Court of Appeal Considers the Interpretation of Consent Orders
In Botleigh Grange Hotel Ltd v Revenue & Customs Commissioners  EWCA Civ 1032 (9 May 2018), a tax case, the Court of Appeal was required to consider the interpretation of the language used in consent orders. In so doing, the court prioritised the formal nature of such an order over a contract-based construction.
The issue arose in the context of a winding up petition brought by HMRC against the appellant company, on the basis of tax debts owed by the latter, and in respect of which the parties agreed a consent order which dismissed the petition. HMRC issued a subsequent demand to the appellant company for payment of further debts owed. In resisting the presentation of another winding up petition, the appellant argued that the consent order, despite having dismissed the first petition, preserved the dispute as to whether the first petition debt was due in its entirety. Relevantly, the appellant believed it had a cross-claim on that first petition debt which exceeded the second demand for payment issued by HMRC.
The Court of Appeal held that while a consent order embodied an agreement between the parties, at the same time it was a formal court document of public significance. Consequently, a consent order had to be interpreted not just as a contract (a bilateral arrangement), but also in the light of that public significance. The fact that a consent order was a court order, ‘the most formal of documents’, meant that on its face it contained no drafting errors or ambiguities. For that reason, the Court of Appeal warned against departing from the natural meaning of the words used, considering the language actually used as more important than inferences based on commercial common sense and/or surrounding circumstances. Accordingly, in the case before it, the Court of Appeal held that the consent order dismissed the first petition without any reservation or condition. If the order had been intended to preserve the dispute, the recitals would have indicated this, and they did not – as the Court of Appeal stated, they ‘make no reference of any kind to the preservation of the dispute as to whether the entirety of the petition debt was due’. The appeal was dismissed.
This case reinforces the care that should be taken in the drafting of an order, not only of a consent order but of any order, to ensure that its wording is both clear and precise in covering all that it is intended to cover and, equally, makes plain that any attempt to seek to look outside the wording of a formal court document is likely to make little, if any, headway.
An Assessment to Tax is never ‘stale’, but it might be out of date: HMRC v Tooth
This article briefly discusses the key points arising out of the decision of the UK Supreme Court in HMRC v Tooth  UKSC 17. The case considered (1) whether a discovery assessment could become “stale” and (2) the meaning of the phrase “deliberate inaccuracy”.
VATA 1994 s.47, Agency, Onward Supply Relief, & Double Taxation
On 12 July 2021, the First-tier Tribunal (Tax Chamber) (“FTT”) released its decision in Scanwell Logistics (UK) Limited v HMRC  UKFTT 261 (TC), rejecting the taxpayer’s claim for onward supply relief (“OSR”).
Whilst OSR is now limited, post-Brexit, to goods imported into Northern Ireland for onward supply to the EU, the FTT’s discussion of agency under section 47 of the Value Added Tax Act 1994 (“VATA”) is of broader interest.
The case serves as a reminder of the significant financial consequences that can result from errors in tax planning, as Scanwell was ultimately held liable for £5.7 million in unpaid import VAT despite the fact that the imported goods almost immediately left the UK (which, if properly planned, could have meant Scanwell was relieved from liability to import VAT).
Draft Finance Bill 2022—tax avoidance measures
Helen McGhee, senior associate at Joseph Hage Aaronson LLP, considers the draft Finance Bill 2022 clauses published on 20 July 2021 in relation to tax avoidance and recent updates to the tax avoidance regime.
Getting Closer: A Global Minimum Tax on Corporations
On 1 July 2021, US Treasury Secretary Janet Yellen announced that countries representing over 90% of global GDP had agreed to a global minimum tax on corporations (“GMCT”). The GMCT seeks to put a floor on tax competition on corporate income through the introduction of a minimum corporate tax of at least 15%. Whilst certain elements give rise to positive expectations, some caveats should be noted. Much will depend on (1) the outcome of future political negotiations and (2) the detail of the drafting at international and national levels.
The DBKAG & K (CJEU) decision: an opportunity for investment funds?
On 17 June 2021, the European Court decided the joint cases K (C-58/20) and DBKAG (C-59/20) regarding whether the supply of certain services constituted the “management of special investment funds”, benefiting from the VAT exemption enshrined in Article 135(1)(g) of Council Directive 2006/112/EC.