Failed scheme

P&O Australia Ltd (POAL) was a wholly-owned subsidiary of the taxpayer company.

POAL declared an interim dividend of A$75m in May 2004 and paid it to its parent business which implemented an arrangement known as a rate-booster scheme in September 2004 to ensure the cash could be brought to the UK tax-efficiently.

The scheme used TA 1988 s 790 and s 799 to treat all tax as foreign tax.

The taxpayer then claimed double taxation relief of £21m in its corporation tax computation for the year to 31 December 2004. HMRC allowed relief of only £6.7m.

The taxpayer’s appeal to the First-tier Tribunal was dismissed.

The case proceeded to the...