G C A International Ltd v Yates (Inspector of Taxes) ; Yates (Inspector of Taxes) v G C A International Ltd
| Jurisdiction | England & Wales |
| Judgment Date | 13 February 1991 |
| Date | 13 February 1991 |
| Court | Chancery Division |
Chancery Division
Before Mr Justice Scott
Corporation tax - double taxation relief - unilateral availability
Unilateral double taxation relief was available to a United Kingdom company in respect of a charge to tax imposed in Venezuela on 90 per cent of the total gross receipts from an international contract.
For the purposes of the relief provided for by section 498 of the Income and Corporation Taxes Act 1970, the Venezuelan charge "corresponded" to United Kingdom corporation tax. However, the amount of the credit available did not extend to the whole of the charge but only to that part that was imposed on the company's remuneration for operations actually carried out by it in Venezuela.
Mr Justice Scott so held in the Chancery Division in dismissing an appeal by the taxpayer company, G C A International Ltd, and a cross-appeal by the Crown from a determination of a special commissioner that gave credit for foreign tax paid by the company but limited it to the amount attributable to the income arising in Venezuela.
The taxpayer company, a United Kingdom company, contracted to carry out a rehabilitation study of three oil wells in Venezuela for a Venezuelan company. The terms of the contract allocated part of the remuneration to the work to be done in Venezuela and part to work in the United Kingdom.
Under Venezuelan law the taxpayer company had to pay tax in Venezuela at a flat rate on 90 per cent of the gross receipts payable under the contract.
There being no double taxation agreement with Venezuela, the taxpayer company claimed relief against United Kingdom corporation tax under the provisions of section 498 in respect of the total tax payable by it in Venezuela.
A tax inspector refused the claim on the ground that none of the Venezuelan tax paid satisfied the conditions in section 498(3) and (6).
Section 498 of the 1970 Act (now section 790 of the Income and Corporation Taxes Act 1988) makes provision for unilateral relief in the absence of double taxation arrangements by allowing the foreign tax as a credit against United Kingdom income or corporation tax.
Section 498 provides: "(3) Credit for tax paid under the law of the territory outside the United Kingdom and computed by reference to income arising in that territory shall be allowed against any United Kingdom income tax or corporation tax...
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Legal and General Assurance Society Ltd v R & C Commissioners
...of the Special Commissioner, in putting into effect the provisions of section 790(4) in the case of Yates v GCA International Ltd (1991) 64 TC 37, adopted the construction contended for by the Revenue and is authority for that construction. It is accepted that the two main issues in that ca......
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Bayfine UK Products and Bayfine UK v HM Revenue and Customs
...argued that had there been a Case I profit this arose entirely in the UK because it is UK source income. Yates v GCA International LtdTAX[1991] BTC 107 (which was not cited to us) is an example of a taxpayer whose income was taxed under Case I being entitled to unilateral relief for tax in ......
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Bayfine UK v HM Revenue and Customs
...test enunciated by Atkin LJ in FL Schmidt & Co v Greenwood [1921] 3 KB 193 and 203–4, and quoted by Scott J in Yates v GCA International [1991] STC 157 at 171: "Where do the operations take place from which the profits in substance arise?" He argues that on the basis of this test the profit......
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Legal & General Assurance Society Limited v David Vivian Thomas, SPC 00461
...and has, we understand, been the subject of dispute between taxpayers and the Revenue at least since Yates v GCA International Ltd (1991) 64 TC 37. We were shown by Mr Henderson an article by Mr David Oliver “Unilateral the Issues in Yates v GCA” [1993] BTR 201; the Chairman drew attention ......