As I have stated in the past I do not usually use this column to discuss individual Court cases, but an interesting decision will shortly be announced by the European Court of Justice.

The case of ICI v Colmer is basically concerned with the availability of group relief and consortium relief in respect of groups of companies with individual members situated both inside the UK and the European Union.

Subject to satisfying other conditions (broadly a 75 per cent relationship), current legislation only allows corporation tax losses to be surrendered or claimed by companies resident in the UK.

For example, a loss incurred by an overseas subsidiary cannot be transferred to its UK 'brother' even if the ultimate parent company is also resident in the UK.

Also, currently there are no provisions allowing group relief between relevant UK subsidiaries all owned by a parent resident in the EC.

It is anticipated that the decision in the above case may have wide-ranging implications for anglo-EC groups and hopefully allow group relief in situations similar to those mentioned above.

Also the decision is likely to affect other group considerations such as capital losses and the surrender of surplus ACT.

In light of the above, it is important that all affected companies make the appropriate claims and elections and that these are submitted to the Inland Revenue within the usual time limits.

Jeremy Roff is a partner with Coopers & Lybrand.

Converted for the new archive on 30 June 2000. Some images and formatting may have been lost in the conversion.