Marks & Spencer (M&S) should be entitled to claim group relief on the losses sustained by its subsidiaries in Germany and Belgium, the High Court ruled this week, as the government is already taking steps to minimise the impact of the EU ruling in the case.

The judgment follows a ruling last December where the European court of Justice (ECJ) found that UK VAT legislation, which prevented a company claiming group relief in respect of the losses incurred by subsidiaries in other EU countries, was contrary to EU law.

HM Treasury subsequently introduced draft legislation to comply with the ruling, but Guy Brannan, head of tax at Linklaters, said that there is still room for challenge under EU law, as the proposed legislation includes restrictions which are not in the ECJ's judgment.

According to Brannan, a company seeking to benefit from group relief would be subject to further constraints, which may be regarded as contrary to the findings in M&S.

The ECJ ruled in the M&S ju...

Jean-Yves Gilg
Solicitors Journal

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