UK and International Tax news

MandS Upper Tribunal Decision

Sunday 8th August 2010

Further to the hearings held in April and August 2009 before the FTT, the appeal by HMRC to determine which of those group relief claims made by the taxpayer would succeed and in what amounts was heard to March 2010 and the Upper Tribunal has recently published its decision.

The main aspects of the Upper Tribunal decision covered the technical validity of the claims and the calculation of the available losses.

It was held that in relation to the self-assessment years, MandS was entitled to claim group relief, valid group relief claims were made, on the basis that sequential claims were effective, claims were made within time limits, and the latest claims were made after the no possibilities test had become satisfied. The quantum of the claim is to be ascertained under Method E and therefore HMRCs appeal on this issue was dismissed.

With regard to the pay and file years, MandS was not entitled to claim group relief on basis that, in relation to the claims which were made in time, the no possibilities test was not satisfied at the date of the claims, later claims made were outside the relevant time limits, and MandS should not be allowed specially to make a claim outside those time limits. For those original claims which were made outside the relevant time limits, MandS should not be allowed specially to make a claim outside those time limits. The Upper Tribunal differed from the First Tier Tribunal on these points and HMRCs appeals on these issues were allowed.

Although it is expected that HMRC will appeal, existing claimants should review their loss relief claims and review whether the no possibilities test was met when the claim was made, in particular, could those losses have been used in the future under the tax law of the territory of the surrendering company. If the test was not met when the claim was made, consideration should be given to submitting new claims. Claimants should also review the calculation of the losses and if necessary amend any claims.

For new claimants, if overseas losses cannot be utilised overseas, claims should be made within the relevant UK time limits, being two years after the end of the accounting period or where a tax return remains open due to an enquiry.

If you would like to discuss the implications of the decision in more detail, please contact Keith Rushen on +44 (0)20 7486 2378

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