CIOT asks government to grant EC request

The European Commission's request to implement legislation on cross-border loss compensation is being backed by the Chartered Institute of Taxation (CIOT).

Based on the European Court of Justice's (ECJ) Marks and Spencer ruling, the legislation negates the UK's imposed conditions on cross-border group relief, which make it difficult for taxpayers to benefit.

The European Commission came to the conclusion that the UK's stance was contrary to the EC Treaty. The UK now has two months to respond to the decision or face action from the ECJ.

Ian Menzies-Conacher, chairman of CIOT's technical committee, said: "Taxpayers require certainty in order to operate their businesses successfully and this requires that the UK law should be properly aligned with our international tax obligations."

"We very much hope that the government will amend the law as soon as possible and without the need for further ECJ involvement."

The Marks and Spencer ruling stated that the UK government was wrong to forbid the company from deducting losses made in France, Belgium and Germany if the firm could not claim losses in those countries.