HM Treasury confirmed that on 12 June 2019 the UK government made an annulment application to the EU General Court against the European Commission’s (EC’s) decision that the financing company exemption (FCE) within the UK’s controlled foreign company (CFC) regime gave rise to state aid.
The UK government has not yet published its application to the General Court, but made available a summary of the technical arguments against the decision included in an annulment application.
The UK’s arguments against the decision include:
Businesses that are potentially affected by the EC’s ruling may have their own grounds for bringing an annulment application, over and above those raised by the UK government and may want to consider separately applying to challenge the EC’s decision because there is a risk that affected groups may be unable to rely on EU defences at the domestic enforcement stage in the UK unless those grounds have been directly raised at the EU level.
Notwithstanding the application for annulment, the UK government is obliged to push ahead with recovery of the state aid. It is understood that initial recovery action will be assessed directly by HM Revenue & Customs and not recovered via the self-assessment system.
Read a June 2019 report prepared by the KPMG member firm in the UK
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