Causation and Context
Causation in a contractual dispute is governed by application of the contract. In law context is everything. These principles were of central importance to the decision of the UK Supreme Court in Navigators Insurance Co Ltd v Atlasnavios-Navegacao Lda (The B Atlantic)  2 WLR 1671. Persons unknown, probably associated with a drugs gang attached three bags of cocaine weighing 132 kg to the hull of the B Atlantic in Venezuela which was loading a cargo of coal for Italy. The drugs were discovered, the vessel detained and this led to the master and the chief officer being convicted by a local jury and sent to prison for 9 years, when they were innocent. This miscarriage also resulted in the confiscation of the vessel. The shipowners who had lost their vessel through no fault of their own or the crew, claimed on the War Risks Policy, which incorporated the Institute War and Strikes Clauses Hulls—Time (1/10/83):
Subject always to the exclusions hereinafter referred to, this insurance covers loss of or damage
to the vessel caused by
1.2 capture seizure arrest restraint or detainment, and the consequences thereof or any attempt
1.5 any terrorist or any person acting maliciously or from a political motive
1.6 confiscation or expropriation.
In the event that the Vessel shall have been the subject of capture seizure arrest restraint detainment
confiscation or expropriation, and the Assured shall thereby have lost the free use and disposal of the
Vessel for a continuous period of  months then for the purpose of ascertaining whether the Vessel
is a constructive total loss the Assured shall be deemed to have been deprived of the possession of
the Vessel without any likelihood of recovery ….
This insurance excludes
4.1 loss damage liability or expense arising from
4.1.5 arrest restraint detainment confiscation or expropriation … by reason of infringement of any customs or trading regulations
These are standard terms used internationally which were the product of the reform by Lloyd’s of its marine insurance forms in 1983, using words from the earlier forms. The problem for the shipowners was the Exclusion. The case law, on the basis of which the parties are taken to have contracted, established that infringement of customs regulations included smuggling. The shipowners asserted that the persons unknown were persons “acting maliciously” and that the detention and confiscation of the vessel was not “by reason of….[the] infringement…”, it was caused by the malicious act .
In the lower courts it had been common ground that the persons unknown acted “maliciously”. Arnould on Marine Insurance (18th edition, 2013) stated its opinion that spite or ill will against the shipowners or their ship was not required.
The Supreme Court dismissed the owners’ claim holding: (1) contrary to the concession made by the insurers before the trial judge and Arnould’s opinion, that “maliciously” was governed by precedent decided nearly 50 years ago, deciding in this context that spite or ill will against owners or the vessel was required, that the Supreme Court should decide the case on the correct meaning, and that there was no malice by the drug smugglers, only the desire to make a profit out of smuggling; and (2) the loss arose from detention and confiscation of the vessel. Either was sufficient to decide the case, and so shipowners were not prejudiced by the Supreme Court disregarding the concession. It was important for the international insurance market that the correct meaning was applied.
On (1) textbook writers do not have the benefit of adversarial argument and can make mistakes. In this case the editors had misunderstood what had been decided by the case law. On (2), the causation issue had to be determined giving proper contractual scope and effect to the Exclusion, and not so as to disregard or emasculate it. What is insured against is given by the Perils and the Exclusions, read together.
The consequence is that a shipowner if he wants cover if his ship is lost because of a third party smuggling, will need special words to do this. Smuggling by the crew is covered under the Hull Policy as barratry, a wrongful act wilfully committed by the master or crew to the prejudice of the owner.
Shipowners had a labyrinth of points which were, or could have been, deployed. These are examined in “Smuggling,Marine Insurance, Causation and Interpretation”  Lloyd’s Maritime and Commercial Quarterly 482 (Steven Gee QC).
Increased Investment in Personal Tax Compliance in the UK (Published in Thought Leaders 4 Private Client)
Advances in technology and increased international fiscal co-operation have made global personal tax compliance initiatives pop up in abundance in recent years. To compound the issue, the Russian invasion of Ukraine and the corresponding economic fallout prompted domestic governments to increase transparency in relation to investments held by wealthy foreign individuals (with a focus on oligarchs).
