BN66 - Court of Appeal and beyond

[Disgusted of Coventry]

Open the court of appeal judgment.

Huitson, R (on the application of) v HM Revenue and Customs [2011] EWCA Civ 893 (25 July 2011)

(If this has already been discussed elsewhere, then I'm sorry for any repetition).

Has anyone read paragraphs 81->84 of the CofA Decision? Judges are obviously highly intelligent people, but even so - some of the arguments in this section are fatuous. Here's an example...

"There had been no representation by HMRC that (...) any legislation enacted would not have retrospective effect."

What?

Surely the average person uses the evidence of his\her experience in order to make a rational decision? Our experience tells us that, if we're acting outside of the Law, an Authority will swiftly bear down upon us to say "You are contravening X. You must immediately do Y. Otherwise the consequences will be Z".

If the Authority in question consistently fails to produce meaningful values of 'X' & 'Z', then it would be natural to assume that the value of 'Y' is groundless.

So how on Earth did the Judge manage to excuse HMRC for failing to inform of its intentions?

[DonkeyRhubarb]

(If this has already been discussed elsewhere, then I'm sorry for any repetition).

Has anyone read paragraphs 81->84 of the CofA Decision? Judges are obviously highly intelligent people, but even so - some of the arguments in this section are fatuous. Here's an example...

"There had been no representation by HMRC that (...) any legislation enacted would not have retrospective effect."

What?

Surely the average person uses the evidence of his\her experience in order to make a rational decision? Our experience tells us that, if we're acting outside of the Law, an Authority will swiftly bear down upon us to say "You are contravening X. You must immediately do Y. Otherwise the consequences will be Z".

If the Authority in question consistently fails to produce meaningful values of 'X' & 'Z', then it would be natural to assume that the value of 'Y' is groundless.

So how on Earth did the Judge manage to excuse HMRC for failing to inform of its intentions?

The High Court judgment was even more hysterical.

Huitson, R (on the application of) v Revenue and Customs [2010] EWHC 97 (Admin) (28 January 2010)

In 88->89 it was suggested that we should have forced HMRC to take us to court.

[phileds]

In retrospect, had the scheme been brought before the Special Commissioners, I suspect we would be in a happier place. HMRC spent seven years doing nothing other than sending meaningless threats to us and MTM, until the law was ahem "clarified" and supplied them with their first weapon with which to attack.

I love 76 (5) in Huitson too:

"The fundamental purpose of DTAs is to avoid double taxation. It is not a purpose of DTAs to facilitate the complete avoidance of income tax in any jurisdiction, or to allow residents of a particular state to reduce the tax on their income to a level below that which would ordinarily be exacted by the state of residence"

Pardon me whilst I ring my broker at Goldman Sachs to buy more Vodafone shares .... what utter, utter bollocks. It makes perfect "sense" of course - that we should all pay the same tax irrespective of how we arrange our affairs here and abroad (yeah right) - and yet, if you owe a few tens/hundreds of millions, tax law starts to become extremely flexible.

As my accountant advised me many years ago - tax avoidance schemes ain't what they used to be. Pre-internet, when these things could be kept amongst those in the know (i.e. the very wealthy, MPs, cabinet ministers, lords of the realm, the aristocracy), all was fine - as soon as hoi polloi started to get a sniff, it was the end.

[ASB]

In retrospect, had the scheme been brought before the Special Commissioners, I suspect we would be in a happier place. HMRC spent seven years doing nothing other than sending meaningless threats to us and MTM, until the law was ahem "clarified" and supplied them with their first weapon with which to attack.

I love 76 (5) in Huitson too:



Pardon me whilst I ring my broker at Goldman Sachs to buy more Vodafone shares .... what utter, utter bollocks. It makes perfect "sense" of course - that we should all pay the same tax irrespective of how we arrange our affairs here and abroad (yeah right) - and yet, if you owe a few tens/hundreds of millions, tax law starts to become extremely flexible.

As my accountant advised me many years ago - tax avoidance schemes ain't what they used to be. Pre-internet, when these things could be kept amongst those in the know (i.e. the very wealthy, MPs, cabinet ministers, lords of the realm, the aristocracy), all was fine - as soon as hoi polloi started to get a sniff, it was the end.

