Compatibility with EU law of intra-group disposals

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 issue was 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 considered the 2014 disposal first. It decided that had JTIH been UK resident TCGA 1992 s 171 would have applied. But because JTIH was a Dutch company no relief was due so the provision breached the freedom of establishment. This restriction was justified for reasons of...