Reliable guidance

HMRC manuals and legitimate expectation

The taxpayer was the UK-based wholly owned subsidiary of a Japanese parent company. The UK outfit set up another wholly owned subsidiary in the US to which it made loans. The US imposed withholding tax at 30% on the interest the taxpayer received on the loans. It was also liable to UK corporation tax on the interest.

The taxpayer claimed relief on the US withholding tax under TA 1988 s 790. HMRC refused on the basis that s 793A prevented the relief.

The taxpayer sought judicial review saying HMRC’s International Manual INTM151060 had given it a legitimate expectation that it would be taxed in accordance with the manual irrespective of whether the information was accurate. HMRC’s review of the taxpayer’s appeal stated:

‘HMRC do not consider that anything turns on the original wording of INTM151060. This passage was removed as part of the...