M&S Wins Again - Mazars - United Kingdom
M&S Wins Again
In the long running saga of the battle to obtain group relief for losses sustained by its German and Belgian subsidiaries, M&S have been successful again.
Having previously established that UK tax law breached EU law, and how that law should be applied, the latest hearing related whether to the facts and circumstances of M&S fell within the requirements laid down by the courts. The crux of the matter was whether there was no real possibility that the foreign subsidiaries would be able to use their losses in Germany and Belgium. M&S had made various group relief claims. Those made before the foreign subsidiaries went into liquidation were rejected, on the grounds that the companies could have traded and ultimately used the losses. However, further claims made once the companies went into liquidation were allowed, as it was by then evident that there was no real possibility that the companies could use the losses. The losses must also be translated into sterling and recomputed under UK tax principles.
The M&S case shows that UK groups may be able to derive some value from the losses of EEA resident subsidiaries, provided the facts and circumstances fit the bill. In the current global recession, any means of extracting value from loss making companies is helpful.
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