Originally posted by Alan Jones
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You are missing/evading the Question. Let me quote Justice Parker:
# Secondly, Mr Elvin QC submits that, unlike in Padmore, HMRC lacked the courage of its convictions (if any) and failed over a long period to take appropriate proceedings in respect of the arrangements. HMRC ought, he argued, to have brought such proceedings and, if HMRC lost - as he maintains was inevitable - Parliament ought, as it did in Padmore, to have allowed the successful taxpayers to retain the fruits of victory. The failure to follow that route made the retrospective legislative response disproportionate.
# However, in my view, the state was not obliged to test the matter first in the courts before enacting legislation, even with retrospective effect. The public policy was of such paramount importance that legislation was necessary in any event to put the position beyond all doubt and to maintain the relevant public policy. Furthermore, for reasons already given, such litigation would probably have been protracted, costly and uncertain. At no time did HMRC indicate to affected taxpayers, including the Claimant, that they could safely rely upon the arrangements. On the contrary, HMRC consistently maintained that the arrangements did not work, and advised taxpayers to pay on account the income tax which HMRC said was properly due. Any prudent taxpayer who followed that advice would not now be prejudiced by the retrospective effect of the legislation. The circumstances here are wholly different from those in Beyeler v Italy (2001) 33 EHRR 52, where the public authorities by their conduct over many years had led the applicant to believe that the state would not exercise a right that it enjoyed, and the later exercise of the right conferred a specific unjust enrichment on the state at the expense of the citizen.
# Nor did HMRC represent, expressly or even impliedly, that legal proceedings would first be pursued before the enactment of any legislation, or that any legislation would not have retrospective effect. In so far as taxpayers may have relied upon the route previously travelled by HMRC and the legislature in Padmore, they did so at their own election and risk.
# Furthermore, taxpayers were not themselves powerless to bring the issue to a head if they so chose. They did not have to wait until HMRC brought proceedings in respect of the arrangements. Section 28A of the Taxes Management Act 1970 is in the following terms:
"28A Completion of enquiry into personal or trustee return
...1) An enquiry under section 9A(1) of this Act is completed when an officer of the Board by notice (a "closure notice") informs the taxpayer that he has completed his enquiries and states his conclusions.
In this section "the taxpayer" means the person to whom notice of enquiry was given.
(2) A closure notice must either-
(a) state that in the officer's opinion no amendment of the return is required, or
(b) make the amendments of the return required to give effect to his conclusions.
(3) A closure notice takes effect when it is issued.
(4) The taxpayer may apply to the Commissioners for a direction requiring an officer of the Board to issue a closure notice within a specified period.
(5) Any such application shall be heard and determined in the same way as an appeal.
(6) The Commissioners hearing the application shall give the direction applied for unless they are satisfied that there are reasonable grounds for not issuing a closure notice within a
specified period."
# It was, therefore, open to any affected taxpayer to apply to the special commissioners for a direction under section 28A (4). If such a direction had been given, and the closure notice had been adverse, the taxpayer would have had an appealable decision. Mr Elvin QC did not suggest that, if such a direction had been sought at a time when HMRC had complete information about the arrangements made by the Claimant, and HMRC had had a reasonable opportunity to consider the legal consequences of such arrangements, an application under section 28A (4) would not have had strong prospects of success. Mr Elvin stressed the relative simplicity of the arrangements and that the Claimant had given complete information about them at a fairly early stage after submission of the first returns. In my view, therefore, the Claimant did not need to wait, but could himself have applied for a direction under section 28A (4), with reasonable prospects of success. If the closure notice had then proved adverse, the Claimant would have had a decision regarding his tax liability which he could have appealed in the usual way.
SO WHY IF YOU WERE SO CERTAIN DID YOU NOT TAKE THIS ROUTE
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# Secondly, Mr Elvin QC submits that, unlike in Padmore, HMRC lacked the courage of its convictions (if any) and failed over a long period to take appropriate proceedings in respect of the arrangements. HMRC ought, he argued, to have brought such proceedings and, if HMRC lost - as he maintains was inevitable - Parliament ought, as it did in Padmore, to have allowed the successful taxpayers to retain the fruits of victory. The failure to follow that route made the retrospective legislative response disproportionate.
# However, in my view, the state was not obliged to test the matter first in the courts before enacting legislation, even with retrospective effect. The public policy was of such paramount importance that legislation was necessary in any event to put the position beyond all doubt and to maintain the relevant public policy. Furthermore, for reasons already given, such litigation would probably have been protracted, costly and uncertain. At no time did HMRC indicate to affected taxpayers, including the Claimant, that they could safely rely upon the arrangements. On the contrary, HMRC consistently maintained that the arrangements did not work, and advised taxpayers to pay on account the income tax which HMRC said was properly due. Any prudent taxpayer who followed that advice would not now be prejudiced by the retrospective effect of the legislation. The circumstances here are wholly different from those in Beyeler v Italy (2001) 33 EHRR 52, where the public authorities by their conduct over many years had led the applicant to believe that the state would not exercise a right that it enjoyed, and the later exercise of the right conferred a specific unjust enrichment on the state at the expense of the citizen.
# Nor did HMRC represent, expressly or even impliedly, that legal proceedings would first be pursued before the enactment of any legislation, or that any legislation would not have retrospective effect. In so far as taxpayers may have relied upon the route previously travelled by HMRC and the legislature in Padmore, they did so at their own election and risk.
# Furthermore, taxpayers were not themselves powerless to bring the issue to a head if they so chose. They did not have to wait until HMRC brought proceedings in respect of the arrangements. Section 28A of the Taxes Management Act 1970 is in the following terms:
"28A Completion of enquiry into personal or trustee return
...1) An enquiry under section 9A(1) of this Act is completed when an officer of the Board by notice (a "closure notice") informs the taxpayer that he has completed his enquiries and states his conclusions.
In this section "the taxpayer" means the person to whom notice of enquiry was given.
(2) A closure notice must either-
(a) state that in the officer's opinion no amendment of the return is required, or
(b) make the amendments of the return required to give effect to his conclusions.
(3) A closure notice takes effect when it is issued.
(4) The taxpayer may apply to the Commissioners for a direction requiring an officer of the Board to issue a closure notice within a specified period.
(5) Any such application shall be heard and determined in the same way as an appeal.
(6) The Commissioners hearing the application shall give the direction applied for unless they are satisfied that there are reasonable grounds for not issuing a closure notice within a
specified period."
# It was, therefore, open to any affected taxpayer to apply to the special commissioners for a direction under section 28A (4). If such a direction had been given, and the closure notice had been adverse, the taxpayer would have had an appealable decision. Mr Elvin QC did not suggest that, if such a direction had been sought at a time when HMRC had complete information about the arrangements made by the Claimant, and HMRC had had a reasonable opportunity to consider the legal consequences of such arrangements, an application under section 28A (4) would not have had strong prospects of success. Mr Elvin stressed the relative simplicity of the arrangements and that the Claimant had given complete information about them at a fairly early stage after submission of the first returns. In my view, therefore, the Claimant did not need to wait, but could himself have applied for a direction under section 28A (4), with reasonable prospects of success. If the closure notice had then proved adverse, the Claimant would have had a decision regarding his tax liability which he could have appealed in the usual way.
SO WHY IF YOU WERE SO CERTAIN DID YOU NOT TAKE THIS ROUTE
NEXT
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