Highland schemes seeks advice for tax recovery
UK - The Highland Council is seeking a provider of tax advisory service to help its £627.8m (€730.9m) local government pension scheme (LGPS) claim back withholding taxes on dividends from EU and EEA sources.
In the unaudited accounts for 2008/09, the Scottish local authority noted its pension fund had joined a group litigation in 2006/07 "to recover tax credits on overseas dividends and foreign income dividends. The estimated claim, gross of fees is £1.7m".
The claims follow the result of the Fokus Bank (Case E-1/04) ruling in December 2004, which said the withholding tax rules of certain member states were in breach of the free movement of capital principle of the EC Treaty.
In January, a case against the Dutch tax office led by Strathclyde pension fund on behalf of a number of UK pension schemes, was expected to lead to a refund of around €500m in withholding taxes, while Dutch pension funds brought a similar case against the French government in February. (See earlier IPE articles: Pension funds set to receive €500m in Dutch tax rebates; Taxing developments and French supreme court acts on pensions rebates)
Highland Council now appears to be pursuing the matter further with the search for "professional tax advisory services in connection with claims to be filed on behalf of the Council's pension und to recover withholding taxes suffered on EU/EEA source dividend income", otherwise known as 'Fokus Bank Claims'.
The Council added: "There is the potential for filing claims in the Netherlands, Germany, Italy, Spain, France, Austria, Denmark and Sweden. The current estimate of the maximum potential tax credit recoverable on behalf of The Highland Council Pension Fund is approximately £1.3m".
Meanwhile, figures from the draft accounts for the year to 31 March 2009 showed the value of the pension fund declined significantly over the 12 month period from £801.7m to £627.8m, as the scheme's return on investments was -23.2%.
The fund claimed a "key contributor" to the underperformance was the result of one of its global equity portfolios, which underperformed its benchmark by a "disappointing 8.4%", in relative terms, with a return of -30.1%, although fixed income investments also "fell short" over the year because of underperforming credit markets.
The closing date for tender submissions is 11 September 2009 and further information can be obtained from the council's procurement department.
Elsewhere, the trustees of the G4S Pension Scheme have appointed Wragge & Co as the legal advisers to its scheme valued at more than £1bn.
Wragge had previously advised the trustees of two constituent pension schemes of G4S, a security solutions group, before they were merged into the G4S Pension Scheme.
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