Taylor (Inspector of Taxes) v MEPC Holdings Ltd

The case concerns the meaning and application of section 403(8) of the Income and Corporation Taxes Act 1988 in the context of group relief and the calculation of the amount to be surrendered. The central legal question is whether allowable losses brought forward should be deducted from chargeable gains made in the relevant accounting period when determining the "profits" for the purpose of calculating the surrender under group relief.

The court analysed the statutory language and the treatment of chargeable gains and carried forward losses for the accounting period relevant to a surrender. The dispositive ruling of the court is not stated in the supplied text of the judgment.

Background and parties: This is an appellate tax case between the Inspector of Taxes (Taylor) and a corporate taxpayer (MEPC Holdings Ltd) concerning corporation tax group relief.

Nature of the claim/application: The appeal raised a point of statutory interpretation concerning how to determine the profits of a company for the purpose of calculating the amount to be surrendered under group relief. In particular, it asked whether allowable losses brought forward should be deducted from chargeable gains arising in the relevant accounting period.

Procedural posture: The matter is before the House of Lords on appeal. The supplied material does not set out the interlocutory history or lower court decisions.

Issues framed by the court:

• (i) Whether, for the purposes of s 403(8) of the Income and Corporation Taxes Act 1988, allowable losses brought forward should be deducted from chargeable gains made in the relevant accounting period when determining the profits available for surrender under group relief.
• (ii) How the statutory language of s 403(8) should be construed in relation to the computation of chargeable gains and the treatment of carried forward losses.

Court’s reasoning (concise): The court examined the statutory wording of s 403(8) and the statutory framework governing the computation of profits, chargeable gains and the use of losses brought forward. The judgment addresses the interplay between the computation of chargeable gains in the relevant accounting period and the use of carried forward allowable losses when calculating a company's profits for surrender purposes. The supplied extract does not state the court's final determination on these issues.