ACT Class 1 – Benefits of a GLO?

Judgment - High Court (18 June 2008)

This is a decision concerning some of the benefits which attach to claimants who participate in group litigation orders as opposed to watching them from the sidelines. Of course there will often be time limitation issues which make it necessary for taxpayers to issue claims in advance of the resolution of the test case. That aside though, in principle, are participants in a GLO who might fund the test case for several years in no better or worse position to rely upon the decision reached in that test case than those who have awaited its determination before taking action?

This issue arose in the context of the ACT Class 1 cases. The DMG case, a test case in Class 1, determined that the time period for bringing claims arising from the payment of ACT where a group income election was denied to a cross border group could extend back to 1973 provided those payments had been made under a mistake and the claims were issued before 9 March 2007. At the conclusion of the DMG case in October 2006, a group of some 19 claimants who had participated in ACT Class 1 and helped fund the DMG case sought to rely upon that decision to settle their claims. The Revenue contended in response, however, that the claimants were unable to rely upon the DMG judgment for factual and procedural reasons.

The Court has concluded in favour of the taxpayer's argument that, provided there are sufficient basic details given of the nature of the claim, its enrolment in the GLO should prohibit HMRC from contending that it is not covered by the test case. Again while the claimants were required to show that factually their claims met the requirements of the DMG decision by using the GLO procedure this could be done simply and uncontroversially.

This is a helpful decision for taxpayers and limits the ability of HMRC to distinguish their claims from the test claims where they are enrolled in a GLO.

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