A UK subsidiary of non-UK resident link companies sought to claim loss relief from the UK branch of a non-resident subsidiary of the consortium company. The provisions operated by a) limiting a claim by a subsidiary of a link company to situations where the link company itself could have made a consortium relief claim (here the link companies were non-resident and therefore not themselves able to claim loss relief) and b) preventing any losses of that UK branch being surrendered if any part of those losses corresponded to amounts deductible for foreign tax.

Following Papillon the Tribunal decided that both the provisions represented restrictions to Article 43 EC Treaty and that those restrictions were neither justified, nor proportionate. Accordingly, the taxpayer succeeded. The decision builds on the M&S decision and is particularly helpful to claimants in Class 2 (i.e. non-UK parents) of the Loss Relief GLO."