The revitalised high street favourite is accusing the Revenue of breaking EU tax regulations and will challenge the Revenue in front of the commissioners for tax, on November 25.

'We are claiming that Marks & Spencer should be allowed to offset the losses incurred by subsidiaries resident in France, Belgium and Germany against our UK taxable profit,' a spokeswoman for the company told Accountancy Age.

The claim covers the four years to 31 March 2001 and losses amounting to over £100m.

The Revenue has rejected the claims on the grounds that the UK group relief system - for offsetting profits and losses of connected companies - only applies to parents and subsidiaries that are both in the UK.

'We believe that this requirement is in contravention of article 43 of the EC treaty which prohibits member states hindering an EU national in one state establishing a business in another member state as they like and in the forms they like,' said the spokeswoman.

Adam Craig, head of Deloitte's EU tax group in the UK said M&S stood a 'very good chance' of victory.