (vi) The real mischief, which I consider must be addressed in order to render section 320 compliant with Community law, is the loss of accrued rights of which their owner is ignorant—that is, the hidden retrospectivity of section 320. When fashioning an appropriate remedy to deal with hidden retrospectivity, it is important to note that the mere question of notice of the introduction of section 320 is an insufficient remedy. Where the taxpayer knows he or she has a claim, then a period of adequate notice that the time within which such a claim must be brought is contracting will be sufficient. That is the basis on which Fleming[2008] 1 WLR 195 and Leeds City Council proceed. This case is different. Although Jazztel and taxpayers in Jazztel’s position have (prior to8 September 2003 ) an accrued right to recover overpaid SDRT, they do not know about this right. A transitional provision giving them notice of the introduction of section 320 will not give such taxpayers any notice of the claims that they have. (vii) In my judgment, it is necessary to have regard to this basic fact—that the taxpayer has a claim that he or she knows nothing about—when fashioning a remedy to render section 320 compliant with Community law. The only remedy that will sufficiently protect the rights that have already accrued is to exclude from the section 320 regime those accrued rights. I therefore dis-apply section 320 in relation to: (a) Claims accruing on or prior to8 September 2003 , which (b) Would be time-barred according to the ordinary six-year limitation period, and which can only be vindicated by the taxpayer relying uponsection 32(1)(c) of the Limitation Act 1980 . Put the other way round, section 320 can apply to all claims accruing after8 September 2003 and to all claims accruing on or prior to8 September 2003 which do not depend upon section 32(1)(c) for their vindication. 101. I regard this approach as entirely consistent with that adopted by Lewison LJ in Leeds City Council. That case, it will be recalled from para 27, concerned only claims accruing after the coming into effect of the new time limit. There is obviously no reason why a legal system needs to have a period of limitation (or other time bar) that is calculated by reference to the claimant’s state of mind. I can see nothing wrong in cutting back the scope of section 32(1)(c) provided accrued rights are unaffected. That is obviously the case as regards rights accruing after the entry into force of the new regime”
“[t]he detailed procedural rules governing actions for safeguarding a taxpayer’s rights under EU law … must not be framed in such a way as to render impossible in practice or excessively difficult the exercise of rights conferred by EU law”
“the mere question of notice of the introduction of section 320 is an insufficient remedy”
“[g]iven the requirement of an effective remedy under EU law, it is submitted that, where it would otherwise apply, a conforming construction must be given to subparagraph 51(6) so as to permit claims to be brought in the High Court”
“Did the election regime under section 438(6) entail a less favourable treatment of Portfolio Dividends contrary to Article 63 TFEU and, if so, what was that less favourable treatment?” 145. … The first part of the question which I now have to consider is the question remitted to the national court, namely “whether, in light of the fact that the permitted election, as regards dividends of national origin, entailed the waiver of tax credits, a company receiving dividends of foreign origin, which could not exercise such an election, was treated less favourably because of that fact alone” (paragraph 56). 146. The question is essentially one of fact, and it was addressed by Mr McCullough in his second statement. He explains that the rate of corporation tax on pension business profits always exceeded the rate of tax applicable to the tax credit carried by FII, and it was therefore beneficial to make the election so long as it did not cause other reliefs claimed to be displaced due to an overall insufficiency of profits remaining in charge to tax. His unchallenged evidence, which I accept, is that: “Where we received dividends from UK resident companies we always made s438(6) elections where the election reduced the company's liability to tax. Had it been possible to make an election for foreign dividends, and the tax computations for the year indicated that it would be beneficial to do so, we would obviously have done so.” 147. In the light of this evidence, I am in no doubt that the confinement of the ambit of section 438(6) to FII did involve less favourable treatment of foreign portfolio dividends in breach of Article 63, and that the question remitted by the [CJEU] should be answered in the affirmative. The next question is to identify the precise nature of the less favourable treatment accorded to such portfolio dividends (or, more accurately, the proportion of them allocated to the shareholders' share of pension business profits) …”. “Did the election regime under section 438(6) entail a less favourable treatment of Portfolio Dividends contrary to Article 63 TFEU and, if so, what was that less favourable treatment?” “Where we received dividends from UK resident companies we always made s438(6) elections where the election reduced the company's liability to tax. Had it been possible to make an election for foreign dividends, and the tax computations for the year indicated that it would be beneficial to do so, we would obviously have done so.”
“Practice generally prevailing Both error or mistake relief and overpayment relief have an exception where the tax was calculated in accordance with prevailing practice at the time. HMRC have considered the comments of the Court of Appeal concerning prevailing practice in the Franked Investment Income Group Litigation (paragraphs 255 to 264). In the view of the court, the practice generally prevailing exception is to be read as subject to the limitation 'that it applies only if and to the extent that the United Kingdom can consistently with its [EU] treaty obligations impose such a restriction'. The court concluded that practice generally prevailing does not affect a claim for repayment of taxes paid in breach of EU law. HMRC understand this principle also applies to the new overpayment relief. Therefore, if a claim for error or mistake relief or overpayment relief relates to taxes paid in breach of EU law, HMRC will not seek to disallow it on the basis that the tax liability was calculated in accordance with the prevailing practice. The other conditions for error or mistake relief and overpayment relief, such as time limits, will still need to be met in all cases.”
“This measure amends legislation to confirm that where tax was levied contrary to EU law, overpayment relief will not be affected by any prevailing practice. It also amends the four year time limit for overpayment relief claims to make clear that the four years run from the period to which the mistake relates.”
“(3) In Part 6 of Schedule 18 to FA 1998…in paragraph 51A…after subparagraph (8) insert— (9) Case G does not apply where the amount paid, or liable to be paid, is tax which has been charged contrary to EU law.”