In the UK, in the context of the cost-of-living crisis, public opinion certainly seems to be in favour of increased accountability for high-net-worth individuals (eg, on 9 October 2022, 63% of Britons surveyed thought that “the rich are not paying enough and their taxes should be increased”).1
HMRC is one of the most sophisticated tax collection authorities in the world and the department is making significant investments in technology in the field of compliance work; they are well placed to take advantage of new international efforts to increase tax compliance, particularly considering the already extensive network of 130 bilateral tax treaties in the UK (the largest in the world).2 The UK was also a founding member of the OECD’s Joint International Taskforce on Shared Intelligence and Collaboration (JITSIC) forum.
This article discusses the main developments in support of the increased focus on international transparency and personal tax compliance in the UK. There are other international fiscal initiatives, particularly in the field of corporate taxation, but such initiatives are beyond the scope of this article.
It should be noted that a somewhat piecemeal approach, with constant tinkering makes compliance difficult for the taxpayer and is often criticised for lacking the certainty that a stable tax system needs to thrive.
This article was first published with ThoughtLeaders4 Private Client Magazine
Tax-Related Measures in the Autumn Statement 2022
On 17 November 2022, the Rt Hon Jeremy Hunt MP, the Chancellor of the Exchequer, unveiled the contents of the Autumn Budget 2022. This comes after the International Monetary Fund (IMF) published its world economic forecast on 11 October 2022. The IMF expects the British economy to grow 3.6% in 2022 and 0.3% in 2023. Other major developed economies are also expected to stagnate next year, namely Spain (1.2%), the US (1.0%), France (0.7%), Italy (-0.2%) and Germany (-0.3%).
This note focuses on tax measures included as part of that statement.
Offshore Structures and Onward Gifts
The so-called “onward gift” tax anti-avoidance rules were introduced by the Finance Act 2018 to complement the changes brought in the previous year aimed at restricting the UK tax privileges afforded to non-UK domiciled individuals. The rules were designed to close some perceived loopholes in relation to the taxation of non-UK resident structures (including but not limited to non-UK trusts). With effect from 6 April 2018, it would no longer be possible for an individual to receive a gift without questioning its providence, particularly where family trusts are involved.
The rules were designed to prevent non-UK structures from using non-chargeable beneficiaries as conduits through which to pass payments in order to avoid tax charges. Gone are the days of “washing out” any trust gains that could be matched to offshore income or gains by prefacing a payment to a UK-resident taxable beneficiary with a non-taxable primary payment to a non-UK resident beneficiary.
“It is notoriously challenging to prove a negative (especially to HMRC) and even more tricky where the taxpayer must speak to someone’s intention other than their own.”
Note that the new rules will apply where funds are received from non-UK resident structures before 6 April 2018 to the extent that they are subsequently gifted after that date.
Increased Investment in Personal Tax Compliance in the UK
Changes in public opinion, advances in technology and increased international fiscal co-operation have made global personal tax compliance initiatives pop up in abundance in recent years. In addition, the Russian invasion of Ukraine and the corresponding economic fallout have prompted governments to increase transparency in relation to investments by wealthy foreign individuals in their countries.
The UK’s HMRC is one of the most sophisticated tax collection authorities in the world and the department is making significant investments in technology in the field of compliance work.
It should therefore be well placed to take advantage of new international efforts to increase tax compliance, particularly against the backdrop of the already extensive network of bilateral tax treaties in the UK, and not forgetting that the UK was a founding member of the OECD’s Joint International Taskforce on Shared Intelligence and Collaboration (JITSIC) forum.
This article discusses the main developments in support of the increased focus on international transparency and tax compliance in the UK. There are other international fiscal initiatives, particularly in the field of corporate taxation, but such initiatives are beyond the scope of this article.
Case note: Lynton Exports (Alsager) Ltd v Revenue and Customs Commissioners  UKFTT 00224 (TC)
As HMRC continue to apply the Kittel principle to increasing numbers of industries and businesses, taxpayers need to be vigilant about evidential requirements that HMRC must fulfil in order to discharge their burden of proof. Read JHA’s latest insight into the First-tier Tribunal’s decision in Lynton Exports (Alsager) Ltd v Revenue and Customs Commissioners  UKFTT 00224 (TC).
If you require any further information about the Kittel, Mecsek, and Ablessio principles, or any other allegations by HMRC of fraud or fraudulent abuse, please contact Iain MacWhannell (firstname.lastname@example.org).