Commissioners for His Majesty Revenue and Customs (Appellant) v Evonik UK Holdings Limited (Respondent)

Case summary

Case ID

UKSC/2026/0003

Parties

Appellant(s)

HM Revenue and Customs

Respondent(s)

Evonik UK Holdings Limited

Issue

If a litigant pays a sum of money owed under a court order, and the court order is subsequently set aside, is the litigant entitled to interest on the sum paid? In this claim, should the respondent therefore have paid interest on the money it held from 2016-2024?

Facts

This appeal arises with respect to a particular claim within long-running proceedings known as the Franked Investment Income (“FII”) Group Litigation. The FII Group Litigation Order (“FII GLO”) involves a series of legal challenges regarding the compatibility of a UK corporate taxation regime with principles of EU law and HMRC’s liability to a taxpayer who has overpaid tax on the basis of incompatible UK legislation. Evonik, the respondent in this appeal, is a Test Claimant within the FII GLO. The Test Claimants have succeeded in demonstrating that when they made certain tax payments to HMRC, they did so in the mistaken belief that the UK tax regime then applicable to overseas dividends was compatible with the provisions of the various treaties establishing the European Union. The respondent is therefore, in principle, entitled to recover from the appellant amounts that they paid under that mistake of law. By March 2014, the sums had been repaid to Evonik. Evonik brought an appeal for the interest on those sums. On 22 January 2016, Henderson J granted summary judgment (i.e. decided without a trial) to Evonik in respect of compound interest from the date ACT was paid to the date it was repaid. The judge applied the law in Sempra Metals Ltd v Inland Revenue Comrs (formerly Metallgesellschaft Ltd) [2007] UKHL 34; [2008] 1 AC 561 (“Sempra”). The judge did not grant compound interest between that date and date of judgment. On 23 March 2016 HMRC paid the sums owed. HMRC appealed. The Supreme Court then departed from Sempra in Prudential Assurance Company Ltd v Commissioners for Her Majesty's Revenue and Customs [2018] UKSC 39 (“Prudential”). The Supreme Court subsequently allowed HMRC’s appeal insofar as it related to Sempra, and on the issue of whether interest should be simple or compound. In an order on 13 May 2024, the Supreme Court set aside Henderson J’s orders to that extent. HMRC now claims it is entitled to the interest on the sum paid from 2016 until the Supreme Court’s order in 2024. In a judgment given orally on 18 June 2024, Richards J rejected HMRC’s submission that it was entitled to interest as of right. After considering further written submissions, on 1 August 2024 Richards J held HMRC was not entitled to interest on the sum paid from 2016 until the Supreme Court’s order in 2024. On 25 March 2025, Richards J made an order giving judgment for Evonik. HMRC appealed. On 7 November 2025, the Court of Appeal dismissed its appeal against the 18 June 2024 judgment, 1 August 2024 judgment, and 25 March 2025 order. The judge’s decision was largely upheld. HMRC now appeals to the Supreme Court.

Date of issue

6 January 2026

Case origin

PTA

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