BN66 - Time to fight back (Chapter 3)

[DonkeyRhubarb]

Going directly to Europe

A while ago a few people questioned whether you could go directly to the ECHR, and bypass the UK courts. This is unusual but there are circumstances which allow for this:

http://www.yourrights.org.uk/yourrig...an-rights.html

2. Before you make an application to the ECHR you must pursue any proceedings that you could take in the UK that are capable of providing you with an adequate remedy for the breach of your Convention rights. Now that the HRA is in force this will generally mean that you will have to take proceedings in the UK under the HRA. This may not be necessary, however, where it is clear that the best you could hope to achieve from taking proceedings under the HRA is a declaration of incompatibility.

In his newsletter last year, Mr YouKnowWho made it clear that this all we could hope to achieve from a JR.

So, in effect, he has opened up the possibility for someone to go straight to Europe.

[Turfer]

A while ago a few people questioned whether you could go directly to the ECHR, and bypass the UK courts. This is unusual but there are circumstances which allow for this:

http://www.yourrights.org.uk/yourrig...an-rights.html

2. Before you make an application to the ECHR you must pursue any proceedings that you could take in the UK that are capable of providing you with an adequate remedy for the breach of your Convention rights. Now that the HRA is in force this will generally mean that you will have to take proceedings in the UK under the HRA. This may not be necessary, however, where it is clear that the best you could hope to achieve from taking proceedings under the HRA is a declaration of incompatibility.

In his newsletter last year, Mr YouKnowWho made it clear that this all we could hope to achieve from a JR.

So, in effect, he has opened up the possibility for someone to go straight to Europe.

The case law you are looking for is "Burden v United Kingom GC (29th April 2008)" under which it was confirmed that a declaration of incompatibility is not an effective remedy that an applicant is required to exhaust before applying to the European Court of Human Rights.

[robinhood]

Article in British Tax Review

Quite an interesting read (well for me anyway), but basically just goes to show that HRMC knew about these schemes but did nothing to stop them

http://www.mondaq.com/article.asp?articleid=71320

What makes section 58 FA 2008 unusual is that the Government has again opted to make its effect retrospective. The debate in the Public Bill Committee on the relevant clause of the Finance Bill saw the Minister, Jane Kennedy, struggling slightly when asked why a retrospective provision was required. She explained:

''As I understand it, a number of people are proposing to use the scheme and some tax advisers will recommend the use of it unless we act to make it clear that the scheme does not work.''4

While this justifies introducing anti-avoidance legislation it does not explain why it has to be retrospective. Pressed further, she said, ''I hope I get this right. It is because HMRC has not consistently made the case throughout the time period that the scheme does not work,. . .''.5 This reply raises some interesting possibilities. Could it mean that HMRC made concessions that they later came to regret and that the only way out of the hole they had dug for themselves was to use retrospective legislation? And is HMRC's previous lack of consistency the reason that a number of people are now proposing to use the scheme? Professional bodies were less than impressed that retrospective legislation was being used. During the debate we heard that the Chartered Institute of Taxation thought it was ''extreme and unjustified''; the Law Society believed it was ''wrong in principle''; and the Institute of Chartered Accountants in England and Wales warned, ''it sends out a very damaging signal about the stability of the UK tax system''. The Minister could only promise to check the representations she had received.

[DonkeyRhubarb]

Potted History

Someone has asked me to put down a brief history of the Montpelier scheme, so here goes. Please PM me if I've got anything wrong. I will update this post, as I gather more info.

THIS IS STILL WORK IN PROGRESS.

May 2001 - Montpelier (MTM) scheme starts operating

??? 2001 – Breakaway SuoMotu scheme starts operating

??? 2003 – Operators of SuoMotu scheme approach Revenue to negotiate a settlement. It is believed that they agreed a settlement which involved paying 30% tax on the Trust income, in addition to tax & nic on the self-employed income. (To be confirmed.)

Summer 2003 – Four Montpelier users are singled out by HMRC as "test cases". They are requested by HMRC to supply copies of bank statements, all documentation associated with the scheme and any correspondence with Montpelier etc. There was then an ensuing exchange of letters with HMRC about the scheme details.

Nov-Jan 2003 – Remaining 1st year users receive Section 9a TMA 1970 Notices

Below is a breakdown of the approximate number of Section 9a TMA Notices received 2003-2005 (as obtained from Montpelier)

2003 (tax year 01/02) – 200 Notices
2004 (02/03) – 350 Notices
2005 (03/04) – 550 Notices

Between 2003 and 2005, HMRC sent several letters requesting further information on the scheme, which were duly responded to. They also requested partnership accounts which were supplied.

May 2007 – HMRC write to Montpelier users stating:

“HMRC does not accept that the claims are valid and it believes the income arising in your Isle of Man Trust/Partnership is chargeable on you. Following advice HMRC now intends taking a number of representative cases forward for hearing before the Special Commissioners and possibly beyond to the Courts to establish the income is chargeable”

And the rest of course is history!!!

[Toocan]

2) Steed Solutions started work on this argument on the 12 March 2008, but they only put it forward to HMRC after the legislation was passed. A brief spoiler is that HMRC's response 4-5 months ago was as follows:

As the life tenant in an interest in possession trust, your client is entitled to the income to which the trustees of that trust are entitled as partners of a partnership. As such, your client is entitled to the income of that partnership and since s58 puts it beyond doubt that those entitled to the income of a partnership are members of that partnership, it follows that s58 applies.

This is not an argument that has been accepted by Steed Solutions

Does it matter whether we have an absolute right to the "income" from the trust, or that it is left to the decision of the trustees? As I recall, we are not absolutely entitled to the income (or anything) from the trust.

Nail Coffin HMRC case

[Toocan]

The case law you are looking for is "Burden v United Kingom GC (29th April 2008)" under which it was confirmed that a declaration of incompatibility is not an effective remedy that an applicant is required to exhaust before applying to the European Court of Human Rights.

Some on the same subject can be found here:

http://www.publications.parliament.u.../173/17308.htm

[mossman]

Great post by xantamisch

Yep, that's how we all got here.

If this drags on until after the Tories are elected, we need a concerted campaign to get the new government on side.

[SantaClaus]

Yep, that's how we all got here.

If this drags on until after the Tories are elected, we need a concerted campaign to get the new government on side.

Yep, xantamisch has echoed everything I thought was wrong about this country.

[DonkeyRhubarb]

European proceedings

I can now confirm that one scheme promoter has submitted an application to ECHR. I'm sure you can work out who this is but I would rather not say here.

Since it probably takes longer to get a case heard in Europe, and Montpelier submitted their application 3 months ago, it is most likely that the JR will take place first.

[deckster]

I can now confirm that one scheme promoter has submitted an application to ECHR. I'm sure you can work out who this is but I would rather not say here.

Since it probably takes longer to get a case heard in Europe, and Montpelier submitted their application 3 months ago, it is most likely that the JR will take place first.

So given that ECHR trumps a JR, does the JR have any relevance now? If (god forbid) the JR fails, will that have an impact on the ECHR case?