Lehman Brothers International (Europe) (in administration) - Application regarding withholding tax on the payment of statutory interest - 5 May 2016

On 22 December 2015, the Joint Administrators of Lehman Brothers International (Europe) (in administration) (“LBIE”) issued an application to Court (the “Application”) for directions in relation to the application of withholding tax legislation to payments of statutory interest. Her Majesty’s Revenue and Customs (“HMRC”) was joined as the Respondent to the Application. 

The Application seeks the guidance of the Court in relation to whether the payment of statutory interest to creditors pursuant rule 2.88(7) of the Insolvency Rules 1986 is a payment of yearly interest for the purposes of section 874(1) of the Income Tax Act 2007 (“ITA 2007”), such that LBIE and/or the Joint Administrators may have an obligation to deduct a sum representing income tax pursuant to section 874(2) ITA 2007 from payments of statutory interest. 

The hearing of the Application took place before Mr Justice Hildyard on 28 and 29 April 2016. At the conclusion of the hearing, the Judge reserved his judgment. 

Copies of the Joint Administrators’ and HMRC’s skeleton arguments, and the daily transcripts of the hearing prepared by external transcribers engaged by the parties to the Application, can be found below.

• Skeleton argument of the Joint Administrators
• Skeleton argument of HMRC
• Daily Transcript – Thursday, 28 April 2016
• Daily Transcript – Friday, 29 April 2016

Please note that: 

• the transcripts are published in the form received from the transcriber (i.e. prior to review by any party to the Application and without corrections);
• the parties reserve the right to post amended versions of the transcript should they consider it necessary, but accept no responsibility for doing so; and
• the Joint administrators are posting such transcript solely for the convenience of interested third parties and neither they nor any other party to the Application makes any representation as to the accuracy of such transcript nor accepts any responsibility for any inaccuracies contained within it. 

Should you have any queries regarding this update, please contact LBIE’s Communications and Counterparty Management team at generalqueries@lbia-eu.com