Compatibility of UK law with EU freedoms

Gallaher a UK company was a wholly-owned subsidiary of JTIH a company resident in the Netherlands. In 2011 it sold intellectual property rights to JTISA a Swiss-resident company in the same group. In 2014 it disposed of shares in one of its subsidiaries to JTIH.

The appeal concerned the compatibility with EU law of UK tax legislation relating to intra-group disposals such as TCGA 1992 s 171 which allows tax relief for intra-group transfers between UK-resident companies but not for those involving group companies in other countries including EU states.

The First-tier Tribunal decided the imposition of an immediate tax charge in relation to the 2011 disposal was not contrary to EU law. However the imposition of an immediate tax charge in relation to the 2014 disposal was contrary to EU law but the relevant provisions of UK domestic legislation could...