United Kingdom: U.K. Ford and Jaguar companies seeking to claim losses from Ford Motor Company Ltd

The U.K. First-tier Tribunal has issued its decision in FCE Bank Plc v. HMRC in respect of appeals by various U.K. Ford and Jaguar companies seeking to claim losses from Ford Motor Company Ltd (FMCL). The claimant company (FCE) was a U.K.-resident company, as was FMCL, the surrendering company. The case related to years before the introduction of worldwide grouping in 2000, and concerned FCE's group relief claim in respect of its accounting period for the year ending 31 December 1994. Before the changes in 2000, there needed to be a common U.K. parent for there to be a group.

HMRC refused FCE's claim for group relief on the basis that FCE and FMCL were not members of the same group during 1994. The only reason that the U.K. tax authorities denied the claim for group relief in respect of losses surrendered by another U.K.-resident company was that the shareholding relied upon to establish those companies as group companies was held by Ford Motor Company, a U.S. resident company. The Tribunal ruled in favor of the claimant company, holding that the nondiscrimination article of the U.K.-U.S. tax treaty provided for relief between the U.K. subsidiaries.