I think you're right about the wider publication.

I can also see where huitson is coming from. I can also see a fundamental problem with it. Aiui some dtas operate on a basis of taxing rates rather than a credit basis.

In the latter case a taxpayer will pay at least his home rate. In the former case, then a taxpayer on one side of it will always pay less. It always cuts both ways.

Is huitson saying all these treatys are fundamentally flawed.

[smalldog]

(If this has already been discussed elsewhere, then I'm sorry for any repetition).

Has anyone read paragraphs 81->84 of the CofA Decision? Judges are obviously highly intelligent people, but even so - some of the arguments in this section are fatuous. Here's an example...

"There had been no representation by HMRC that (...) any legislation enacted would not have retrospective effect."

What?

Surely the average person uses the evidence of his\her experience in order to make a rational decision? Our experience tells us that, if we're acting outside of the Law, an Authority will swiftly bear down upon us to say "You are contravening X. You must immediately do Y. Otherwise the consequences will be Z".

If the Authority in question consistently fails to produce meaningful values of 'X' & 'Z', then it would be natural to assume that the value of 'Y' is groundless.

So how on Earth did the Judge manage to excuse HMRC for failing to inform of its intentions?

agreed, if we had gone to commissioners earlier and we lost I would probably have ended up going bakc to LTD and taking the chance while IR35 established itself. On that basis we should also be able to use our time machine in the same way as HMRC and retrospectively reorganise our affairs. whats good for the goose and all that. I dont see how they can use restrospectivity and we cant.

[lucozade]

No response from the one I sent early December 2011

Following on from this, I've had a response from my local tax office. They have sent 2 letters for 2 years worth.

However, I've got potential liability for 4 years.

Need to understand what it is I've been sent versus what I'm missing I guess.

[DonkeyRhubarb]

Following on from this, I've had a response from my local tax office. They have sent 2 letters for 2 years worth.

However, I've got potential liability for 4 years.

Need to understand what it is I've been sent versus what I'm missing I guess.

There should be an enquiry letter for each tax year.

From what I've seen so far, there's not a lot of consistency in the wording of these letters. They should quote Section 9a TMA 1970 but some just refer to Code of Practice 8, and others merely say they are opening an enquiry or investigation.

They can probably get away with sloppy wording but there has to be an enquiry letter of some sort before they can issue a Closure Notice, otherwise the Closure Notice is not valid.

PS.

I forgot to mention that some enquiries were opened under discovery. There is a questionmark over whether these are valid, which may ultimately need to be decided at a tax tribunal.

[lucozade]

There should be an enquiry letter for each tax year.

From what I've seen so far, there's not a lot of consistency in the wording of these letters. They should quote Section 9a TMA 1970 but some just refer to Code of Practice 8, and others merely say they are opening an enquiry or investigation.

They can probably get away with sloppy wording but there has to be an enquiry letter of some sort before they can issue a Closure Notice, otherwise the Closure Notice is not valid.

Not got the letters to hand but do remember them mentioning Section 9a TMA 1970.

I'm hoping that means that since they only sent me 2 letters that they didn't do this for the other 2 years. How will I know? Or do I just right back repeating the original point - no enquiry letter, CN not valid please remove.

[bve534]

Tax avoidance and the establishment

As my accountant advised me many years ago - tax avoidance schemes ain't what they used to be. Pre-internet, when these things could be kept amongst those in the know (i.e. the very wealthy, MPs, cabinet ministers, lords of the realm, the aristocracy), all was fine - as soon as hoi polloi started to get a sniff, it was the end.[/QUOTE]

Got it in one - I remain convinced that is why we are being singled out for special treatment.

[BrilloPad]

As my accountant advised me many years ago - tax avoidance schemes ain't what they used to be. Pre-internet, when these things could be kept amongst those in the know (i.e. the very wealthy, MPs, cabinet ministers, lords of the realm, the aristocracy), all was fine - as soon as hoi polloi started to get a sniff, it was the end.

Got it in one - I remain convinced that is why we are being singled out for special treatment.

Maybe if MP had kept it to the first 500 users it would still be going now? Anyway we cannot change the past. No-one can. Except HMRC.