BN66 - Court of Appeal and beyond

[SantaClaus]

Sounds like frustration is getting the better of you my friend.
What makes you think 'rich elite' and 'priviledged types' weren't affected by s58 as well ? As for growing up 'poor' so did most of the people in this country and lets not forget that includes many of our MPs. Its irrelevant.

Retrospective taxation is the issue, not who it affects nor how badly it affects them. It may help our case to highlight the plight of many who will be bankrupted but lets not jump on the current bandwaggon of blaming 'the rich'.

The blame rests squarely with those HMRC officials who mislead government, the managers that first incentivised them to do so and the government that passed legislation with ill thought out consequencies !

Hi TK

I'm not frustrated, in fact I'm more driven than ever to fight this, and like others, I am working on stuff behind the scenes.

I have nothing against wealthy people at all, it is something we all aspire to. When I refer to the "wealthy elite", I am referring to hypocritical millionaire members of the cabinet who more or less tell the public "do as I say, not as I do".

Time for an example methinks...

Nick Clegg wants to let MPs keep family fortunes under wraps - Telegraph

[Tax_shouldnt_be_taxing]

Yes I believe this forms the basis of a legal argument that in fact s58 can only apply to claims post March 2008 (Rees). Pre that date transactions were made under tha law of the day. Returns were submitted under the law of the day. They cannot be judged under a law that did not exist.
Under this arguement, Only transactions made and/or returns submitted after s58 was announced (Rees) can be judged under the s58 law - the retrospective element only applies to claims that had not been submitted.
If this could be a winning arguement, I hope your previous years tax returns were all up to date.
On the downside this arguement also acknowledges that s58 would apply to your 2007/8 return. However, it also needs to be decided if in fact s58 even applies to the Montp scheme.

Without getting too pedantic, s.58 only became law after Royal Assent in July 2008. FA 2008 only became an Act upon RA. Even HMRC acknowledge that 'now as Section 58 has become law' post RA. So transactions, returns, whatever else were legal as the law stood prior to July 2008. So if you submitted a SAR prior to that date then you are within the law as it stood. I recall something from HMRC stating that nobody should file a Return claiming relief for the 07/08 period as a result of BN66. I recall that being stated by Brannigan I think after Budget Day and before Royal Assent. Guess he wanted to make sure no SAR's could escape just in case they later found BN66 didn't stick.

As an aside, it's not Friday yet but something for our watchers over at HMRC to occupy themselves with.

Section 58(3) inserts a subsection into ITTOIA 2005 Section 858 that includes us as a member of a firm (so as to snare us in the BN66 trap) then makes s.58(4) apply as having always had effect (you know the Tax Tardis bit). So Pop Quiz HMRC...

What are the specific characteristics of ITTOIA 2005 that makes a nonesense of both the clarification excuse that is s.58 and the application of retrospection to ITTOIA 2005? There's 2 characteristics to make your search easier and if you find them, you might think "Oops, maybe we should have picked a different Act...". Happy hunting!

[Buzby]

Interesting article

doing some search around European law case history and found this article:

http://old.tax.org.uk/attach.pl/7561...23_TA_1208.pdf

Here is a extract:

In Marks and Spencer20, the European Court had concluded in relation to the 1988 legislation that:
‘National legislation retroactively curtailing the period within which repayment may be sought of sums paid by way of VAT collected in breach of provisions with direct effect of Sixth Directive ... such as those in Article 11A(1), is incompatible with the principles of effectiveness and of the protection of legitimate expectations.’
If that was not sufficient, the Court in Grundig Italiana21 decided a few months later that: ‘Community law precludes the retroactive
application of a time-limit that is shorter and, as the case may be, more restrictive for the claimant than the period for initiating proceedings that was previously applicable to claims for the recovery of national taxes contrary to Community law where no adequate transitional period is provided during which claims relating to sums paid before the entry into force of the legislation introducing the new time-limit may still be brought within the old period.’

more interesting for us:

