On 26 January 2015 Henderson J handed down his judgment on various computation issues in the Prudential test case in the CFC & Dividend GLO. Following judgment on liability in October 2013, HMRC had raised a number of computation arguments seeking to reduce the value of Prudential’s claim which led to a further hearing in October 2014. Many of these defences were conceded by HMRC at the beginning of that hearing. In all other respects Henderson J’s judgment of last week found in favour of the taxpayer’s method of computation. These concern how to compute the credit which, to be compatible with EU law, should have been available to set against tax on dividend income and ACT where the dividends were from portfolio investments in both EU and non-EU companies and how those credits should be applied.
Henderson J also held that Prudential was entitled to recover compound interest on claims brought in years in which HMRC has on-going enquiries (open years), and not just claims in respect of closed periods. HMRC had conceded this point during the course of the hearing.