Loss Relief Group Litigation Order, Claimants Listed In v Revenue & Customs

A national court should exercise restraint before making a preliminary reference where the questions may prove academic or the factual context is incomplete. Under Article 267 TFEU, a reference must be necessary to enable the referring court or tribunal to resolve the dispute before it. A reference from stayed High Court proceedings, intended principally to assist the First-tier Tribunal in determining different proceedings, is procedurally doubtful. The court should ordinarily ensure that the legal and factual context is sufficiently developed before formulating questions for the CJEU. The application for an immediate reference on cross-border group-relief structures was therefore premature and dismissed.

The claimants in a group litigation order concerning cross-border corporation tax loss relief applied to the High Court for a reference to the CJEU under Article 267 TFEU. They sought answers on whether EU freedom of establishment could apply to several corporate group structures not directly considered in Marks & Spencer PLC v Halsey (Inspector of Taxes) [2005] ECR I-10837.

The applications arose against a procedural impasse before the First-tier Tribunal. The claims also raised the separate “no possibilities” test for foreign losses, which was due to be considered by the Supreme Court. The central issues were whether the High Court should refer the structural questions immediately, including in stayed claims, and whether the factual and procedural context was sufficiently developed.

1. Application dismissed. The proposed reference was premature and, in relation to claims proceeding in the High Court but intended to assist the FTT, procedurally questionable.
2. Article 267 TFEU permits a reference where the referring court considers it necessary to enable it to give judgment in the dispute before it. It was doubtful whether the High Court could properly refer questions in stayed proceedings so that the FTT could decide them.
3. The CJEU should ordinarily receive a sufficiently developed legal and factual context. Questions which appear simple in the abstract may become more complex after disclosure and findings of fact. This was particularly important because justification and proportionality might differ according to the corporate structure and the residence of the parent company.
4. National courts should avoid references on questions which may prove academic. The group-structure issues might become irrelevant if the claimants failed on the “no possibilities” test. It was therefore appropriate to await the Supreme Court’s decision, or its formulation of any further reference, before deciding whether to refer the structural questions.
5. The claimants bore the evidential burden of demonstrating that the “no possibilities” test was satisfied. The Revenue was entitled to make searching enquiries based on the then-binding Court of Appeal decisions, although it would be unreasonable to insist on full disclosure from every claimant if enquiries were confined to representative test cases.
6. The proper course was for the parties to identify suitable test cases, provide comprehensive information in representative cases, and co-operate in bringing the structural issues before the FTT.

Not an appeal. The application was made in the High Court within the Loss Relief Group Litigation Order against the background of proceedings and applications before the First-tier Tribunal. The judgment dismissed the High Court application for an immediate CJEU reference.