<b>Tax News:</b> Pirelli lose on group income elections. By Nichola Ross Martin

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The House of Lords has found in favour of HMRC in a long running case in which Pirelli Cables attempted to reclaim ACT under double taxation conventions - Pirelli Cable Holding NV and others v Inland Revenue Commissioners [2006] UKHL 4.

The case centred on the application of two double taxation conventions which were primarily designed to avoid double taxation of distributable profits between the company and its shareholders. Pirelli had attempted to avoid payment of ACT by making a group income election under s.247 ICTA 1988 in respect of dividends paid by a UK subsidiary to its parent companies in the Netherlands and Italy.

The Lords decided that if a group of companies elected to avoid advance corporation tax by making a group income election it could not also be entitled to tax credits u...

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