The Supreme Court dismissed HMRC’s Appeal against a debarring order in the First-tier Tribunal. The FTT had, in making the debarring order against HMRC for various procedural breaches, referred to the guidance in Mitchell v News Group Newspapers Ltd, which it had held to be applicable by analogy to the Tribunals.
HMRC argued before the Supreme Court that the FTT’s reliance on Mitchell was unsound. In particular, CPR applies only to the Courts of England and Wales, whereas the Tribunal has its own rules, the jurisdiction of which extends to the whole of the United Kingdom. The Supreme Court held, however, that it would be unrealistic and undesirable for Tribunals to develop their own procedural jurisprudence on any topic without paying close regard to the approach of the courts to that topic.
Therefore while the imposition of a debarring order was a tough sanction, it was not unreasonable or unjustifiable. The FTT had also not come to its decision on unsound reasoning or any errors of law.
This article appears in the JHA July 2017 Tax Newsletter, which also features:
B.A.T. Industries p.l.c. and Ors v HMRC
The First-tier Tribunal (FTT) dismissed the appeal brought by the British American Tobacco Group against the imposition of a withholding tax on restitution interest under Part 8C Corporation Tax Act 2010.
Part 8C Corporation Tax Act 2010 (introduced by Finance No.2 Act 2015) created a ring-fenced charge at a rate of 45% on interest, not limited to simple interest at a statutory rate, paid in respect of common law claims in restitution. The rationale for the charge, it was said, was that had the awards of interest been received and taxed year-by-year over the period of the claim, they would have been subject to tax at higher corporation tax rates than the current rate and the compounding effect would have been reduced by annual charges.
The FTT rejected BAT’s submission that the tax infringes a number of EU law principles, including the principle of effectiveness and the right to an adequate indemnity for losses arising from a breach of EU law. The Appellants argued unsuccessfully that it is for the courts to calculate taxpayers’ losses due to breaches of EU law based on their individual circumstances and not for the legislator to seek to claw back part of those awards via a one-size fits all tax. However, the FTT considered that a retrospective tax on a court award would only breach EU law if it was confiscatory in nature, which the 45% tax was not. BAT had also argued that, even if a ring-fenced tax on Court awards did not by its nature breach EU law, 45% was a disproportionate rate, since it was set by reference to the nominal rate of tax and that most if not all of the affected taxpayers would have reduced their tax liability through the availability of reliefs. The FTT rejected this argument, finding that BAT had not proven that they had not received a windfall and that it was rational and proportionate to set a tax by reference to the nominal rate. The FTT did not consider it appropriate to refer any questions to the CJEU since it found that the law was clear. The next stage is an appeal to the Upper Tribunal.
This article appears in the JHA July 2017 Tax Newsletter, which also features:
Reliance on HMRC guidance – Mansworth v Jelley
The taxpayer received employee share options from his employer and he exercised those options in 1999 and 2000. Following the decision in Mansworth v Jelley in which the grant of an option and its exercise were deemed to be a single transaction, HMRC issued its 2003 guidance, which stated that the income tax payable had to be added to the base cost and confirmed it would apply the same treatment to shares acquired under options before April 2003.
The taxpayer therefore sought to amend his returns to claim a capital tax loss to offset against subsequent capital gains. HMRC opened enquiries into the taxpayer’s self-assessment, warning him that they did not accept his additional losses and his claims remained open. Six years later, HMRC issued corrected guidance announcing that its 2003 guidance had been wrong in law and that the base cost would be treated as the market value of the shares at the date of acquisition unless the taxpayer could show real detrimental reliance on the previous guidance.
It was accepted by the parties that HMRC’s guidance had given rise to a legitimate expectation that HMRC would be bound by the guidance. However, the Court held that it is open to a public body to change a policy if it has acted under a mistake. HMRC’s decision could only be successfully challenged if it caused conspicuous unfairness, which in this case the Appellant was unable to show.
This article appears in the JHA July 2017 Tax Newsletter, which also features:
Joseph Hage Aaronson LLP has grown its commercial litigation practice with the addition of Michelle Duncan who joins the firm’s London office as a partner.
