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Evonik UK Holdings Ltd v HMRC

One day we will see final resolution of all of the issues relating to the incompatibility of the UK’s Franked Investment Income rules with the EU principles of freedom of establishment.

This latest skirmish concerns the calculation of interest.

At one time the argument in these cases was over whether compound interest was due on tax repayments. That issue was found in HMRC’s favour in the Prudential case, but the question then arose as to whether the simple interest that was undoubtably due should be payable at the normal corporation tax rate or at the much higher rate under the Senior Courts Act 1981.

Essentially, the point of contention in this appeal was whether the company could withdraw a concession it had previously made that its claim should be based on the lower rate. It appears to have overlooked the possibility that a claim at the higher rate might be possible.

The court here decided that the company could not be permitted to be released from