No repayment due

The issue concerned the taxation of dividends paid by a UK company to an EU parent company.

Each of the claimant groups in the case had a parent company resident in the EU which had received from a UK-resident subsidiary company a dividend in respect of which advance corporation tax (ACT) had been paid.

The European Court of Justice’s decision in Metallgesellschaft Ltd v CIR (C-397/98); Hoechst AG v CIR (C-410/98) [2001] STC 452 ruled that it was unlawful for the UK to allow a UK-resident subsidiary to pay a dividend to its UK-resident parent company under a group income election and avoid paying ACT while denying that opportunity where a UK-resident subsidiary paid a dividend to an EU non-UK-resident parent company.

The taxpayer companies claimed that their tax treatment contravened article 43EC of the EC Treaty. The High Court rejected the taxpayers’...