Residence is irrelevant

The taxpayer company and FMCL were resident in the UK and owned by FMC which was resident in the USA.

The taxpayer claimed group relief under Double Taxation Relief (Taxes on Income) (The United States of America) Order 1980 SI 1980/568 in respect of trading losses made by FMCL.

HMRC refused on the basis the three companies could not constitute a relevant group because FMC was not resident in the UK.

FCE said the department's claim was discriminatory on the ground that relief would have been allowed had FMC been a UK resident.

Both the First-tier Tribunal and Upper Tribunal (Tax and Chancery Chamber) found for the taxpayer.

The Court of Appeal said it was irrelevant whether the American parent was subject to UK corporation tax or not in relation to two UK resident companies being sufficiently connected to each other so as to form a...