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BTI
BTI
BTI - British American Tobacco P.l.c. - Supreme Court Judgment in the FII Group
Litigation
British American Tobacco p.l.c.
Incorporated in England and Wales
(Registration number: 03407696)
Short name: BATS
Share code: BTI
ISIN number: GB0002875804
("British American Tobacco p.l.c." or "the Company")
British American Tobacco p.l.c.
Supreme Court Judgment in the FII Group Litigation
The Supreme Court today handed down its judgment in the case of The Test
Claimants in the FII Group Litigation v The Commissioners for HM Revenue and
Customs. The British American Tobacco group is the principal test claimant in
that group litigation (GLO) in which the claims of 25 company groups are
enrolled.
The judgment is complex and extends to 190 pages. British American Tobacco will
be studying the judgment in detail with external counsel and deciding on the
future course of action.
The judgment concerns a number of issues but the main issue of relevance to
British American Tobacco concerned the lawfulness of retrospective legislation
introduced by s107 of Finance Act 2007 (FA `07).
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.
Profits were effectively subject to double taxation, firstly in the source state
and then in the UK when distributed to shareholders. British American Tobacco
issued its claim in the litigation in June 2003 and its case was referred to the
European Court (ECJ) in 2004. In 2006, six days before the ECJ was due to
release its ruling, HMRC announced retrospective legislation which became s107
of FA `07, to cancel all restitution claims in tax matters which extended back
longer than six years such as those of British American Tobacco and others in
the GLO who had issued claims at about the same time. Before the intervention
of this retrospective change these claims could be made for tax liabilities
going back to 1973 in most cases. The judgment of the ECJ which then followed
that announcement did largely find discrimination and favoured the taxpayers.
In 2008 the High Court held that the retrospective cancellation of these claims
by s107 of FA `07 was also a breach of EU law. In 2010 the Court of Appeal
unanimously overturned that judgment. In this judgment the Supreme Court
sitting as a panel of 7 judges (reserved for the most important of its cases)
has unanimously held that s107 of FA `07 was in breach of EU law and has
restored the claimants` claims.
The effect of the judgment is to enable British American Tobacco and other
claimants who issued their claims at about the same time to pursue claims for
the recovery of unlawfully imposed UK corporation tax back, in most cases, to
1973. Although the ECJ has ruled largely in favour of the taxpayers in those
claims, the value of the claims is subject to a second reference to the ECJ.
The Advocate General`s opinion in that reference is due on 28 June 2012. It is
not known when the judgment of the court will follow. Once the ECJ judgment is
delivered the matter will then revert to the UK courts.
British American Tobacco cannot comment on the views or reaction of HMRC to this
judgment however further issues in the litigation are likely to remain which
could take several years to resolve.
23 May 2012
Sponsor: UBS South Africa (Pty) Ltd
Date: 23/05/2012 12:13:01 Produced by the JSE SENS Department.
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