UK vs Royal Bank of Canada: International Tax Case
The Full Summary is published by The Academy of Tax Law:
Case Information:
Judgment Summary
This case examines whether payments received by the Royal Bank of Canada (RBC) under an oil exploration agreement were subject to UK taxation. The core issue concerns the interpretation of Article 6(2) of the UK/Canada Double Taxation Convention 1978, which governs the taxation of income derived from immovable property, including natural resources.
The case originates from Sulpetro Ltd, a Canadian corporation, which owned a subsidiary, Sulpetro (UK), licensed to explore and extract oil from the Buchan Field in the North Sea. In 1986, BP acquired Sulpetro’s rights under a sale and purchase agreement (SPA), agreeing to make contingent payments based on oil prices ("the Payments"). RBC, as Sulpetro’s creditor, later acquired the right to receive these Payments.
HMRC contended that these Payments fell under Article 6(2) of the UK/Canada Convention, allowing the UK to tax them. RBC challenged this, arguing that the Payments were not consideration for "the right to work" the Buchan Field and were outside the UK’s taxing jurisdiction.
The First-tier Tribunal and Upper Tribunal upheld HMRC’s position. However, the Court of Appeal reversed this, ruling that the Payments did not arise from a "right to work" within the meaning of Article 6(2). HMRC appealed to the Supreme Court.
The Supreme Court upheld the Court of Appeal’s decision, affirming that:
READ THE REST OF THE SUMMARY HERE (INCLUDING ALL THE POINTS BELOW):
Key Points of the Judgment
1. Background
2. Core Dispute
3. Court Findings
4. Outcome
Transfer Pricing Method Used
Major Issues or Areas of Contention
Was This Decision Expected or Controversial?
Significance for Multinationals
Significance for Revenue Services
Similar Cases for Review
This is a reminder that applications for our Postgraduate Programmes are now open for the March 2025 intake.
Postgraduate Programmes in Transfer Pricing:
APPLICATIONS NOW BEING ACCEPTED (Closes End of March 2025)
Postgraduate Programmes in International Taxation:
APPLICATIONS NOW BEING ACCEPTED (Closes End of March 2025)
Postgraduate Programmes in South African Tax Law:
APPLICATIONS NOW BEING ACCEPTED (Closes End of March 2025)
Have some questions about the programmes?
Please don't hesitate to contact our Education Consultant, Ben Ellis, at [email protected] or call us at +44(0)2080522710.