Update – UK withholding tax application (the “Application”) – Court of Appeal Judgment – 20 December 2017

On 19 December 2017, the Court of Appeal handed down its judgment in respect of HMRC’s appeal against the first-instance decision of the Hon. Mr Justice Hildyard, following the hearing which took place before it on 31 October and 1 November 2017.  

Copies of the judgment and the Order can be found below:

• Court of Appeal Judgment handed down on 19 December 2017; and
• Court of Appeal Order dated 19 December 2017.

In summary, the Court of Appeal upheld HMRC’s appeal and held that payments of statutory interest pursuant to rule 14.23(7) of the Insolvency Rules 2016 (and formerly payable pursuant to rule 2.88(7) of the Insolvency Rules 1986) give rise to an obligation to withhold amounts representing income tax (subject to such exemptions or reliefs as may be available).  

The Court of Appeal refused to give permission to appeal from its decision. Any further application for permission to appeal to the Supreme Court would need to be made by 16 January 2018. The Joint Administrators are considering (including in light of any creditors’ views) whether they should apply for such permission to appeal. 

The Joint Administrators are considering the impact of the judgment and will issue an update early in the New Year as to whether they propose to seek permission to appeal and on guidance as to the consequences of the judgment.

Should you have any queries regarding this update please contact LBIE’s Communications and Counterparties management team at generalqueries@LBIA-eu.com.