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Lloyd’s Asset Leasing v HMRC

This is a very important case on cross-border group relief. Historically losses of a non-resident member of a group could not be surrendered as group relief to be set against the profits of a UK group company. Following the Marks and Spencer case in 2006 this restriction was held to be discriminatory under EU law. A provision was therefore introduced into UK law to allow losses of an EEA resident member of a group to be set against the profits of a UK member of that group. However, this set-off is only available where all other possibilities of relief have been exhausted in the country of residence of the loss-making company. The UK legislation also incorporates an anti-avoidance test: relief is not available where the loss arises from arrangements which have as their main purpose, or one of their main purposes, to secure an amount which can be surrendered as group relief.

The dispute here relates to the decision of the Lloyds Bank Group to cease activities in