GLOs: Lords rules on claim procedures

Multinational companies challenging UK tax law on the basis of
inconsistencies with European law look set to be able to take cases to the ECJ
as soon as possible.

In a crucial legal judgment today, the House of Lords ruled that in one class
of ‘group relief’ claims – claiming relief against UK profits for losses
incurred by subsidiaries overseas – only those still within statutory time
limits should go through the Special Commissioners, the standard UK framework
for tax appeals.

Those who are outside the time limits, which are commonly two years, will
remain in the High Court. Lawyers were broadly pleased with the decision, and
hope to get the cases through to the ECJ as soon as possible.

Even those cases sent to the Special Commissioners could be referred to the
ECJ, should ‘practical convenience’ dictate, the judgment says.

Bill Dodwell, tax partner at Deloitte, said that the decision did mean,
however, that companies would have additional burdens in preparing claims: ‘if
people want to pursue claims they are going to have to do rather more work than
they had initially hoped for.’

The burdens come from presenting cases to the Special Commissioners in full,
assuming they are within time limits, rather than simply presenting the broad
outlines of a dispute in High Court proceedings.

‘For quite a lot of groups that will also mean making two sets of claims,’
said Dodwell.

That could deter marginal claims, meaning the Revenue may also be pleased
with the decision.

The High Court had initially ruled that all cases in the group relief
category should be heard through the Special Commissioners, which was overturned
in the Court of Appeal. The Lords judgment is said to have negotiated a ‘middle
way’ between those two decisions.

The case concerns some well-known names, including Heinz, BT and French bank
BNP Paribas, representing hundreds of other companies claiming for similar

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