Royal Bank of Canada (Respondent) v Commissioners for His Majesty's Revenue and Customs (Appellant)
Case ID: UKSC 2023/0101
Case summary
Issues
Is UK corporation tax payable on certain sums received by the respondent during its accounting periods ended 31 October 2008 to 2015 inclusive?
Facts
Royal Bank of Canada ("RBC") (the respondent) is a bank based in Canada. In the early 1980s, RBC advanced a loan of $450 million Canadian Dollars to Sulpetro Limited ("Sulpetro"), a Canadian oil company. Sulpetro (UK) Limited ("SUKL"), a wholly owned subsidiary of Sulpetro, was granted a licence ("the Licence") by the UK government to explore and exploit the Buchan field, an oil field in the North Sea. SUKL and Sulpetro entered into an agreement which provided that Sulpetro would incur all the development and exploitation costs in relation to the Buchan field and, in return, it would receive the Licence holder's share of the oil recovered.
In 1986 Sulpetro sold its interest in the Buchan field to BP Petroleum Development Limited ("BP"). As part of the sale agreement, Sulpetro transferred to BP 100% of the issued share capital of SUKL, as well as all beneficial rights and interests it held in the Licence. In return, BP agreed to, amongst other things, make a payment of a royalty to Sulpetro in respect of all oil production from the Buchan field ("the Payments"). In broad terms, the Payments were payable when the market price per barrel of oil exceeded USD $20.
In 1993 Sulpetro was in financial difficulties and went into receivership. RBC, as a creditor in the receivership, was assigned by court order the right to receive the Payments. BP subsequently sold its interest in the Buchan field to Taslisman Energy Inc, which assumed the obligation to make the Payments.
HMRC (the appellant) became aware of the Payments in 2013 and determined that they were chargeable to UK corporation tax. It subsequently issued assessments and closure notices to RBC for the accounting periods 2008-2015 on the basis that RBC was liable to pay corporation tax on the Payments. RBC unsuccessfully appealed against the assessments and closure notices to the First-tier Tribunal. The Upper Tribunal dismissed RBC's further appeal. RBC appealed to the Court of Appeal, which allowed its appeal. HMRC now appeals to the Supreme Court.
Judgment appealed
Parties
Appellant(s)
Commissioners for His Majesty's Revenue and Customs
Respondent(s)
Royal Bank of Canada
Appeal
Justices
Lord Lloyd-Jones, Lord Briggs, Lord Hamblen, Lord Leggatt, Lady Rose
Hearing start date
4 November 2024
Hearing finish date
5 November 2024