Marks and Spencer Plc v Revenue & Customs [2009] UKFTT 231 (TC) (24 August 2009)

Marks and Spencer Plc v Revenue & Customs [2009] UKFTT 231 (TC) (24 August 2009)

Where the 'no-possibilities' test is satisfied, group relief should be given for losses of non-resident subsidiaries as computed under UK tax rules, accepting differences in timing and computation, and not restricting relief to the lower of local and UK losses for each year. Denying relief due to timing differences constitutes an unjustified restriction on freedom of establishment under Article 43 EC.

Citation
[2009] UKFTT 231 (TC)
Parties
Appellant: Marks and Spencer Plc; Respondents: The Commissioners for Her Majesty's Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
24 August 2009
Procedural Posture
Tax Appeal / Decision on Quantification of Group Relief Losses Following Earlier Substantive Decision, With Previous Decision Under Appeal
Outcome
Appeal allowed in part; group relief to be computed per Method E as set out in the Tribunal's decision.
Legal Topics
Group Relief, Corporation Tax, Cross Border Loss Relief, Freedom of Establishment (eu)
Tax Law European Union Law Group Relief Corporation Tax Cross Border Loss Relief Freedom of Establishment (eu)

Case Brief

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Parties

Marks and Spencer Plc

Appellant

The Commissioners for Her Majesty's Revenue and Customs

Respondents

Procedural Posture

Tax Appeal / Decision on Quantification of Group Relief Losses Following Earlier Substantive Decision, With Previous Decision Under Appeal

Legal Issues

  1. 1 How should losses of non-resident subsidiaries be quantified for group relief under UK law in light of ECJ jurisprudence?
  2. 2 Does the timing and computation difference between local and UK tax rules affect the amount of group relief available?
  3. 3 Is it lawful to restrict group relief to the lower of local and UK computed losses for each year?

Ratio Decidendi

Where the 'no-possibilities' test is satisfied, group relief should be given for losses of non-resident subsidiaries as computed under UK tax rules, accepting differences in timing and computation, and not restricting relief to the lower of local and UK losses for each year. Denying relief due to timing differences constitutes an unjustified restriction on freedom of establishment under Article 43 EC.

Court Disposition

Appeal allowed in part; group relief to be computed per Method E as set out in the Tribunal's decision.

Orders

  • Previous decision corrected under rule 37 to dismiss claim for MSB for period ended 31 March 2000.
  • No order for costs due to lack of jurisdiction.