Group relief loss relief was not available

The taxpayers were UK resident members of a group company whose ultimate parent was based in the Netherlands. They claimed consortium relief for the years ending 31 December 2007 2008 and 2009 against losses by the UK permanent establishment of one of the Dutch group companies. HMRC refused the claims on the basis that the profits were available to be offset against non-UK profits – indeed some of the losses had been offset against Dutch profits.

The taxpayers’ appealed saying that TA 1988 s 403D(1)(c) breached the EU principle of freedom of establishment in a manner that was not justifiable or proportionate.

In essence they relied on the Court of Justice of the EU decision in CRC v Philips Electronics UK Ltd (Case C-18/11) [2013] STC 41 where it held that s 403D(1)(c) imposed a restriction on freedom of establishment which could not be...