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27 April 2007 / Tim Crosley , Michael Walsh
Issue: 7270 / Categories: Features , Tax , Commercial
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This is not just group relief...

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How is the ECJ tackling discrimination in domestic tax systems? Tim Crosley and Michael Walsh report

On 22 February 2007 the Court of Appeal gave its ruling in the latest instalment of Marks & Spencer plc v Halsey (HM Inspector of Taxes) [2007] EWCA Civ 177, [2007] All ER (D) 232 (Feb), which has seen Marks & Spencer (M&S) litigating since 2002 for its right to claim group relief for the losses of foreign subsidiaries based in Europe.

In the UK, there is no consolidated system of taxation, meaning that each member of a group of UK companies is (as a starting point) taxed separately on its own profits. Recognising that this could be unfair where some parts of the group are doing well and some are not, the UK allows losses in one group company to be “surrendered” to another profitable group company, thus allowing the profitable company to use those losses to reduce the tax payable by it.

The rules are complex, but a basic point

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