The government has moved to shut down a tax loophole arising from the ECJ’s
decision on Marks & Spencer.
HMRC said today that it would be introducing rules to prevent companies from
liquidating loss-making EU subsidiaries to sidestep relief rules.
The ECJ judgment meant that UK groups could not claim loss relief from those
subsidiaries if they could be used elsewhere. Liquidating a company and
transferring the business elsewhere might have made it possible to avoid the new
HMRC’s website says that ‘the Government will therefore be introducing
legislation to deny loss relief where there are arrangements which either:
result in losses becoming unrelievable outside the UK that were otherwise
relievable, or; give rise to unrelievable losses which would not have arisen but
for the availability of relief in the UK, if the main purpose or one of the main
purposes of those arrangements is to obtain UK relief.’
The loophole will be shut down from today
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