Menu
13/12/2005
M&S wins landmark tax case
Marks & Spencer has won a landmark tax ruling in a European Court, which could potentially cost the UK Treasury billions of pounds.
The European Court of Justice granted Marks & Spencer the right to offset losses incurred by the closure of operations in other EU countries against its UK tax bill.
The High Street retailer, which is resident in the UK for tax purposes, had gone to court when it had been unable to lower its UK tax bill by offsetting losses incurred in its German, French and Spanish subsidiaries during the Nineties, against its UK profits.
The company had sought “group relief” under UK tax laws, but the claim was refused on the grounds that the law only applied to losses incurred in the UK.
Britain’s High Court sent the case to the European Court of Justice in 2003. Today’s ruling said that the UK’s refusal to allow the offset of losses violated EU regulations.
The verdict will save Marks & Spencer around £30 million. However, it is feared that the ruling could cost the Treasury billions of pounds, if other UK-based cross-border companies attempt to gain repayment of tax money, following the new ruling.
However, the ruling also stated that losses could not be offset against profits in a company’s home market, if they could be claimed in the country where the losses occurred.
The court said that the UK’s rules were compatible in principle with the EU legislation, but said they were contrary to “freedom of establishment”, because they did not take into account a situation where companies could not offset losses in the country where they occurred.
David Rothenberg, a senior tax executive at chartered accountants Blick Rothenberg, said that the government should prepare to rush through any claims, particularly from companies with a tax year that ended in December.
Mr Rothenberg warned that the ruling could cost the UK Exchequer “billions of pounds” and said: “It is not only the UK Exchequer that is at risk from these decisions – governments throughout Europe are anticipating considerable costs.”
(KMcA/GB)
The European Court of Justice granted Marks & Spencer the right to offset losses incurred by the closure of operations in other EU countries against its UK tax bill.
The High Street retailer, which is resident in the UK for tax purposes, had gone to court when it had been unable to lower its UK tax bill by offsetting losses incurred in its German, French and Spanish subsidiaries during the Nineties, against its UK profits.
The company had sought “group relief” under UK tax laws, but the claim was refused on the grounds that the law only applied to losses incurred in the UK.
Britain’s High Court sent the case to the European Court of Justice in 2003. Today’s ruling said that the UK’s refusal to allow the offset of losses violated EU regulations.
The verdict will save Marks & Spencer around £30 million. However, it is feared that the ruling could cost the Treasury billions of pounds, if other UK-based cross-border companies attempt to gain repayment of tax money, following the new ruling.
However, the ruling also stated that losses could not be offset against profits in a company’s home market, if they could be claimed in the country where the losses occurred.
The court said that the UK’s rules were compatible in principle with the EU legislation, but said they were contrary to “freedom of establishment”, because they did not take into account a situation where companies could not offset losses in the country where they occurred.
David Rothenberg, a senior tax executive at chartered accountants Blick Rothenberg, said that the government should prepare to rush through any claims, particularly from companies with a tax year that ended in December.
Mr Rothenberg warned that the ruling could cost the UK Exchequer “billions of pounds” and said: “It is not only the UK Exchequer that is at risk from these decisions – governments throughout Europe are anticipating considerable costs.”
(KMcA/GB)
Related UK National News Stories
Click here for the latest headlines.
30 November 2010
Corporation Tax Reform To Create 'Competition'
The Government has published details of its Corporate Tax Reform programme consisting of a series of essential reforms designed to improve the UK's tax competitiveness. Measures include the introduction of new Controlled Foreign Company (CFC) rules and a commitment to introduce a Patent Box.
Corporation Tax Reform To Create 'Competition'
The Government has published details of its Corporate Tax Reform programme consisting of a series of essential reforms designed to improve the UK's tax competitiveness. Measures include the introduction of new Controlled Foreign Company (CFC) rules and a commitment to introduce a Patent Box.
30 May 2014
More Fall Into Debt Following HMRC Overpayments
The number of issues reported to Citizens Advice of people falling into debt as a result of repaying overpaid tax credits increased by 14 per cent in the 2013/14 tax year. Tax Credit debts arise when HMRC over-estimates a person’s entitlement to financial support and ends up having to recoup overpayments.
More Fall Into Debt Following HMRC Overpayments
The number of issues reported to Citizens Advice of people falling into debt as a result of repaying overpaid tax credits increased by 14 per cent in the 2013/14 tax year. Tax Credit debts arise when HMRC over-estimates a person’s entitlement to financial support and ends up having to recoup overpayments.
06 April 2011
Government Tackle Tax Avoidance
David Gauke, Exchequer Secretary to the Treasury, has today announced a change in legislation to prevent tax avoidance. The measure will prevent individuals from taking advantage of a tax loophole that would have emerged today had the Government not taken action.
Government Tackle Tax Avoidance
David Gauke, Exchequer Secretary to the Treasury, has today announced a change in legislation to prevent tax avoidance. The measure will prevent individuals from taking advantage of a tax loophole that would have emerged today had the Government not taken action.
18 March 2004
Chancellor’s film relief rules broadly welcomed
Chancellor Gordon Brown’s decision to offset the closing of a tax loophole widely used by filmmakers with extended tax relief has been generally well received by industry bodies.
Chancellor’s film relief rules broadly welcomed
Chancellor Gordon Brown’s decision to offset the closing of a tax loophole widely used by filmmakers with extended tax relief has been generally well received by industry bodies.
30 January 2004
Government hails Child Tax Credit figures
The government has hailed its Child Tax Credit and Working Tax Credit after official figures revealed that six million families had taken up the scheme in the 10 months since their introduction.
Government hails Child Tax Credit figures
The government has hailed its Child Tax Credit and Working Tax Credit after official figures revealed that six million families had taken up the scheme in the 10 months since their introduction.
-
Northern Ireland WeatherToday:A showery start with outbreaks most frequent north of Lough Neagh and through the morning, before dwindling during the afternoon as the northwest breezes ease and brighter spells of weak sunshine prosper. Maximum temperature 8 °C.Tonight:A dry night, save for a few light showers around the coasts, with prolonged clear spells and light winds bringing a frosty dawn for many in central and southern parts. Minimum temperature -3 °C.
