Mindpearl AG v The Commissioners for Her Majesty's Revenue & Customs, TC 01400
| Jurisdiction | UK Non-devolved |
| Judge | Adrian J SHIPWRIGHT |
| Judgment Date | 18 August 2011 |
| Neutral Citation | [2011] UKFTT 555 (TC) |
| Respondent | The Commissioners for Her Majesty's Revenue & Customs |
| Appellant | Mindpearl AG |
| Reference | TC 01400 |
| Court | First-tier Tribunal (Tax Chamber) |
[2011] UKFTT 555 (TC)
TC01400
Appeal number: TC/2009/15541
CORPORATION TAX –s 343 TA – impact of Article 43 (now 49 TFEU) – non-member state
transferee – could rights of member state transferor be relied on? No as non EU national
involved –Was s 343TA applicable? No in circumstances as 75% test not met – Were
provisions discriminatory? No section applied to all companies in the same way whether UK
resident or not – Should Tribunal read 75% as 50% so position same for anti-avoidance
purposes in s 768 TA? No, Parliament enacted 75%- Appeal dismissed
FIRST-TIER TRIBUNAL
TAX (Corporation Tax)
MINDPEARL AG Appellant
- and -
THE COMMISSIONERS FOR HER MAJESTY’S
REVENUE AND CUSTOMS Respondents
TRIBUNAL: ADRIAN SHIPWRIGHT (TRIBUNAL JUDGE)
HELEN FOLORUNSO (TRIBUNAL MEMBER)
Sitting in public at 45 Bedford Square, London WC1 on 7 April 2011
Gavin Scott, Financial Controller, for the Appellant
Sarah Ford, Counsel, instructed by the General Counsel and Solicitor to HM Revenue
and Customs, for the Respondents
© CROWN COPYRIGHT 2011
2
DECISION
Introduction
1. This is an appeal by Mind Pearl AG ("Mindpearl") against amendments to
Mindpearl's returns for 2001 and 2002. These amendments denied Mindpearl loss
relief under section 343 Income and Corporation Taxes Act 1988 ("TA"). The notices 5 of amendment were issued on 27 June 2005.
2. The losses in dispute amount to some £3,688,687.
The Issue
3. The issue here, in essence, is whether relief for the losses in dispute should be
allowed, notwithstanding that the 75% requirement is not met, in the light of Article 10 431 of the EU Treaty (now Article 49 Treaty on the Functioning of the European
Union). This is referred to as the “Article 43 Issue” in this decision i.e. can and does
Article 43 apply?
4. This raises a number of questions including the following:
(1) Does section 343 TA treat companies incorporated or operating in the UK 15 differently from those incorporated outside the UK as regards losses?
(2) Does the UK treat share transfers and business transfers involving losses
differently?
(3) Is this discriminatory of itself?
(4) What is the proper comparator? 20 (5) Should section 343 TA be read as having a 50% requirement rather than the
75% test set out in the legislation?
5. The Article 43 Issue is the only issue considered in this decision. Mindpearl had
sought to rely on other matters earlier but told us at the hearing that it was only
concerned with Article 43 and, in particular, the rights of the transferor, rather than 25 Mindpearl itself, under Article 43.
6. In addition, we were specifically told that Mindpearl only wished to argue the
position under European Law. It did not wish to argue that in fact more than 75% of
the trade before and after the transfer was under common ownership. Mindpearl
specifically confirmed this to the Tribunal at the start of the hearing. Accordingly, the 30 point was not argued before us and we did not consider it further.
7. We were also told that Mindpearl did not wish to rely on the arrangements between
Switzerland and the European Union. Mindpearl specifically confirmed this to the
Tribunal at the start of the hearing. Accordingly, the point was not argued before us
and we did not consider it further. 35 8. We were further told that Mindpearl did not wish to rely on any double tax
convention. Mindpearl specifically confirmed this to the Tribunal at the start of the
hearing. Accordingly, the point was not argued before us and we did not consider it
further.
The Law 40 The UK legislation
9. The legislation, in so far as is relevant here, is found in sections 337, 343 344,
393, 768 and 769 TA.
10. These provide (in so far as relevant):
1 We refer in this decision to article 43 as that was the provision in force at the time. Article 49 was
referred to and included in the bundle for th e purposes of this hearing. Th e effect of t he article is not
meant to have changed.
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