Prudential Assurance Co Ltd & Ors v Revenue & Customs Commissioners  EWHC 2811 (Ch) concerned the UK's former rules on the taxation of dividends received by insurance companies resident in the UK on shareholdings in foreign companies which were held as investments in their pension and life assurance business. The claimants alleged that UK legislation had contravened EU law, specifically the free movement of capital enshrined in Article 56 of the EC Treaty (now Article 63 of the Treaty of the Functioning of the European Union), by treating dividends received from foreign companies unfavourably in comparison to those received by companies resident in the UK.
The matter had been referred to the ECJ on a number of issues and returned to the High Court. In the interim, the Court of Appeal delivered its judgment in Test Claimants in the FII Group Litigation v Revenue and Customs Commissioners,  EWHC 2893 (Ch),  STC 254 (the FII Decision). This judgment was highly material to the issues in the present case and so the parties opted to re-open their hearing, with the claimants submitting that arguments should be heard and judgment delivered in the usual way and the Commissioners asserting that proceedings ought to be adjourned pending any further appeal of the FII Decision.
Mr Justice Henderson granted the Commissioners' application to adjourn the proceedings. His reasons were principally that it would be inappropriate to rule on the substantive merits of the claim because as a result of the FII Decision, most of the claims would be dismissed for reasons of procedure or limitation, rendering any such rulings unnecessary and obiter. Mr Justice Henderson stressed that the normal rules on precedent applied to proceedings brought under Group Litigation Orders, and rejected the claimants' suggestion that his ruling would be appropriate on the hypothetical basis that parts of the FII Decision would be overturned in due course. Furthermore, Mr Justice Henderson stated that the outstanding issues arising in the present case were very likely to be resolved by existing appeals of the FII Decision, together with references to the ECJ that may be made in the future.
The adjournment of this test case means that UK-resident insurance companies facing uncertainty over the treatment of their dividends under the previous UK taxation regime now face a further wait while existing test cases progress to the Supreme Court.