Jurisdiction(s):
United Kingdom

Ramsay applied: Court of Appeal construes ‘beneficially entitled’ purposively, denies ITA 2007 s 933 relief, and treats rolling short-term loans as yearly interest for UK withholding tax

Published on: 29 April 2024

Published by a LexisNexis Tax expert

Legal News

Article summary

Hargreaves Property Holdings Ltd v HRMC [2024] EWCA Civ 365 What are the practical implications of this case?

The Court of Appeal’s handling of ‘beneficial entitlement’ signals that the judiciary will interrogate legal notions through the prism of the statute and, where fitting, adopt a purposive reading. For this taxpayer, however, beneficial entitlement was a settled legal concept that resisted a purposive gloss. As Lady Justice Falk made clear, no statutory notion enjoys immunity from purposive interpretation. The WHT regime is designed to secure collection where the payee of taxable income is outside the UK, and the disputed exemption recognises that those within the corporation tax net are not, for that reason, problematic. That rationale is not engaged on these facts. In addition, the Court of Appeal’s view of ‘yearly interest’ underlines an ongoing readiness to look past discrete steps and to focus on the commercial substance of the overall arrangement when testing how the tax code applies. Their analysis was anchored in statutory context rather than abstract doctrine, with purposive tools used only as the legislation allowed. The withholding tax regime targets payments beyond the UK charge, while relieving corporates already within corporation tax. A holistic, commercially realistic view prevailed...

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