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No abuse
The Pirelli appeal concerned advance corporation tax and group income elections and had been part of the Group Litigation Order ([2006] STC 548) that went before the House of Lords in February 2006 (see Update Taxation 16 February 2006 page 497 for a report of that decision). The case was remitted back to the Chancery Division where Pirelli raised a new point. It argued that the double tax agreement credit which the non-UK companies received and which Pirelli accepted should be considered in calculating the compensation should not be characterised as a double tax credit which those companies were not entitled to at all. If a group income election had been made the dividends paid to the non-resident companies would have been free of advance corporation tax.
HMRC said that raising a new point was an abuse of process ...
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