Adjustment to Net Asset Value

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 17 OF THE MARKET ABUSE REGULATION (EU) 596/2014

Announcement by BlackRock Latin American Investment Trust plc
 LEI: UK9OG5Q0CYUDFGRX4151

Adjustment to Net Asset Value of BlackRock Latin American Investment Trust plc

Summary

The Board of BlackRock Latin American Investment Trust plc (the “Company”) is pleased to announce a positive adjustment of £1,572,210, or 1.06%, to the net asset value (“NAV”) of the Company as at 7 July 2020 due to the recognition of an expected receipt of tax reclaims on foreign income.

Background

The Company’s investments mainly comprise shares issued by non-UK companies. Until 2009, any dividends paid to the Company by non-UK companies were subject to UK corporation tax, although credit could be given for any withholding tax suffered (in contrast to dividends paid by UK companies which were not subject to UK corporation tax). A number of cases challenging this difference in treatment, on the basis that it was illegal under European Union law, were commenced against the UK tax authorities (“HMRC”). The litigation most relevant to the Company was commenced in 2003 in the UK High Court, pursuant to the terms of a group litigation order (“GLO”). The Prudential Assurance Company Limited ultimately became the test case under the GLO.

The Company took a number of measures to protect its investors in relation to this matter, including filing tax returns for accounting periods to 31 December 2007, 31 December 2008 and 31 December 2009 (the “relevant accounting periods”) on the basis that foreign dividends were exempt from UK corporation tax, and commencing proceedings against HMRC in the UK High Court (which led to the Company enrolling in the GLO in 2013).  In 2018, the Company also filed related statutory claims for double tax relief.

On 25 July 2018, the UK Supreme Court handed down its judgment in the Prudential case, ruling that dividends on non-UK portfolio shareholdings were taxable but that credit should be given for the underlying foreign tax at the foreign nominal corporate income tax rate of the source country. Litigation is ongoing in relation to the validity of various procedural defences raised by HMRC which will be relevant to the Company’s ability to be able to succeed in its existing High Court claim.

The Company has, however, now received correspondence from HMRC accepting the entitlement of the Company to a repayment of UK corporation tax suffered in the relevant accounting periods in relation to dividends from non-UK companies. The Company now considers receipt of a repayment is sufficiently certain that it should make an accrual for accounting purposes to reflect such treatment. 

The corporation tax refund expected to be received by the Company following HMRC’s acceptance of the claims for the relevant accounting periods amounts to £1,084,224.

HMRC has also confirmed in this correspondence that the Company is entitled to receive a refund for corporation tax paid in subsequent periods ending 31 December 2014, 31 December 2015 and 31 December 2016 amounting to £487,986, which was paid on a protective basis in case the Company was not able to claim the double tax relief described above.

The accounting rules applicable to the Company determine that an uncertain tax receivable shall be accrued in the NAV of the Company when, in the view of the Board, the successful future receipt of such receivable is virtually certain. The Board’s current assessment is that the future receipt of the tax reclaims described above is virtually certain and so meets this threshold.

Consequently, the aggregate amount of £1,572,210 has been accrued in the Company’s NAV as at 7 July 2020 (released to the market on 8 July 2020) and treated as  a credit to revenue.

The person responsible for making this announcement is Sarah Beynsberger, Company Secretary.

For further information, please contact :

Melissa Gallagher
Managing Director
BlackRock Investment Management (UK) Limited

Tel: [phone]

Rob Naylor
Cenkos Securities plc

Tel: [phone]