At a hearing on 25 November 2010, the First-tier Tribunal (FTT) was asked to rule on the question of whether a number of common issues of principle arising in cross border group relief claims, which do not arise in the Marks & Spencer case, could be determined now as preliminary issues by representative claimants. The issues concerned largely group structures which HMRC contend distinguish claimants from M&S. HMRC’s position was that no common issues should be carved out in this way and instead that every group relief claim should be pursued on an individual basis.

The FTT’s decision has just been received. In endorsing the taxpayers’ position that the preliminary issues should proceed, the FTT have held that this should ideally be by way of a referral of joint questions to the Tribunal under paragraph 31A of Sch 18 FA98. As the FTT cannot make an order for such a referral, they have instead directed that the parties attempt to agree the terms of the questions to be referred. Failing agreement, the FTT invites the taxpayers to renew their applications so that the FTT can consider the preliminary issues in the context of those applications.  

This means that through representative references it should be possible to establish whether cross border group relief is available in circumstances not covered by M&S, such as where the common parent is resident in another Member State or a third country or where the non resident losses are claimed by a lower tier UK company. It also means that these issues can be addressed without the need (and expense) of considering other aspects that will be dealt with in the M&S case (which had been HMRC’s position).

This group litigation is being pursued by a group of 10 claimant groups. If you have such claims where issues arise beyond those in the M&S case there may be merit in participating to ensure the issues in your claim are covered and you are not left to litigate alone as HMRC propose.