Tax Treaty Case Law around the Globe 2015

S. 15United Kingdom: George Anson vs. HMRC

The case relates to a hybrid entity, its qualification and the entitlement of participators to a foreign tax credit. It was presented in Vienna in April 2015 at the conference which preceded this book, and at which time the decision of the UK Supreme Court was still pending. The judgment was subsequently released on 1 July 2015.

The facts are very straightforward. It concerned an individual - Mr Anson - who was making a claim to foreign tax credit in the United Kingdom. He was a member of a Delaware LLC, and he received his share of the profits of the LLC. This was a hybrid situation because the United States treated the LLC as transparent, saw Mr Anson as receiving the profits, and taxed him at 45 %. However, he was resident in the United Kingdom and the United Kingdom saw the LLC as opaque, and treated him as receiving a separate source of income distributions from the LLC. The United Kingdom taxed the profits distributed to him at 22 % and refused him any credit for the US tax. The overall result was that he had a tax liability of approximately 57 %, higher than either of the national tax rates.

Mr Anson was claiming a foreign tax credit and, i...