HM Revenue and Customs v Marks and Spencer Plc: CA 14 Oct 2011

The taxpayers claimed relief for losses incurred within their European subsidiaries. The claim having been referred to the ECJ, Moses LJ summarised the issues outstanding: ‘(i) Is the test that the ECJ established to identify those circumstances in which it would be unlawful to preclude cross-border relief for losses, the ‘no possibilities’ test, to be applied (as the Revenue contend) at the end of the accounting period in which the losses crystallised rather than (as MandS contends) the date of claim? This question involves deciding whether the Court of Appeal in the first appeal reached a binding decision on that issue and whether it remains binding on this court in light of subsequent decisions of the ECJ.
(ii) Can sequential / cumulative claims be made (as MandS contends) by the same company for the same losses of the same surrendering company in respect of the same accounting period? The Revenue assert that that is not a question decided by the Court of Appeal and is precluded both by UK fiscal rules and by the underlying jurisprudence of the ECJ.
(iii) If a surrendering company has some losses which it has or can utilise and others which it cannot, does the no possibilities test (as the Revenue contend) preclude transfer of that proportion of the losses which it has no possibility of using?
(iv) Does the principle of effectiveness require MandS to be allowed to make fresh ‘pay and file’ claims now that the ECJ has identified the circumstances in which losses may be transferred cross-border, when at the time MandS made those claims there was no means of foreseeing the test established by the court?
(v) What is the correct method of calculating the losses available to be transferred?’
Held: The Court efused HMRC’s appeal on the first, second, third and fifth issues. It refused MandS’s appeal on the fourth issue
Lloyd, Moses, Etherton LJJ
[2011] EWCA Civ 1156, [2011] STI 2843, [2011] BTC 589, [2012] STC 231, [2011] NPC 103
England and Wales
At FTTTxMarks and Spencer plc v Revenue and Customs FTTTx 2-Apr-2009
FTTTx EUROPEAN LAW – group relief for losses of non-resident subsidiaries – whether there are no possibilities for those losses to be taken into account at the date of the group relief claim – no at the date of . .
Appeal fromMarks and Spencer Plc v HM Revenue and Customs UTTC 21-Jun-2010
UTTC EUROPEAN LAW – group relief for losses of non-resident subsidiaries – whether there are no possibilities for those losses to be taken into account at the date of the group relief claim – date of valid claim . .
See AlsoMarks and Spencer Plc v Halsey (Inspector of Taxes) 2003
Marks and Spencer Plc appealed against the refusal of group relief, on the ground that the statutory limitations on the territorial scope of group relief were incompatible with, and overridden by, Community law. The Special Commissioners dismissed . .
At ECJMarks and Spencer v David Halsey (Inspector of Taxes) ECJ 13-Dec-2005
ECJ Articles 43 EC and 48 EC – Corporation tax – Groups of companies – Tax relief – Profits of parent companies – Deduction of losses incurred by a resident subsidiary- Allowed – Deduction of losses incurred in . .
See AlsoMarks and Spencer plc v Halsey (Inspector of Taxes) ChD 10-Apr-2006
The court considered the implementation of the ECJ decision between the parties.
Held: The matter was to be remitted to the Special Commissioners. The ‘no possibilities’ test referred to in the ECJ’s judgment required an analysis of the . .
See AlsoHalsey (HM Inspector of Taxes) v Marks and Spencer Plc CA 20-Feb-2007
The inspector appealed against a decision granting group relief to the taxpayer a UK resident company for losses by a group company in another European state.
Held: The appeal was denied. To refuse group relief in these circumstances would be . .

Cited by:
Appeal fromRevenue and Customs v Marks and Spencer Plc SC 22-May-2013
The company wished to assign losses in its European subsidiaries against its profits. Since the losses were first claimed, the subsidiaries had gone into insolvent liquidation.
Held: Lord Hope said: ‘I would answer the first issue by rejecting . .
At CARevenue and Customs v Marks and Spencer Plc SC 19-Feb-2014
For the purposes of corporation tax, MandS claimed group relief in respect of losses sustained by two of their subsidiaries, resident in Germany and in Belgium. Lord Hope observed that the claims were originally made and refused by HMRC over ten . .

These lists may be incomplete.
Updated: 16 March 2021; Ref: scu.445635