Royal Bank of Canada: A common sense approach to tax treaty interpretation

In a judgment which represents a victory for common sense, the Court of Appeal has upheld the taxpayer's appeal relating to the interpretation of the UK-Canada double tax treaty.  The Court held that certain receipts fell within the scope of the "business profits" article of the treaty, rather than the "immovable property" article, and were therefore exclusively taxable in Canada.  HMRC contended that the payments were income from immovable property on the basis that they were consideration for the right to work oil deposits in the North Sea.  This was implausible because, as the Court recognised, the taxpayer had never had any right to work the relevant deposits, and instead had a right to receive payments calculated by reference to the value of oil extracted. Read more

Supreme Court provides guidance on Follower Notices

In R (Haworth) v HMRC, the Supreme Court has provided welcome guidance in relation to the follower notice regime, confirming that a notice may be issued only where HMRC believes that there is "no scope for a reasonable person to disagree that the earlier ruling denies the taxpayer the [relevant tax] advantage".  It presents HMRC with a high bar, but one that is justified given the draconian nature of the regime. Read more

What is “reasonable detail” when notifying a tax claim under an SPA?

In Dodika v ULGH [2021] EWCA Civ 638, the Court of Appeal considered whether the Defendant (buyer) complied with the requirement to give "reasonable detail" of the matter giving rise to a tax claim under the SPA when notifying that claim to the Claimants (sellers).  The tax claim arose in connection with an ongoing transfer pricing enquiry (conducted by the Slovenian tax authority) of which the sellers were already aware.  We consider the Court's decision (in favour of the buyer) in this blogpost. Read more

HMRC’s ability to argue fraudulent misrep hindered

In the latest round of litigation in HMRC's bid to avoid a settlement agreement with members of the GE group of companies, the Court of Appeal has refused HMRC permission to amend their case to seek the equitable rescission of the settlement agreement on the ground of fraudulent misrepresentation.  Although the decision offers some comfort to the taxpayers concerned, it serves as a reminder that taxpayers should approach settlement discussions with HMRC with care. Read more