ScottishPower (SCPL) Limited and others (Respondents) v Commissioners for His Majesty’s Revenue and Customs (Appellant)

Case summary

Case ID

UKSC/2025/0047

Parties

Appellant(s)

THE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMS

Respondent(s)

(1) SCOTTISHPOWER (SCPL) LIMITED; (2) SCOTTISHPOWER RENEWABLES (UK) LIMITED; (3) SCOTTISHPOWER (DCL) LIMITED; (4) SCOTTISHPOWER ENERGY RETAIL LIMITED

Issue

Does the rule preventing the deduction of penalty payments for the purpose of calculating taxable profits encompass payments made to consumers/consumer organisations in settlement of regulatory investigations?

Facts

ScottishPower supply and generate electricity and gas. Accordingly, they are regulated by the Gas and Electricity Markets Authority (“GEMA”), but the day-to-day work of GEMA is carried out by the Office of Gas and Electricity Markets (known as “Ofgem”). Between October 2013 and April 2016 ScottishPower entered into various agreements with GEMA to settle investigations by Ofgem into matters such as mis-selling, complaints handling, and costs transparency. Consequently, ScottishPower made payments to consumers and consumer organisations totalling roughly £28 million (in addition to paying nominal penalties). HMRC maintains that this $28 million cannot be deducted from ScottishPower’s profits for tax purposes. ScottishPower disagrees. The First-Tier Tribunal (“FTT”) agreed with HMRC save for one particular element of the payments. On appeal, the Upper Tribunal (“UT”) sided wholly with HMRC. The Court of Appeal (“CA”) disagreed and sided with ScottishPower. HMRC now appeals to the Supreme Court.

Date of issue

18 March 2025

Case origin

PTA

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