News - tax cases

Meaning of pay

In a case concerning advance corporation tax the meaning of 'payment' in TMA 1970 s 87 and 'pay' in TA 1988 s 246N was disputed. The company claimed that payment and pay could include set off but HMRC argued otherwise and claimed interest on what they considered to be unpaid advance corporation tax.
On appeal the High Court found for HMRC as did the Court of Appeal. The company appealed to the House of Lords.
Reversing the previous decisions the House of Lords ruled that on a true construction of the relevant legislation payment could mean set off. It would be out of all proportion to have a perpetual liability to pay interest and it was unlikely that Parliament would have intended such a system. Section 246N(2) described how the legislation should work. The reference to tax...