Sempra Metals Ltd v IRC

Sempra Metals Ltd v Inland Revenue Commissioners [2007]

UKHL 34 (http://www.bailii.org/uk/cases/UKHL/2007/34.html) is a
Sempra Metals Ltd v IRC
UK tax law case, concerning the availability of compound interest Court House of Lords
upon personal claims. The effect of the case, decided by a majority, Citation(s) [2007] UKHL 34 (http://
was to reverse the outcome of Westdeutsche Landesbank www.bailii.org/uk/case
Girozentrale v Islington LBC. However, the Supreme Court departed
s/UKHL/2007/34.html),
from this ruling in Prudential Assurance Co Ltd v Revenue and
[2008] AC 561
Customs Commissioners.
Keywords
Resulting trusts
Contents
Facts
Judgment
See also
Notes
References
External links

Facts
Sempra Metals paid advance corporation tax on its dividends, but the tax breached EU law. Sempra Metals
claimed the tax back, as it was paid under a mistake of law, and it demanded compound interest, the time
value of the money. The IRC argued the award should be based on simple interest, but if compound, the rate
should be the rate the Government could have borrowed at in the relevant period.

Judgment
The House of Lords held that there was an action for money paid under mistakes of law, Kleinwort v Lincoln
CC. There was also jurisdiction for giving compound interest. The restitutionary remedy was not like
damages, so the gain would need to be measured, not the loss to the claimant. The Revenue should therefore
give back its whole benefit. Simple interest would fall short of true value, so compound interest was proper.

Lord Hope, Lord Nicholls and Lord Walker held it was extremely difficult to quantify any benefit to the
revenue because it did not use the money, so resort to the convention rate of interest should be had.

Lord Scott and Lord Mance dissented, saying the claim had to reflect the actual benefit received.

See also
English trust law
Notes

References

External links

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This page was last edited on 4 October 2018, at 09:29 (UTC).

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