On 23 May 2012, the Supreme Court of the United Kingdom handed down its judgment in the case of The Test Claimants in the FII Group Litigation v The Commissioners for HM Revenue and Customs (HMRC). In this Group Litigation (GLO) 25 UK headquartered multinationals seek the recovery of taxes said to have been levied in breach of EU law. The Supreme Court’s unanimous ruling reinstates claims issued before September 2003 that were previously cancelled by retroactive legislation in 2007. By a majority ruling (5:2) it has also concluded that other retrospective legislation in 2004 which restricted claims issued on or after 8 September 2003 to 6 years, was also unlawful but has referred that issue back to the European Court (ECJ) for clarification. Dorsey & Whitney are the lead and test case solicitors who have represented the claimants throughout.
The claimants in the GLO contend that they were discriminated against in breach of EU law by the imposition of UK corporation tax charges, mostly in the form of advance corporation tax (ACT), upon the distribution of foreign sourced income.
The Supreme Court heard the current case as a panel of 7 judges. A 7 judge panel is reserved for the Court’s most important cases (usually the Supreme Court sits as a panel of 5). It has unanimously held that by cancelling existing claims the 2007 legislation offended EU rights and cannot be applied. This re-instates claims for liabilities back to 1973 in the 6 claims issued prior to the September 2003 date.
A majority of the judges (5:2) held that the earlier 2004 legislation also failed for the same reasons. Because EU law requires certainty as to its interpretation by national supreme courts, this dissenting opinion has forced the Supreme Court to refer this question back to the European Court for clarification. This will be the 3rd reference of the case by the UK to the ECJ since 2004.