Strategic Finance
| Appeal court alters conditions for foreign loss offsets |
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| Written by Richard Northedge | |
| Thursday, 22 February 2007 | |
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The UK Court of Appeal has widened the circumstances in which losses made by overseas subsidiaries can be offset against British tax.
The decision affects about 400 companies that sought to benefit from a decision made in 2005 in favour of Marks & Spencer by the European Court of Justice. The appeal court has ruled that for UK companies to offset foreign losses against UK taxes they must show that there is no real prospect of the losses being offset against local taxes. An earlier interpretation of the European ruling by the high court had been described as extremely restrictive. UK rules introduced by the Treasury last year may now have to be amended because of the appeal court ruling. |
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