Tax Treaty Case Law around the Globe 2012

United Kingdom: Group Relief

32.1. FCE Bank Plc v. HMRC

32.1.1. Facts of the case

The facts of this case and the decision of the First Tier Tribunal were discussed in the 2011 edition of Tax Treaty Case Law Around the Globe. It is not necessary to repeat all that material here. In October 2011 the Upper Tribunal (Tax and Chancery Chamber), consisting of Mr Justice Henderson and Dr Julian Ghosh QC, upheld the decision of the First Tier Tribunal and rejected the appeal of HM Revenue and Customs.

It will be recalled that the issue in this case concerned the surrender of losses by way of group relief from one UK resident company owned by a US resident parent to another UK resident company owned by the same parent. The UK legislation has been changed subsequent to the events giving rise to the case, but at the time of those events it was not possible to surrender a loss by way of group relief unless the parent of the surrendering company and the claimant company were resident in the United Kingdom. It was claimed (successfully before the First Tier Tribunal and now the Upper Tribunal) that such a rule conflicted with article 24(5) of the United Kingdom-United States income tax treaty.

The on...