Interesting decision

Sempra Metals Ltd's appeal in connection with the treatment of advance corporation tax has been upheld in the House of Lords.

The case had been heard in the European Court of Justice which held that one aspect of the UK's advance corporation tax regime was contrary to Article 43 (then Article 52) of the EC Treaty and that English law must allow Sempra to be able to recover an amount equal to interest on the amounts paid to HMRC as advance corporation tax. The relevant statute was TA 1988 s 247 concerning group income elections.

A number of claims have been brought in the High Court following the ECJ's decision; these have been grouped within a Group Litigation Order known as the ACT Group Litigation Order. Sempra was the test claimant on the question of whether companies should recover interest at a compound rate or ...