Commentary

A2.206 Significant UK Court of Justice and UK Court cases

Administration and compliance

A2.206 Significant UK Court of Justice and UK Court cases

A2.206 Significant UK Court of Justice and UK Court cases

Outlined below are some significant Court of Justice cases and UK Court cases which considered UK tax provisions.

Losses

ICI v Colmer (C-264/96)

This case1 involved a claim to consortium relief by ICI, which at the time was not available where more than half of a consortium member's business consisted of holding shares in non-UK resident subsidiaries.

The Court of Justice held that the UK group relief rules at the time imposed a restriction on the right of UK companies to establish subsidiaries in other Member States of the European Union contrary to EU law.

As a result of the Court of Justice decision, the UK group and consortium relief rules were changed such that:

  1.  

    •     for group relief purposes a group exists broadly where one company owns 75% of the other or a third company (wherever resident) owns 75% of both of them

  2.  

    •     for consortium relief purposes the UK residency requirement was removed

These changes went beyond those strictly required by the Court of Justice decision and ensure that these other provisions were compliant with EU law.

Marks & Spencer plc2 (C-446/03)

In this case, Marks and Spencer plc claimed group relief for losses arising in its European subsidiaries, as illustrated in Diagram 1. At the time, UK law did not allow a UK company to claim losses from a non-resident company except where the non-resident carried on a trade in the UK through a permanent establishment.

The Court of Justice held that the

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