Injunctions against Innocent bystanders
Sloane Street is lined with the outlets of retail brands. They own trade marks. They face competition from cheap imitations sold on the internet through web sites with addresses which change. No-one knows who the sellers are, or where they are. Their identity is concealed. No effective injunction can be obtained against them. The imitated brands obtained internet blocking injunctions against BT and other service providers requiring them to block access to identified web sites and addresses to which they migrate. At first instance and in the Court of Appeal the internet service providers resisted the injunctions because they committed no wrong and were entirely innocent. The case went to the Supreme Court on who should pay the expenses of implementing the injunctions.
Injunctions are granted for a purpose. The injunction jurisdiction rests on current policy. The Mareva injunction is a consequence of use of off shore companies, banks accounts and trust structures. The decisions in the time of Queen Victoria which denied Mareva jurisdiction were founded on policy which became out dated and unjust.
The internet blocking injunction is granted against the third parties to protect a copyright or trade mark right, and to promote the due administration of justice when no effective order can be made against the wrongdoer. The expenses of implementing them must be borne by the claimant and not imposed on the innocent party.
The same principles apply to cases, whether about Intellectual Property or not. Injunctions cannot and do not depend on case law on the limits to the jurisdiction exercised by the old High Court of Chancery over disclosure of documents in the time of Charles Dickens. That jurisdiction was not available against the innocent bystander, a mere witness. In Victorian England there was no internet. Times have changed.
The jurisdiction to grant injunctions against innocent bystanders is considered in The Jurisdiction to Grant Injunctions against Innocent Third Parties, published in The European Intellectual Property Review Volume 40 Issue 9 2018 , p 571, Steven Gee QC.
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 (email@example.com).
Preparing for the Possibility of a Domicile Enquiry
Helen McGhee, a director and chartered tax advisor at Joseph Hague Aaronson, explores who might be vulnerable to an HMRC enquiry on domicile and how best to deal with such enquiries.
The Kittel Principle - Sweet Sixteen
The following is an article written by David Bedenham about HMRC’s wide-ranging application of the ‘Kittel principle’. The current focus appears to very much be on the labour supply industry and the allegation of ‘Mini Umbrella Company Fraud’ (or ‘MUC Fraud’). This article highlights the need for taxpayers to get specialist advice at an early stage when faced with a Kittel decision. If you have any queries about Kittel-related issues or similar denials of input VAT or assessments to VAT, please contact Iain MacWhannell (firstname.lastname@example.org).