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)

The Tribunal held that the correct approach is to allow group relief for losses as computed under UK tax rules (Method E), not limited to the lower of UK or foreign losses for each year, as restricting relief to the lower amount would unjustifiably hinder the freedom of establishment under Article 43 EC. Timing and computational differences between UK and local rules are a necessary consequence of the ECJ decision and must be accepted.

Citation
[2009] UKFTT 231
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 / Post Initial Decision; Quantification of Losses for Group Relief Following Earlier Substantive Ruling, With Some Issues Under Appeal
Outcome
Appeal allowed in part; group relief to be calculated on UK tax computation basis (Method E) as set out in the attached figures; no order as to costs.
Legal Topics
Group Relief, Cross Border Loss Relief, Freedom of Establishment, Quantification of Tax Losses, Application of ECJ Decisions
Tax Law European Union Law Group Relief Cross Border Loss Relief Freedom of Establishment Quantification of Tax Losses Application of ECJ Decisions

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Parties

Marks and Spencer Plc

Appellant

The Commissioners for Her Majesty's Revenue and Customs

Respondents

Procedural Posture

Tax Appeal / Post Initial Decision; Quantification of Losses for Group Relief Following Earlier Substantive Ruling, With Some Issues Under Appeal

Legal Issues

  1. 1 How to quantify losses for group relief in cross-border situations under EU law
  2. 2 Whether UK or local (foreign) tax computation rules should determine the amount of losses eligible for group relief
  3. 3 Whether only the lower of UK or foreign losses is allowable for group relief

Ratio Decidendi

The Tribunal held that the correct approach is to allow group relief for losses as computed under UK tax rules (Method E), not limited to the lower of UK or foreign losses for each year, as restricting relief to the lower amount would unjustifiably hinder the freedom of establishment under Article 43 EC. Timing and computational differences between UK and local rules are a necessary consequence of the ECJ decision and must be accepted.

Court Disposition

Appeal allowed in part; group relief to be calculated on UK tax computation basis (Method E) as set out in the attached figures; no order as to costs.

Orders

  • Group relief for losses to be allowed as computed under UK tax rules (Method E) for the relevant periods.
  • No order for costs due to lack of jurisdiction.