12 Eur. L. Rep. 1 (2008)

handle is hein.journals/eurlawreo12 and id is 1 raw text is: [2008] EuLR

House of Lords
Lord Hope of Craighead, Lord Nicholls of Birkenhead, Lord Scott of Foscote,
B                                   Lord Walker of Gestingthorpe, Lord Mance
[2007] UKHL 34
18 July 2007
Restitution - Tax paid by mistake - Unjust enrichment - Whether restitutionary
award of money value should be made on basis of compound or simple interest
The Commissioners of the Inland Revenue (the Revenue) (the appellants)
appealed against the Court of Appeal's decision ([2005] EuLR 773) to uphold an
earlier ruling of the High Court ([2004] EuLR 939) which had held that the UK
company, Sempra Metals Ltd (Sempra) (the respondent), an enterprise
D   specialising in non-ferrous metals, precious metals and plastics, but whose
parent company was located in Germany, was entitled to compensation or
restitution in respect of premature payments of advance corporation tax (ACT)
and that this compensation should be on the basis of compound interest. The
lower courts had taken the view that since these payments had been made by
mistake, and in breach of Community law, the Revenue had been unjustly
enriched as a result of these payments and Sempra was therefore entitled to
E  restitution to be calculated on the basis of compound interest.
Contesting this, the Revenue argued that any compensation payment should
be calculated on the basis of simple interest only. Alternatively, the Revenue
contended that if compound interest were to be used then the conventional rate
should be calculated by reference to the rate at which the Government would
have been able to borrow money during the same time period.
F  Held, dismissing the appeal
1. It could now be taken as settled law that a cause of action arose at common
law in respect of money paid under a mistake of law. Moreover, the time had
now come to recognise that the court had jurisdiction at common law to
award compound interest where the claimant sought a restitutionary remedy
for the time value of money paid by mistake. See post pp. 13F-14C.

C 2008 Hart Publishing Ltd.
CCC 1091-3297/08/010001 93

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