Consortium relief found wanting

The taxpayer company Philips Electronics was part of the Philips group the parent company of which was established in the Netherlands.

The parent entered into a joint venture with South Korean group LG Electronics which had a Dutch subsidiary LGPD Netherlands BV with a branch in the UK.

Philips Electronics claimed consortium relief for the years 2001 to 2004 in relation to the losses of the UK branch of LGPD Netherlands.

HMRC refused the claim saying the losses could be set against the company’s profits in the Netherlands.

The First-tier Tribunal allowed the taxpayer company’s appeal. The Revenue HMRC appealed to the Upper Tribunal (Tax and Chancery Chamber) which referred the matter to the Court of Justice of the European Union for a preliminary ruling.

The court ruled that article 43 of the EC Treaty would be contravened if the national...