Cross-border loss relief
A long running case concerning cross-border loss relief claims in relation to losses incurred by Belgian and German subsidiaries of Marks & Spencer has almost been resolved.
The latest instalment of this case, although heard by the Special Commissioners, arose from an ECJ decisionin December 2005 which ruled substantially in favour of Marks & Spencer. The case was subsequently heard in both the High Court and Court of Appeal before leave of appeal to the House of Lords was refused. The case then reverted back to the Special Commissioners who had originally given a decision back in December 2002.
The remaining contentious issue was known as the “no-possibilities” test which basically meant Marks & Spencer must have exhausted all possibilities of using the losses in the country where they were incurred (i.e. Belgium and Germany) before group relieving them against UK generated profits.
The Special Commissioners decided that the appeals made prior to the ECJ were not valid group relief claims as they did not satisfy the “no-possibilities” test. However, claims made after the ECJ judgment (on 20 March 2007) were valid group relief claims which satisfied the “no-possibilities” test.
The Special Commissioners made this decision in principle and asked that the parties agree figures. The Appellant had supplied computations which HMRC had not yet decided if they would accept. If figures cannot be agreed, the matter will be referred back to this Tribunal for determination.