HMRC v Royal Bank of Canada

In HMRC v Royal Bank of Canada [2025] UKSC 2 (12 February) the Supreme Court (SC) dismissed HMRC’s appeal and upheld the CA’s decision that Article 6 of the UK/Canada double tax treaty (DTT) (immovable property) did not apply to the payments. The payments made by BP (and later by Talisman) to Royal Bank of Canada (RBC) could not be taxed in the UK because they did not fall within the extended meaning of immovable property even though they were calculated by reference to the volume and price of the oil extracted by its UK subsidiary.

RBC had loaned money to Sulpetro (S) a Canadian company to fund oil exploration in the UK continental shelf. Under an agreement the illustrative agreement S provided funding and expertise to its wholly-owned UK...