Action thrown out

09 February 2015

Issue: 4488 / Categories: Tax cases , Companies , Europe , International

European Commission v UK (C-172/13), Court of Justice of the European Union

The UK amended legislation to allow cross-border group relief after the judgment in Marks & Spencer v Halsey (C-446/03) [2006] STC 237. The provisions were later rewritten as CTA 2010 s 111 to s 128.

The European Commission (EC) brought an action against the UK on the ground the legislation made it virtually impossible for a resident parent company to obtain relief and did not comply with the Marks & Spencer ruling.

The Court of Justice of the European Union said there was nothing to support the EC’s assertion that the UK rules required a non-resident subsidiary to be put into liquidation before the end of the accounting period in which losses were sustained to allow its resident parent company to be able to obtain cross-border group relief.

The UK confirmed it was “possible to show that losses sustained by a non-resident subsidiary may be characterised as definitive...

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