An ongoing Marks & Spencer case has reached a new stage in the process, with the European Commission now officially requesting the UK adopt a European Court of Justice (ECJ) judgment.

The case relates to the retailer claiming to offset losses generated from outside the UK against profits made here. Claims were made for losses totaling £99m, reducing the M&S’ UK tax liability by approximately £30m.

The EC said that the UK was adopting an 'unnecessarily restrictive' interpretation of the court's judgment. It also set out more generous rules on time limits for claims than the UK has allowed.

Following the judgment in 2005, the UK introduced limited relief for losses incurred overseas.

Ian Menzies-Conacher, chairman of the Chartered Institute of Taxation's technical committee, said the institute is in favour of the European Commission formalizing the request.

'Taxpayers require certainty in order to operate their businesses successfully and this requires that the UK law should be properly aligned with our international tax obligations. We very much hope that the Government will amend the law as soon as possible and without the need for further ECJ involvement,' he said.

If the United Kingdom does not reply satisfactorily to the reasoned opinion within two months the Commission may refer the matter to the ECJ.

Further Reading:

Court of Appeal decision on M&S due today