Tax treaties and consortium relief

The recent Court of Appeal decision in FCE Bank represents another nail in the coffin of HMRC's argument that the ‘link company’ rules in the consortium relief legislation do not conflict with the UK's double tax treaties.

In HMRC v FCE Bank PLC [2012] EWCA Civ 1290 HMRC unsuccessfully appealed against the decision of the Upper Tribunal that the UK's group relief rules as they applied in 1994 contravened article 24 (the non-discrimination article) of the US/UK double tax treaty. Under the group relief rules then applicable the ‘group’ relationship between the claimant and surrendering companies could not be established through a common parent company that was not tax resident in the UK. FCE Bank in successfully claiming group relief for the relevant period ...