FCE Bank - HMRC’s appeal to Court of Appeal is dismissed

01 Oct 2012 | Newsletter/briefing

Slaughter and May successfully represented FCE Bank plc (FCE), a subsidiary of Ford Motor Company (FMC), in relation to HMRC’s latest appeal following the decisions of the First-tier Tribunal (April 2010) and Upper Tribunal (October 2011). The Court of Appeal dismissed HMRC’s appeal for essentially the same reasons as were given by the Upper Tribunal.

Before 2000, a group relationship could not, for UK tax purposes, be traced through non-UK resident companies. HMRC therefore refused a claim for group relief by FCE from its sister company, Ford Motor Company Limited, because both were directly-owned UK resident subsidiaries of FMC, a US resident company. FCE maintained that it was entitled to that claim, relying on the US-UK double tax treaty.

The Court of Appeal held that whether or not the US parent was within the charge to UK corporation tax was irrelevant to the claim for group relief, which was a claim that only affected the UK tax position of the two UK subsidiaries. The only reason for the refusal of the group relief claim, therefore, was the fact of FMC’s US residence. That ground of discrimination was in breach of the US-UK double tax treaty and the appeal was therefore dismissed.


Sara Luder (partner)

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