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Deutsche Morgan Grenfell was the UK subsidiary of a German company. Advance corporation tax was payable on the dividends it paid to its German parent because at the relevant time TA 1988 s 247 provided that a group income election which enabled dividends to be paid without the paying subsidiary having to pay advance corporation tax could only be made if the subsidiary and its parent were both resident in the UK. In March 2001 the European Court of Justice held that the denial of the right of election to holding companies established in Member States other than the UK and their UK subsidiaries was contrary to EC law. Furthermore in respect of payments of advance corporation tax already made EC law conferred a right of compensation or restitution. The company had been able to set off the advance corporation...