BN66 - Round 2 (Court of Appeal)

[SLB]

I think it's OK to send this one to Labour MPs too.

See what you think.

Just off to hand delivery the letter to Ed Davey at his constituency office - which should hopefully get me a quicker reply than his last effort!

Also up for the £100 payment - there is something very appealing about getting info from the scum by devious and under-handed methods!

[moira under the stairs]

Different response ... Has anyone had....

This is pretty much the "standard template", except for the bit above.

Got a post card from the office of my MP 'acknowledge with thanks the receipt of your communication of the 3rd June the contents of which have been noted' and scribled on it is '& will receive attention', nothing yet !!!!

[DonkeyRhubarb]

What David Gauke said in 2008

(Someone asked me this morning, so I thought I'd reproduce some of it here. I would encourage everyone to read this.)

The retrospective nature of the clause is deeply troubling.

The existing legislation appears to deal with the issue where the UK residents or domiciled individuals are partners in the relevant offshore funds, but it does not seem to work where the partners are trusts and the UK individuals are benefiting from the arrangement. The proposal essentially states that the amendments contained in the clause are to be treated as always having had effect. Either the law exists or it does not. It is troubling when the Government state that the law in the past is something because that is what they say it is now.

This is partly an issue of simple democracy. It raises issues about EU law and legitimate expectations.

Indeed, one leading tax expert described it as unprecedented. The Minister smiles, but I would be grateful if she gave some examples. She may seek to give the example of the 1987 case, but distinctions can be drawn with that. The 1987 provision, with regard to section 62 of the Finance Act 1987, seeks to reverse the Padmore case, to which we have referred. It says that the measure is deemed to have an effect except in relation to any judicial decision made before the amending legislation was announced. That is an important carve-out. It benefited not only Mr. Padmore, but a number of other individuals who had entered into arrangements and waited for the conclusion of the judicial proceedings relating to Mr. Padmore. In doing so, they benefited from that carve-out.

There is the issue of timing, which we touched on in relation to the previous clause. I do not think that anyone would dispute that the provision is retrospective. It goes back at least to 1987, so that is 21 years. As I said earlier, there is the issue of HMRC and the Treasury not necessarily acting terribly quickly when becoming aware of the arrangements. The explanatory notes refer to the “new avoidance scheme”. This is not the first time in these proceedings that I have had to query the explanatory notes, but I am not sure that the expression “new avoidance scheme” is entirely justified. How long have the Government, whether through HMRC or the Treasury, been aware of the arrangements? There is certainly evidence that HMRC has been aware of the arrangements for some years. That raises the question that I asked earlier. It is incumbent on the Government to act reasonably quickly. If they become aware of a scheme that they do not like but they sit on their hands and do nothing about it, and then some years later say, “Okay, we will introduce retrospective legislation,” that raises real concerns, because again there is a continued period of uncertainty. I would press the Government to move quickly if they saw something wrong, rather than sit on it for a long time and then seek to introduce retrospective legislation.

It comes back to legitimate expectation. If the Government do not act on something, perhaps they have taken the view that they will not pursue it. That argument has become stronger in recent years, as the Government now benefit from a disclosure regime. Schemes that result in people making tax savings are disclosed to HMRC, which has the opportunity to review the situation and introduce legislation.

It might be worth returning to the Rees rules, which we discussed on Tuesday. My hon. Friend the Member for Fareham discussed them with the Economic Secretary,
and there was some disagreement over interpretation. However one looks as those rules, this provision does not comply with them. The rules set out three circumstances that apply with retrospective tax legislation. If anti-avoidance provisions are to be legislated, there should be a clear warning in the House of Commons, where feasible a draft law should be published as soon as possible—to give effect to the proposal—and the clause should be incorporated in the next available Finance Bill. I would be grateful if the Financial Secretary could enlighten us on the extent to which that process has been followed with these provisions. I am not sure that it has. The Government are not on particularly strong ground.

It is not acceptable that the Government permit something that they consider unacceptable to exist for some years, and then seek to introduce retrospective legislation to address it. That is what we see here. The comments from the professional bodies are universally critical. The Chartered Institute of Taxation described the retrospective nature as “extreme” and “unjustified”, the Law Society described it as “wrong in principle”, and the Institute of Chartered Accountants in England and Wales said that “it sends out a very damaging signal about the stability of the UK tax system”.

The Minister says that in the opinion of HMRC, the clause merely clarifies the existing law, and that there has been no litigation. That is presumably because HMRC has not pursued litigation. If HMRC is so confident that the measure merely clarifies the law—I am not making a case one way or the other—why is it not bringing litigation against the users of the scheme?

