Gallaher Limited v The Commissioners for Her Majesty's Revenue & Customs, TC 07055
| Jurisdiction | UK Non-devolved |
| Judge | Tony BEARE |
| Judgment Date | 25 March 2019 |
| Neutral Citation | [2019] UKFTT 0207 (TC) |
| Respondent | The Commissioners for Her Majesty's Revenue & Customs |
| Appellant | Gallaher Limited |
| Reference | TC 07055 |
| Court | First-tier Tribunal (Tax Chamber) |
1
[2019] UKFTT 0207 (TC)
TC07055
Appeal number:TC/2018/01443; TC/2018/05432
CORPORATION TAX – whether the UK legislation in relation to intra-
group disposals is compliant with EU law – consideration of the applicable
freedoms, whether or not the provisions in question restrict a freedom,
whether or not the provisions can be justified by the lack of objective
comparability of situation or by reference to the balanced allocation of
taxing powers between Member States, the proportionality of the restriction,
the doctrines of conforming interpretation and disapplication –
consideration of movements of capital – in relation to the disposal of shares
to the Dutch resident parent company, disapplication of the restriction
limiting no gain/no loss disposals to transferees within the UK tax net – in
relation to the disposal of intangible assets to the Swiss resident sister
company, UK legislation compatible with EU law
FIRST-TIER TRIBUNAL
TAX CHAMBER
GALLAHER LIMITED
Appellant
- and -
THE COMMISSIONERS FOR HER MAJESTY’S
Respondents
REVENUE & CUSTOMS
TRIBUNAL:
JUDGE TONY BEARE
Sitting in public at Taylor House, 88 Rosebery Avenue, London EC1R 4QU on
29, 30 and 31 January 2019 and 1 February 2019
Mr Philip Baker QC and Mr Imran Afzal, instructed by Freshfields Bruckhaus
Deringer LLP, for the Appellant
Mr Rupert Baldry QC and Mr Ben Elliott, instructed by the General Counsel
and Solicitor to HM Revenue and Customs, for the Respondents
2
DECISION
1. INDEX
Glossary of cases
4
Introduction
7
The relevant facts
7
The relevant issues
10
The relevant law
11
The relevant provisions of the UK
domestic legislation
11
The relevant provisions of EU law
17
Discussion
28
General overview
28
Questions to be addressed in relation to
each Disposal
35
Summary of conclusions
36
The 2014 Disposal
37
Which freedoms?
37
Is there a restriction?
40
Can the restriction be justified by the lack
of objective comparability?
41
Can the restriction be justified by the
need for the balanced allocation of taxing
powers?
45
The exit tax cases
45
NGI
45
Portugal 2
47
Denmark
48
DMC
48
3
Germany
49
LabTec
50
Panayi
51
A Oy
52
Main points arising from the exit tax
cases
52
Is the restriction proportionate?
55
How should the national court respond in
the case of a restriction on an EU
freedom which is disproportionate?
58
The doctrine of conforming interpretation
59
The submissions of the parties in relation
to conforming interpretation
63
Conclusion in relation to conforming
interpretation
66
Which party’s conforming interpretation?
66
The role of the UK courts
76
Disapplication
83
Conclusion in relation to the 2014
Disposal
87
The 2011 Disposal
88
Which freedoms?
88
Freedom to move capital
88
Freedom of establishment
97
Is there a restriction?
97
Thin Cap
102
Conclusion
114
Right to appeal
114
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