BN66 - Round 2 (Court of Appeal)

[deckster]

Can't find reference to it any place else.

http://www.thetimes.co.uk/tto/busine...cle2918229.ece

But it will cost you a pond to look at it!

But I don't have a pond, or even a puddle! Any chance you could at least post a precis?

[Cosmo]

Copy & Pasted -

The taxman has fallen out with the European Commission over rules aimed at preventing individuals from avoiding UK tax by transferring money overseas.

The European Commission this week formally requested that Britain amend two anti-abuse tax regulations that it believes are “discriminatory” and in breach of EU single market rules that allow the free movement of capital.

The rules that the Commission has taken issue with relate to the UK’s “transfer of assets abroad” legislation.

Under the rules, should the likes of a top banker or IT consultant transfer assets to a company — often a trust set up purely for tax reasons — outside the UK, they are subject to tax on the money that leaves the country as well as any company tax they may later incur where the company is based.

If the same person were to invest the same assets in a UK company, only the company itself would be liable for tax.

The Commission said the restrictions were “disproportionate, in the sense that they go beyond what is reasonably necessary in order to prevent abuse or tax avoidance and any other requirements of public interest”.

The UK has two months to respond, before the Commission — which first contacted HM Revenue & Customs about a potential issue with the legislation in 2009 — could refer the case to the European Court of Justice.

HMRC lawyers are trawling through the ruling and it was unclear how they would respond.

In theory, they have three options: to defend the legislation; amend it to realign it with EU rules; or withdraw it.

The first option would cause the tax office to run the risk of having the rules judged as illegal and overturned — as would withdrawing the legislation.

The second option, an amendment — which could take the form of ruling out EU countries from the asset transfer rule, provided a legitimate commercial reason for any money transfer can be given — appears the most likely.

Referring to the Commission’s request, an HMRC spokesman said: “The Government is considering its response to the concerns expressed by the Commission, and fully intend to comply with its legal obligations.”

Chris Morgan, head of KPMG’s EU tax group, said: “This is another example of where we need to make sure our rules are EU-compliant. If they are compliant, we can defend the tax base, but the danger is they get overturned, which would open the floodgates for people to take advantage of it.”

[DonkeyRhubarb]

I would be surprised if the Times article has anything to do with the PwC case because the Court of Appeal has not handed down a judgment yet.

Case Tracker for Civil Appeals

I am in regular contact with the PwC side, as are our legal team, and they have not mentioned any new developments.

[NO TO RETRO]

I would be surprised if the Times article has anything to do with the PwC case because the Court of Appeal has not handed down a judgment yet.

Case Tracker for Civil Appeals

I am in regular contact with the PwC side, as are our legal team, and they have not mentioned any new developments.

I thought it was KPMG who were going straight to Europe anyway, not PwC? Could it be their case?

[swede]

hmmm

Copy & Pasted -

The taxman has fallen out with the European Commission over rules aimed at preventing individuals from avoiding UK tax by transferring money overseas.

The European Commission this week formally requested that Britain amend two anti-abuse tax regulations that it believes are “discriminatory” and in breach of EU single market rules that allow the free movement of capital.

The rules that the Commission has taken issue with relate to the UK’s “transfer of assets abroad” legislation.

Under the rules, should the likes of a top banker or IT consultant transfer assets to a company — often a trust set up purely for tax reasons — outside the UK, they are subject to tax on the money that leaves the country as well as any company tax they may later incur where the company is based.

If the same person were to invest the same assets in a UK company, only the company itself would be liable for tax.

The Commission said the restrictions were “disproportionate, in the sense that they go beyond what is reasonably necessary in order to prevent abuse or tax avoidance and any other requirements of public interest”.

The UK has two months to respond, before the Commission — which first contacted HM Revenue & Customs about a potential issue with the legislation in 2009 — could refer the case to the European Court of Justice.

HMRC lawyers are trawling through the ruling and it was unclear how they would respond.

In theory, they have three options: to defend the legislation; amend it to realign it with EU rules; or withdraw it.

The first option would cause the tax office to run the risk of having the rules judged as illegal and overturned — as would withdrawing the legislation.

The second option, an amendment — which could take the form of ruling out EU countries from the asset transfer rule, provided a legitimate commercial reason for any money transfer can be given — appears the most likely.

Referring to the Commission’s request, an HMRC spokesman said: “The Government is considering its response to the concerns expressed by the Commission, and fully intend to comply with its legal obligations.”

Chris Morgan, head of KPMG’s EU tax group, said: “This is another example of where we need to make sure our rules are EU-compliant. If they are compliant, we can defend the tax base, but the danger is they get overturned, which would open the floodgates for people to take advantage of it.”

it is intersting that it does refer to IT consultants...

[DonkeyRhubarb]

There's more on the story here:

European Commission Objects to UK Investment Law

I am pretty certain this has no bearing on BN66.

Also note this is the EU Commission, not the ECHR or the ECJ.

[Emigre]

There's more on the story here:

European Commission Objects to UK Investment Law

I am pretty certain this has no bearing on BN66.

Also note this is the EU Commission, not the ECHR or the ECJ.

Unless I'm mistaken, this represents a clear statement of the intent of the EU Commission which de facto runs Europe. Unless there is a legal challenge to the Commissions authority the ECJ would have a hard time overturning this ruling.

The interesting thing is in the actual wording which talks of "disproportionate" and so which seems to me to narrow what was previously stated as being a "wide angle of appreciation". The fact that this statement appears to relate directly to the core of the Shiner/PwC case must be viewed as extremely helpful.

I'm not clear that the ruling provides us with any binding precedent that we can rely on but certainly it seems to me that the LJs will need to consider their decsions in light of this event regardless of whether it was presented to them as an argument last November.

Alternatively, perhaps our Counsel should be negotiating a quiet backing down by HMRC?

Emigre

[DonkeyRhubarb]

The fact that this statement appears to relate directly to the core of the Shiner/PwC case must be viewed as extremely helpful.

I will see what the PwC side make of it and report back.

[smalldog]

one good thing from all of this, it shows Europe are prepared, and will tell HMRC and our government to stick it. Any the fact they are using disproportionate is very helpful.

[phileds]

About two years ago, just after I'd received a closure notice relating to my short membership of the MTM scheme, I overpaid a tax bill by £3k. When some months later I asked for this back, HMRC told me that I could go swing as I was under investigation related to the MTM scheme (or words to that effect).

It's only just occurred to me that I might have been talking to an idiot on the other end of the line (yes, I am naive and over trusting). Can HMRC hold on to money like this?