Halsey (HM Inspector of Taxes) v Marks & Spencer Plc

Halsey (HM Inspector of Taxes) v Marks & Spencer Plc

The relevant time for satisfying the 'no possibilities' test is when the group relief claim is made, not at the end of the accounting period in which the losses accrued. The test must be applied to the objective facts of the company's situation at that time, considering whether there is no real possibility for the losses to be used in the state of residence. The resident company requirement in group relief is not automatically disapplied unless the paragraph 55 conditions are fulfilled.

Parties
Appellant and Respondent to Cross Appeal: HALSEY (HM Inspector of Taxes); Respondent and Appellant to Cross Appeal: MARKS & SPENCER PLC
Jurisdiction
England and Wales
Judgment Date
20 February 2007
Procedural Posture
Civil Appeal / Court of Appeal Judgment on Appeal and Cross Appeal From High Court
Outcome
Revenue's appeal dismissed; M&S appeal allowed in part; no further reference to the Court of Justice.
Legal Topics
Group Relief, Cross Border Loss Relief, Freedom of Establishment, Interpretation of EC Treaty Articles 43 and 48, Principle of Effectiveness
Tax Law European Union Law Group Relief Cross Border Loss Relief Freedom of Establishment Interpretation of EC Treaty Articles 43 and 48 Principle of Effectiveness

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Parties

HALSEY (HM Inspector of Taxes)

Appellant and Respondent to Cross Appeal

MARKS & SPENCER PLC

Respondent and Appellant to Cross Appeal

Procedural Posture

Civil Appeal / Court of Appeal Judgment on Appeal and Cross Appeal From High Court

Legal Issues

  1. 1 Whether UK group relief provisions restricting cross-border loss relief breach Articles 43 and 48 EC Treaty
  2. 2 At what time must the 'no possibilities' test be satisfied for cross-border group relief claims
  3. 3 How the 'no possibilities' test should be interpreted and applied

Ratio Decidendi

The relevant time for satisfying the 'no possibilities' test is when the group relief claim is made, not at the end of the accounting period in which the losses accrued. The test must be applied to the objective facts of the company's situation at that time, considering whether there is no real possibility for the losses to be used in the state of residence. The resident company requirement in group relief is not automatically disapplied unless the paragraph 55 conditions are fulfilled.

Court Disposition

Revenue's appeal dismissed; M&S appeal allowed in part; no further reference to the Court of Justice.

Orders

  • Order of 11 April 2006 varied to delete the words 'to determine it in the light of the judgment of the High Court' from paragraph 2.
  • Appeal remitted to the special commissioners for determination in accordance with the Court of Appeal's judgment.