BN66 - Round 2 (Court of Appeal)

[zippo]

See in particular 1st attachment "Finance Bill.1987.pdf"

Page 5, "Legislation should not be retrospective"

Points 13 & 14.

s62 Finance (No2) Act 1987 - WhatDoTheyKnow

Excuse my ignorance...... but wasnt all this information available at the time of the last case ?

[TAF4]

This is brilliant stuff DR!!

Later in the Finance Bill debate we read from Norman Lamont (Column 1176)..........
The type of retrospection on which the House has normally looked with disfavour is where the law is changed retrospectively so that people find themselves faced with unexpected and unprovided for tax liabilities for past years. In this instance retrospection is somewhat different.

So even the Padmore retrospection is admitted as having no bearing on normal retrospection considerations.

Got that Hector?

[DonkeyRhubarb]

Excuse my ignorance...... but wasnt all this information available at the time of the last case ?

The Hansard minutes of the 1987 parliamentary debate were.

But I'm not sure about some of the other HMRC stuff.

I will let you know when Montp and our legals have reviewed it.

[smalldog]

13. This is not a case where a taxpayer has arranged his affairs on the basis of existing law as generally understood and the law is then changed with retrospective effect so that he finds himself faced with unexpected and unprovided for liability for past years.

Correct me if I'm wrong: Our case hinges on the fact that the 2008 Finance Bill contained a "clarification" to the effect that "the members of a firm include any person entitled to a share of income of the firm". Hence the 1987 legislation could be applied.

So anybody who wasn't a member suddenly becomes a member. Isn't that, by definition, an "unexpected" change to "existing law as generally understood"?

And HMRC's defence in the current case is that Huitson had been warned enough, he should have seen this coming, hence retrospection is justified.
Well, I for one had no warning whatsoever. Not a single letter from HMRC - not one - until getting a closure notice. If Huitson is unsuccessful, I'll seriously consider taking this to court myself.

Forgive me if I am mistaken but I havent read anywhere that warnings provide justification for restrospection? Warnings are given to let people know that something is could/likely to change from a given point, so you may consider rearranging your affairs to ensure that as the rule is changed PROSPECTIVELY, you can move forwards having altered your affairs to adhere to that ruler change.

Ultimately what is the point of a warning if that warning was given AFTER you had carried out the action and threaten to change history?? The warning serves no purpose, there is nothing you can do if rules are changed historically, other than to let you know you are in trouble as the rules are going to be changed retrospectively and you are F**ked me old china...

So, I would be interested to know how HMRC expected taw payers to react to a warning that they might change the law retrospectively, were we also in that case allowed to retrospectively change our affairs? IF they said, by the way we are changing the rules from x date so this scheme will no longer work, then fine. We all shut up shop, thats a way of giving a warning that allows tax payers to arrange their affairs, other than that the warning serves no purpose and is pointless.

Or maybe dear Hector, you should in any communications to scheme users intimated that you may consider retrospectively changing the rules, but you didnt and the rest is history.

loads of B**locks

[DonkeyRhubarb]

Have a look at the 7th page of the 2nd attachment:

http://www.whatdotheyknow.com/reques...nce%20Bill.pdf

I bet they didn't intend to include this.

It is a FAX reply, from HMRC's Library, to Martin Brooks who, along with Simon Davis, was named in the BN66 press release. He requested these very same documents, and note the date: 5th November 2007.

[TAF4]

Have a look at the 7th page of the 2nd attachment:

.... note the date: 5th November 2007.

When did Hector develop the Padmore gambit?

[DonkeyRhubarb]

A word of caution

The cynic in me says they wouldn't have released these documents before the hearing if they were likely to be much help to us.

If I was being really paranoid, I might even suspect this was a diversionary tactic.

However, I've passed them on to both Montp and PwC anyway just in case they do contain anything of value.

[DonkeyRhubarb]

When did Hector develop the Padmore gambit?

I know, from a previous FOI, that the idea of retrospectively clarifying 1987/Padmore was first broached in a meeting on 1st Nov 2007. In other words, this would have been around the same time as Martin Brooks requested these documents from the Library.

EDIT

This is the BN66 press release I mentioned earlier. Check out the names at the bottom of the 2nd page.

http://www.hmrc.gov.uk/budget2008/bn66.pdf

[DonkeyRhubarb]

This is my theory of what went down and the timescales.

1st Nov 2007 - HMRC meet with Tax Counsel

From FOI, I know this was the first time retrospection was broached. I also know from FOI that the meeting was subject to legal privilege so lawyers were involved.

My guess is that Counsel advised HMRC they had no prospect of success through litigation. I also believe it was Counsel who came up with the idea of retrospective legislation. Whether HMRC were warned about possible legal challenges, or not, we will probably never know.

Nov 2007 - Martin Brooks requests the papers on the 1987 legislation from the HMRC Library.

Brooks worked in HMRC's internal Solicitors Office, and was probably responsible for drafting the clauses of the Bill. Simon Davis, who is also named in the BN66 press release, was the Assistant Director responsible for BN66.

Nov/Dec 2007 - HMRC informed HM Treasury of the proposal for retrospective legislation

Feb 2008 - HMRC writes to Montpelier, and some scheme users, informing them of their (new) view that 1987 applies to the scheme

7th Mar 2008 - Chancellor of the Exchequer approves the measure

12th Mar 2008 - BN66 press release is published

[TAF4]

So, Counsel, or MartinB, float the Padmore gambit as an act of desperation to cover up 7 years of failure to legislate. Hector grabs the 'get out of jail free' card with a big sigh of relief and Bully boy Brown gets the Nieu Labor majority to bulldoze it through without too much scrutiny.



In a single bound Hector is free!!

B'stards!!