AXA Sun Life PLC & Ors v Commissioners Of Inland Revenue & Anor

A determination of a group litigation order issue ordinarily binds all parties on the group register. Under CPR r 19.23, however, the court may exceptionally order otherwise where applying the test-case determination to an unresolved claim would require the court to apply a rule now known to be erroneous, and justice so requires.

A claimant seeking restitution must plead the material facts constituting each money claim. A claim to recover a payment cannot be pleaded before that payment has been made. A pleading directed to tax charged on foreign dividends in the year of receipt does not, without fair notice, encompass a later-year restitution claim arising from an inability to carry forward unused double-taxation relief.

The claimants brought EU-law restitution claims under the CFC and Dividend Group Litigation Order concerning the former corporation-tax and advance-corporation-tax regimes. AXAIUK challenged tax said to have been paid because unused double-taxation-relief credits could not be carried forward. GREA claimed interest in respect of unlawfully levied ACT which had been set off against lawful corporation tax before its claim.

Richards J held for HMRC on limitation and set-off, but held that AXAIUK had pleaded its unused-DTR claims. Both sides appealed from [2023] EWHC 944 (Ch). The central questions were the binding effect of the Prudential test-case decisions under the GLO, and whether AXAIUK's 2003 or 2009 pleadings included the later restitution claims now advanced.

1. AXA's appeals were dismissed and HMRC's cross-appeal was allowed. The Limitation Issue had not been conclusively determined for all GLO claimants by the Prudential proceedings. Henderson J had not decided a common date when the relevant mistake was, or could reasonably have been, discovered. His declaration that the particular Prudential claims were in time was fact-specific. The limitation question must therefore be determined under the law stated in [2020] UKSC 47.

2. The Set-off Issue had been determined against HMRC as a GLO issue in Prudential. The Supreme Court had not reversed that determination because HMRC's concession meant that category-a utilised ACT was not before it for decision. Nevertheless, CPR r 19.23(1)(a) permitted the court to order otherwise. That exceptional course was justified because later binding authority established that the restitutionary basis of the earlier determination was wrong, GREA's unresolved claim would otherwise be decided under law known to be erroneous, and there was no rational distinction from the other categories of unlawful ACT. The ordinary expectation remains that GLO determinations bind registered parties.

3. The court applied [2021] UKSC 31 and the CJEU's reasoning in Salinen. Tax actually paid in a later year because domestic law prevented unused DTR credits from being carried forward is recoverable in restitution, subject to limitation. That proposition did not resolve whether AXAIUK had pleaded such claims.

4. A restitutionary money claim accrues when the relevant payment is made. The claimant must plead that payment and the other material facts establishing enrichment, at its expense, and an unjust factor. Accordingly, AXAIUK could not in 2003 or 2009 have pleaded claims to recover tax paid only in 2017 and 2018. References to monies liable to be paid could support, at most, declaratory relief; they did not plead completed money claims.

5. The 1996–1999 claims had also not been pleaded. Read fairly, the pleadings sought recovery of tax immediately charged on foreign dividends under the impugned provisions. They gave no fair notice of a distinct claim for later-year tax caused by the inability to carry forward unused DTR. Since neither group of claims had been made before 1 April 2010, they were precluded by paragraph 51(6) of Schedule 18 to the Finance Act 1998. The income-tax set-off sub-issue did not arise and was left undecided.

• Court of Appeal (Civil Division): The claimants' appeals on limitation and set-off were dismissed. HMRC's appeal on the pleading issue was allowed: [2024] EWCA Civ 1430 .
• High Court, Chancery Division, Revenue List: Richards J decided limitation and set-off for HMRC, and the pleading issue for AXAIUK: [2023] EWHC 944 (Ch) .