BN66 - Court of Appeal and beyond

[SantaClaus]

There has been a reoccurring theme banded about that retrospection = bad, clarification = acceptable.

If legal text requires clarification then by definition it was unclear.
So can we, professional scheme providers and tax advisers be forgiven for not fully understanding that which was not clear?

Even the clarification argument stinks.

The whole thing stinks. Unfortunately our corrupt parliament and judges stink the most!

[DonkeyRhubarb]

doesnt give me any confidence the Supreme court will make any difference in that case if all we are doing is bleating on about HR...sorry to be negative but unless we give the whole and ugly story I cant see the judges overturning this.

Unfortunately this doesn't have much bearing on the HR compatibility of the legislation itself which is all that the Supreme Court will be concerned with.

[Disgusted of Coventry]

"...Taxing measures must satisfy the requirements of proportionality, but the threshold of justification to be met by the State is very much lower than in relation to other ECHR rights..."

Can someone (ie. you, DR) explain this?

"The principle of proportionality requires that there be a reasonable relationship between a particular objective to be achieved and the means used to achieve that objective."

OK, so what is the means & what is the objective? Is it...

Objective : To close a tax-avoidance scheme.
Means : HMRC to sit on its hands for several years; to wait until the amount of later-to-be-disputed potential revenue has reached a staggeringly large value; to change an existing Law; to develop some absurd sophistry for persuading Parliament to make this Brand New Law retrospective.

If so, then wouldn't one would be inclined to think it just a little disproportionate (whatever the threshold)?

[reckless]

Proportionality

Can someone (ie. you, DR) explain this?

"The principle of proportionality requires that there be a reasonable relationship between a particular objective to be achieved and the means used to achieve that objective."

OK, so what is the means & what is the objective? Is it...

Objective : To close a tax-avoidance scheme.
Means : HMRC to sit on its hands for several years; to wait until the amount of later-to-be-disputed potential revenue has reached a staggeringly large value; to change an existing Law; to develop some absurd sophistry for persuading Parliament to make this Brand New Law retrospective.

If so, then wouldn't one would be inclined to think it just a little disproportionate (whatever the threshold)?

Continuing with the theme of proportionality and fairness, is it reasonable for tax legislation to target one particular group (by means of retrospection) in a way that has no tax precedent and also (by virtue of the recent HMRC Protocol on Dealing with Tax Avoidance, and the timing for implementing tax changes), will never be applied again in the future?!

[DonkeyRhubarb]

Can someone (ie. you, DR) explain this?

"The principle of proportionality requires that there be a reasonable relationship between a particular objective to be achieved and the means used to achieve that objective."

OK, so what is the means & what is the objective? Is it...

Objective : To close a tax-avoidance scheme.
Means : HMRC to sit on its hands for several years; to wait until the amount of later-to-be-disputed potential revenue has reached a staggeringly large value; to change an existing Law; to develop some absurd sophistry for
persuading Parliament to make this Brand New Law retrospective.

If so, then wouldn't one would be inclined to think it just a little disproportionate (whatever the threshold)?

You got me there. I can't explain it.

It might have been different if the scheme had been hidden from the authorities and HMRC had only discovered it in 2007. However, every single user declared it on every one of their tax returns. As soon as DOTAS came in, the scheme was even registered with HMRC and was given a scheme reference number (SRN). Thereafter, tax returns included this SRN.

If it is proportionate to use 7-year retrospective legislation to close a scheme which HMRC had known about for 7 years, then I don't know what proportionate means.

Was there something special/peculiar/unique about this scheme that warranted such an unprecedented response?

I don't think so. Surely it's no different to any other tax avoidance scheme which exploits a loophole in the tax system?

There is a more fundamental question here though.

If using 7-year retrospection is a proportionate response to a (fully disclosed) tax avoidance scheme then how much further would the authorities have to go for something to become disproportionate?

Think about it. If BN66 is ok what wouldn't be ok? How far could they push it? What could they get away with?

[SantaClaus]

You got me there. I can't explain it.

It might have been different if the scheme had been hidden from the authorities and HMRC had only discovered it in 2007. However, every single user declared it on every one of their tax returns. As soon as DOTAS came in, the scheme was even registered with HMRC and was given a scheme reference number (SRN). Thereafter, tax returns included this SRN.

If it is proportionate to use 7-year retrospective legislation to close a scheme which HMRC had known about for 7 years, then I don't know what proportionate means.

Was there something special/peculiar/unique about this scheme that warranted such an unprecedented response?

I don't think so. Surely it's no different to any other tax avoidance scheme which exploits a loophole in the tax system?

There is a more fundamental question here though.

If using 7-year retrospection is a proportionate response to a (fully disclosed) tax avoidance scheme then how much further would the authorities have to go for something to become disproportionate?

Think about it. If BN66 is ok what wouldn't be ok? How far could they push it? What could they get away with?

If 7 year retrospection is "proportionate" for our tax scheme, then surely the same retrospection should be applied to the stamp duty tax avoidance scheme on property purchases (which the govt. have signalled they will act against).

As the stamp duty loophole involves millions more £££s than ours and there are likely to be more people doing it, surely HMRC's attitude to us is dis-proportionate.

I wonder if there is a channel where we could formally request the same treatment is given to bigger tax avoidance schemes. And when they refuse, that is the proof we were treated unfairly.

[screwthis]

If 7 year retrospection is "proportionate" for our tax scheme, then surely the same retrospection should be applied to the stamp duty tax avoidance scheme on property purchases (which the govt. have signalled they will act against).

As the stamp duty loophole involves millions more £££s than ours and there are likely to be more people doing it, surely HMRC's attitude to us is dis-proportionate.

I wonder if there is a channel where we could formally request the same treatment is given to bigger tax avoidance schemes. And when they refuse, that is the proof we were treated unfairly.

Exactly!

And can the legislation they recently passed stating there would be no more retrospective action by retrospectively applied to say 2007?

[Disgusted of Coventry]

If it is proportionate to use 7-year retrospective legislation to close a scheme which HMRC had known about for 7 years, then I don't know what proportionate means.

I think this is beginning to make a few small molecules of sense.

Is A1P1 as much about the definitions of concepts as it is of Law? And is the Margin of Appreciation there to respectfully allow each country to interpret those definitions in a way that is consistent with its own political & economic framework?

So, to decide if BN66 is 'proportionate', would it be appropriate to ask...

"Was there an alternative 'means' by which HMRC could have`achieved the same 'objective'? One which would have had a less harmful impact upon those affected?"

Is this how A1P1 is supposed to work?

[DonkeyRhubarb]

I think this is beginning to make a few small molecules of sense.

Is A1P1 as much about the definitions of concepts as it is of Law? And is the Margin of Appreciation there to respectfully allow each country to interpret those definitions in a way that is consistent with its own political & economic framework?

So, to decide if BN66 is 'proportionate', would it be appropriate to ask...

"Was there an alternative 'means' by which HMRC could have`achieved the same 'objective'? One which would have had a less harmful impact upon those affected?"

Is this how A1P1 is supposed to work?

Possibly.

If the 'objective' was to try and collect tax from people who had used the scheme during the past 7 years then the obvious 'alternative means' would have been to take us to court, rather than legislating with retrospective effect. They could still have legislated prospectively to protect future revenues.

[moira under the stairs]

Possibly.

If the 'objective' was to try and collect tax from people who had used the scheme during the past 7 years then the obvious 'alternative means' would have been to take us to court, rather than legislating with retrospective effect. They could still have legislated prospectively to protect future revenues.

Summary.... A kind of Entrapment !!!