My reflections
I would like to share with you some of my reflections on the proceedings.
Firstly, it was great to finally meet up with some of the people off the forum and put faces to the various characters.
Revelations
From my perspective, the only significant revelation to come out during the entire course of the two days was the existence of an internal technical note (No. 63) published within HMRC in 2002 stating that they didn’t know how to challenge the scheme from a legal standpoint. Some of the letters they subsequently sent us from 2003 onwards made reference to challenging the scheme using arguments which they had already rejected or at least cast doubt on in this technical note.
I have raised an FOI request to get this document put into the public domain.
http://www.whatdotheyknow.com/request/technical_note_63
Case Law
I think it is important for us to take a step back from the case and set it in a much wider context. Anyone who was present at the proceedings will have observed how both sides used numerous and varied UK and EU case law to support their proposition and also try and negate the opposing side.
Whatever judgement the Court hands down with Section 58, this will become case law, and not only in the UK but across the whole European Union.
The Devil is in the detail
HMRC want the Court to set aside the details of the case (history, delay, inconsistencies) but, as our barrister pointed out, it is all about the detail of the case. The Court cannot ignore the specifics because to do so, in itself, would go against Article 1 Protocol 1.
Whilst Nation states are afforded a wide degree of margin in matters of taxation any measures they enact have to be proportionate. It is not enough to argue that it is proportionate because it raises tax revenue and is therefore in the interests of the majority of taxpayers. If that were the case, then any minority group could be targeted retrospectively where the state decides individuals have not paid their “fair share”.
Precedent
In order for the Court to rule in favour of HMRC they must do so in a way which doesn’t establish a wide precedent, and it is not easy for the Court to do this given that HMRC want them to overlook the details.
Even if the Judge accepts that there is an arguable case that the scheme might not have worked, for any of the reasons HMRC put forward, it is hard to frame this in a way that doesn’t leave the door wide open for the state to attack any arrangement where it also has an arguable case. For example, it could be argued that many of the devices used to circumvent IR35 over the past 9 years might not work if tested in a court of law. Does that give the state the right to retrospectivly change IR35 to put this beyond doubt?
(As an aside, HMRC’s barrister made specific reference to IR35, describing it as “anti-avoidance” legislation, and citing our scheme as just one of the many varied approaches used to circumvent it.)
Conclusion
So, in my opinion, the only question we have to ask ourselves is how can the Court hand down a judgement in the case of Section 58 where it satisfies the Article 1 Protocol 1 requirement of proportionality, whilst at the same time not establishing a precedent in case law which could be used to further erode the legitimate rights and expectations of the individual.
This is a difficult square to circle.
I would like to share with you some of my reflections on the proceedings.
Firstly, it was great to finally meet up with some of the people off the forum and put faces to the various characters.
Revelations
From my perspective, the only significant revelation to come out during the entire course of the two days was the existence of an internal technical note (No. 63) published within HMRC in 2002 stating that they didn’t know how to challenge the scheme from a legal standpoint. Some of the letters they subsequently sent us from 2003 onwards made reference to challenging the scheme using arguments which they had already rejected or at least cast doubt on in this technical note.
I have raised an FOI request to get this document put into the public domain.
http://www.whatdotheyknow.com/request/technical_note_63
Case Law
I think it is important for us to take a step back from the case and set it in a much wider context. Anyone who was present at the proceedings will have observed how both sides used numerous and varied UK and EU case law to support their proposition and also try and negate the opposing side.
Whatever judgement the Court hands down with Section 58, this will become case law, and not only in the UK but across the whole European Union.
The Devil is in the detail
HMRC want the Court to set aside the details of the case (history, delay, inconsistencies) but, as our barrister pointed out, it is all about the detail of the case. The Court cannot ignore the specifics because to do so, in itself, would go against Article 1 Protocol 1.
Whilst Nation states are afforded a wide degree of margin in matters of taxation any measures they enact have to be proportionate. It is not enough to argue that it is proportionate because it raises tax revenue and is therefore in the interests of the majority of taxpayers. If that were the case, then any minority group could be targeted retrospectively where the state decides individuals have not paid their “fair share”.
Precedent
In order for the Court to rule in favour of HMRC they must do so in a way which doesn’t establish a wide precedent, and it is not easy for the Court to do this given that HMRC want them to overlook the details.
Even if the Judge accepts that there is an arguable case that the scheme might not have worked, for any of the reasons HMRC put forward, it is hard to frame this in a way that doesn’t leave the door wide open for the state to attack any arrangement where it also has an arguable case. For example, it could be argued that many of the devices used to circumvent IR35 over the past 9 years might not work if tested in a court of law. Does that give the state the right to retrospectivly change IR35 to put this beyond doubt?
(As an aside, HMRC’s barrister made specific reference to IR35, describing it as “anti-avoidance” legislation, and citing our scheme as just one of the many varied approaches used to circumvent it.)
Conclusion
So, in my opinion, the only question we have to ask ourselves is how can the Court hand down a judgement in the case of Section 58 where it satisfies the Article 1 Protocol 1 requirement of proportionality, whilst at the same time not establishing a precedent in case law which could be used to further erode the legitimate rights and expectations of the individual.
This is a difficult square to circle.
Comment