Revenue acts to close tax-avoidance loophole

Marks & Spencer’s landmark victory in its tax dispute with Revenue &
Customs has prompted the taxman to enact new legislation which, if passed, will
prevent companies with European subsidiaries taking advantage of tax reliefs
awarded by the European Court of Justice.

The new legislation will be included in the 2006 Finance Bill, which follows
next month’s Budget speech.

If passed, it will take effect retrospectively from 21 February this year.

In December last year, the ECJ ruled M&S could offset losses from
subsidiaries in other European Union countries against UK company tax, not just
against losses generated in the UK.

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