Due entitlement

Tax credits and foreign income dividends

The trustees of the BT Pension Scheme claimed that TA 1988  s 246C which denied them repayments of tax credits on foreign income dividends (FIDs) contravened EU law in particular Art 63 of the Treaty on the Functioning of the EU – free movement of capital.

The case proceeded through the UK courts until the Court of Appeal referred the matter for the two years that were not time barred to the Court of Justice of the EU.

The CJEU confirmed that shareholders receiving FIDs were entitled to the same treatment as those receiving UK-sourced dividends.

Further domestic courts must disapply the provisions conflicting with Art 63 so as to give full effect to EU law. Shareholders should be given an effective remedy enabling them to obtain payment of the tax credits of which they had been deprived.

Finally ...