Michelle joined the firm from Paul Hastings (Europe) Limited in June 2017. Michelle’s practice is focused on commercial litigation and dispute resolution, both domestic and international, including extensive experience in Africa. Michelle has expertise in securities and insolvency litigation and on advising clients in relation to international fraud and corruption. She acts for financial institutions, corporates and private clients.
Joe Hage, Managing Partner, commented: “Michelle has joined the firm’s growing commercial litigation practice and brings a wealth of experience to the firm. Michelle has worked with several of the firm’s partners while they were at the Bar and has over 20 years’ experience as a litigator.”
A new fixed costs pilot is to be opened to new cases in certain specialist civil courts in London, Manchester and Leeds; namely the London Mercantile Court and three courts in each of the Manchester District Registry and Leeds District Registry.
There are a number of requirements for the costs pilot to be used, such as agreement between the parties and the length of the trial.
The matter of Lexlaw Ltd v Mrs Shaista Zuberi [2017] EWHC 1350 (Ch) concerned Lexlaw’s claim in respect of unpaid solicitor’s fees which Mrs Zuberi disputed on various grounds, but the issue for consideration at a forthcoming preliminary issues hearing concerned whether the allowance for “the payment” and also for “costs and expenses” meant the agreement complied with the DBA Regulations.
First published in CCH Daily incorporating Accountancy Live.
On 3 April 2017, Marcus Smith J delivered judgment in the High Court in Jazztel plc v HMRC [2017] EWHC 677 (Ch), the test case in the Stamp Taxes GLO. The claimant here sought recovery of UK stamp duty reserve tax (SDRT) that it had paid on the issue of shares to clearance houses and in exchange for depository receipts. Under ss 96 and 93 respectively of the Finance Act 1986, such transactions gave rise to a charge to SDRT at a higher rate of 1.5%, as compared with the 0.5% charge that applied to a standard transfer of shares.
Continue reading on CCH Daily incorporating Accountancy Live (subscription required)
It seems that a refusal to mediate is not an unreasonable choice after all.
In Graham Gore v (1) Kishwar Naheed and (2) Asim Suhail Ahmed [2017 EWCA Civ 369], Lord Justice Patten outlined that a party was not unreasonable in refusing mediation in favour of using the Courts, if the circumstances in the particular case meant that decision was vindicated.
Mr Justice Toulson has recently been scathing of Defendants who apply tactics in the costs management process.
In Findcharm Ltd v Churchill Group Ltd, the Defendant’s Precedent R document reduced the Claimant’s budget to less than half. The Judge deemed this completely unrealistic.
nterpol has, by a decision taken at its session of 27 February to 3 March 2017, deleted from its databases the Red Notice issued in July 2015 in respect of President Viktor Yanukovych, and the data held on its files concerning President Yanukovych’s son, Oleksandr Yanukovych. Interpol has confirmed that President Yanukovych and Oleksandr Yanukovych are not subject to an Interpol Red Notice or Diffusion, and that they are not known on Interpol’s databases.
This action by Interpol follows applications in 2015 to Interpol by Joseph Hage Aaronson LLP on behalf of President Yanukovych and Oleksandr Yanukovych seeking their removal from the Interpol list of wanted persons, including on the basis that the cases against them were politically motivated, lacked an evidentiary basis, and lacked due process. Following these requests, Interpol had suspended a Red Notice issued against President Yanukovych and a so-called Diffusion (a request for co-operation in relation to a police investigation) concerning Oleksandr Yanukovych, and blocked the access of Interpol member countries to data concerning them, while it considered the concerns raised.
During this process Interpol considered further information provided by Joseph Hage Aaronson LLP on behalf of President Yanukovych and Oleksandr Yanukovych, and consulted the National Central Bureau of Ukraine, including on its further requests for Red Notices made during that time, which have not been granted. This decision confirms that the retention of the data held in respect of President Yanukovych and Oleksandr Yanukovych is contrary to and that all international police cooperation via Interpol’s channels in this case would not be in conformity with Interpol’s Constitution and Rules.
Enquiries to: Joseph Hage Aaronson LLP, Tel: +44 (0)2078518888
