Marks & Spencer is in line to claim group relief on its UK tax bill for
losses made in overseas subsidiaries, after a ten-year battle at the high
Upper Tier Tribunal judges decided the retail giant could claim group relief
for losses in Germany and Belgium during 2000, 2001 and 2002, but also shot down
claims for other years.
Tax returns in the two countries for the period in question show collective
losses of more than £75m, which would reduce M&S’ UK tax liabillity by
The retail giant has been trading blows with the taxman for more than a
decade in trying to offset its UK tax bill because of losses sustained in
Germany and Belgium.
Appeals have been lodged by both sides as the case has gone through the
“In relation to the self-assessment years (years to 31 March 2000, 2001 and
2002) for losses of both MSG and MSB, M&S is entitled to claim group
relief…. HMRC’s appeal on this issue is dismissed, ” Mr Justice Warren and
Judge Edward Sadler said in the 69-page ruling.
However, HMRC won its appeal against M&S claiming for German losses for
the years to 31 March 1998 and 1999 on the “no possibilities” rule.
Judges said M&S had failed to prove there was no possibility for the
foreign subsidiary’s losses to be relieved for tax in the future in Germany,
including a sale to a third party.
“M&S is not entitled to claim group relief,” the judges said This is on
basis that, in relation to the claims which were made in time, the no
possibilities test was not satisfied at the date of the claims…. HMRC’s appeal
on this issue is allowed.”
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