It is perhaps understandable that the Treasury might consider that if the taxpayer can go back 20 years, it should be able to do so as well, and this is what is contemplated by Finance Act 2008, s. 58. This section specifically provides that the changes within it are treated as always having had effect – back to 1987 when the original legislation was enacted.
The explanatory notes to the Finance Bill explained the clause as follows:
‘The above Acts already provide that, where UK residents are members of foreign partnerships nothing in any Double Taxation Treaty affects their liability to corporation tax, capital gains tax or income tax respectively. Clause 55 puts it beyond doubt that the legislation has always had that effect and that persons entitled to share in the profits of a partnership are members of that partnership.’
Budget Notice 66 also noted that the new clause simply clarified how the law should always have been interpreted. Thus, both the Budget Notice and the Explanatory Notes appear to admit that the legislation was never clear, otherwise there would be no need for clarification.
The approach of the European Court of Justice in the case of Gemeente Leusden22 is worth noting. In that case, the Netherlands government withdrew the option to tax in certain cases. The effect of the legislation was that transactions that would have been taxable based on choices that taxpayers had already exercised would become exempt. That affected the right to recover VAT in relation to the properties. The European Court of Justice concluded that:
‘Where a Member State withdraws the right ...it must take account of the legitimate expectation of its taxable persons when determining the arrangements for implementing the legislative amendment.’
The Court also went on to say that:
‘The repeal of legislation from which a taxable person has derived an advantage in paying less tax, without there being any abuse, cannot however, as such, breach a legitimate expectation based on Community law.’

[travellingknob]

When I refer to the "wealthy elite", I am referring to hypocritical millionaire members of the cabinet who more or less tell the public "do as I say, not as I do".

Cant fault you there. The other one seems to be "we dont like the way your doing it, you must do it this way"

[travellingknob]

"Without getting too pedantic, s.58 only became law after Royal Assent in July 2008. FA 2008 only became an Act upon RA. Even HMRC acknowledge that 'now as Section 58 has become law' post RA."

Completely agree. I only used the March 2008 date as thats when BN66 was announced and thus the date the Rees rules would apply from

[travellingknob]

Excellent post Buzby.

Is DR or anyone else discussing this sort of info and arguements with Montp ?

[TalkingCheese]

doing some search around European law case history and found this article:

http://old.tax.org.uk/attach.pl/7561...23_TA_1208.pdf
...

Nice one Buzby.

This must have been discussed before but what about this ?

"...Article 7 of the European Convention on
Human Rights (ECHR) provides that:
1 No one shall be held guilty of any criminal
offence on account of any act or omission
which did not constitute a criminal offence
under national or international law at the time
when it was committed. Nor shall a heavier
penalty be imposed than the one that was
applicable at the time the criminal offence was
committed..."

I dont understand how the Judicial Review twisted those words in favour of HMRC. If we were now evading tax then it is a criminal offence and as far as I can tell HMRC & co are following the above wrt not making us criminals, but what about the "...Nor shall a heavier penalty be imposed...". Did they ignore that bit ?

Is it because it is civil legislation and not criminal or something ?

[TalkingCheese]

doing some search around European law case history and found this article:

http://old.tax.org.uk/attach.pl/7561...23_TA_1208.pdf
...

I like this too:

"‘Retrospectivity is the handmaiden of
incompetent or mischievous governments."

[Emigre]

Nice one Buzby.

Is it because it is civil legislation and not criminal or something ?

That's the one. We would have been home and dry by now if we could have claimed Article 7. It is because we couldn't that we were in Court on A1 P1 which allows Governments a margin of appreciation on tax.

The cases that Buzby has brought up had some airtime at the HC and CoA. However, the Courts appear to have disregarded legal precedent and enforced some sort of unwritten social policy. All the Courts did was to enforce Parliament's supremacy. The Courts did not consider the legality of the scheme before or after S58, both of which are still potentially available.

ECHR is more bound by the cases listed by Buzby than are the UK Courts who are not in fact bound by them at all (they look like muppets in ECHR if they disregard them). I understand that the application by Steed is extremely thorough and lists such cases in its submission. I guess we are hoping that Huitson and or Shiner may be allowed to join that case and so strengthen it.

[mrkitchen]

Decision

That's the one. We would have been home and dry by now if we could have claimed Article 7. It is because we couldn't that we were in Court on A1 P1 which allows Governments a margin of appreciation on tax.

The cases that Buzby has brought up had some airtime at the HC and CoA. However, the Courts appear to have disregarded legal precedent and enforced some sort of unwritten social policy. All the Courts did was to enforce Parliament's supremacy. The Courts did not consider the legality of the scheme before or after S58, both of which are still potentially available.

ECHR is more bound by the cases listed by Buzby than are the UK Courts who are not in fact bound by them at all (they look like muppets in ECHR if they disregard them). I understand that the application by Steed is extremely thorough and lists such cases in its submission. I guess we are hoping that Huitson and or Shiner may be allowed to join that case and so strengthen it.

Who makes that call ?