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Big business awaits European court decision on M&S's 30m £ test case.

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PositionMarks and Spencer

A court battle between Marks and Spencer and the UK government could open the floodgates for tax relief claims worth more than 1bn [pounds sterling]. Some of the world's largest companies, including Coca-Cola, IBM and Heinz, are hoping that a victory for M&S will strengthen their own claims for huge refunds.

The European Court of Justice is considering M&S's bid to claim more than 30m [pounds sterling] in corporation tax. The company hopes to claw back group relief against its UK tax liabilities for losses incurred by its subsidiaries in continental Europe. The Inland Revenue is refusing to allow tax losses from M&S's overseas subsidiaries to be offset against its UK profits, arguing that foreign losses must stay abroad.

More than 60 multinational companies are making similar cross-border loss relief claims under a group litigation order. A dozen other stand-alone claims are also pending.

"A win for M&S would certainly set a precedent for others to follow," said Adam Craig, head of the EU tax practice at Deloitte in the UK. "Different groups have different structures and they won't necessarily be able to rely on the M&S decision for success. But it's...

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