I do not think that the Minister has reassured Conservative Members at all. There is an essential contradiction in what she said. She said that HMRC is confident that the clause merely reasserts existing law, that it is not a change in law and that the schemes are in clear breach of the law, yet she suggests that some £200 million in back tax is at risk. If the law is as she says—I have no reason to doubt it—that sum is not at risk, because all that is required is for HMRC to litigate. It prompts the question why HMRC will not litigate. Why is it not prepared to take the matter to court?
It relates to the point made by my hon. Friend the Member for Cities of London and Westminster. The Government are saying, essentially, that they will pass new law if they think that the law is in some way flawed or there is an alternative interpretation of it that they do not like. Rather than allowing the courts to interpret that law, they will rewrite it retrospectively so that it says what they wanted it to say in the first place. Such an approach gives individuals and businesses no reassurance that the law is what they think it is, as it is written down and what has been passed by Parliament. The impression is that it is something that can be changed if not at a whim, at the discretion of the Government retrospectively.

We have a well-developed legal system that should work on the basis of laws being interpreted on the grounds of what they say, not what the Government want them to say—even if that is not what they said at the time.

A Government should pursue and litigate on the basis of the existing law. When they identify an abuse, they should issue a warning and announce that they will change the law at the first opportunity, and then do so. The Minister said that HMRC was first aware of the schemes in 2001, but they were not pursued widely because the warnings given by HMRC proved to be sufficient. None the less, there was an awareness at that time by HMRC of some ambiguity in the wording of the 1987 legislation.

Notwithstanding the fact that the schemes were not being pursued, why were such measures not introduced under the Finance Act 2001 or subsequent Acts? There has been plenty of them. Given that there were two Finance Acts in 2005, there have probably been about eight. The matter causes great concern, and the Government’s approach should be to pursue it rigorously and to litigate if there is some doubt about the law. In the meantime, warnings should be given and legislation should be made. The Government have not done that. They have sat on the matter, have come back subsequently some years later and taken action when the scheme started to develop, having been aware of the ambiguity under the 1987 legislation.

Indeed, I am more inclined to interpret the proposal to make it retrospective as an admission that the 1987 Act does not do what the Government said it does. That is not based on a legal analysis but, if they were so confident that the 1987 legislation prohibits the behaviour that we are talking about, why on earth have they not litigated on the matter?

For those reasons I am more convinced than ever that the retrospective nature of the clause is unacceptable.

[moira under the stairs]

(Someone asked me this morning, so I thought I'd reproduce some of it here. I would encourage everyone to read this.)

The retrospective nature of the clause is deeply troubling........
[/B]

O Bugger ... should have attatched this to the Dtj,doc I sent today

[BarneyCool]

Perhaps we should all just be sending him a copy of his own words. Just incase he's forgotten. what a toe rag

[normalbloke]

Reply from David Cameron...but don't get excited...

Just had reply from PM's office (he's my local MP) apologising for delay in responding to the first letter etc. Standard template bs.. "..will make Minister aware blah blah.." I'll send the latest letter now.

[SLB]

(Someone asked me this morning, so I thought I'd reproduce some of it here. I would encourage everyone to read this.)

[I]The retrospective nature of the clause is deeply troubling.

It's amazing the difference (or lack of it) being in power makes isn't it?! He has the chance to shove this crap down Liebours throats and overturn their errors and he won't help! Weasel! Surely annoying the crap out of Liebour politicians would be incentive enough to do something about it? Putting a postive spin e.g. Britain has a stable tax system in place once again after Liebour ineptitude - can't be that hard?

[moira under the stairs]

It's amazing the difference (or lack of it) being in power makes isn't it?! He has the chance to shove this crap down Liebours throats and overturn their errors and he won't help! Weasel! Surely annoying the crap out of Liebour politicians would be incentive enough to do something about it? Putting a postive spin e.g. Britain has a stable tax system in place once again after Liebour ineptitude - can't be that hard?

As they say 'it's always easier Pi$$ing in from the outside.' why should it be any different for the Grunts in Parliment.

[DonkeyRhubarb]

It's amazing the difference (or lack of it) being in power makes isn't it?! He has the chance to shove this crap down Liebours throats and overturn their errors and he won't help! Weasel! Surely annoying the crap out of Liebour politicians would be incentive enough to do something about it? Putting a postive spin e.g. Britain has a stable tax system in place once again after Liebour ineptitude - can't be that hard?

Unfortunately there are obstacles

1) He's in coalition with Liberals who are hot on tax avoidance

2) Doing anything in the current climate of austerity which could be seen to be soft on tax avoidance would be political dynamite in the hands of the opposition

3) He's got HMRC breathing down his neck to leave this well alone

There's nothing in it for the Government to do anything, so it's far easier for them to cop out and leave it to the courts to resolve. If the courts rule in our favour then the judiciary will take the flak.

[swede]

Reply received from Brooks Newmark - Braintree (CON)

"...have forwarded your letter to the Secretary of the Exchequer"... Shall get on with 2nd letter.