The Senior Costs Judge, Master Gordon-Saker, has applied the new proportionality test introduced by the Jackson reforms in determining the costs to be awarded in a breach of privacy case. In doing so, he reduced the amount due to the claimant to approximately half of what he had previously deemed as reasonable on a line by line assessment.
One of the main issues in the case was whether the new test applies to additional liabilities as well as to base costs. The master held that it did but added that, contrary to the position under the old rules, the court is not required to consider these items separately.
He stated that it is clear that the new test was intended to bring about a real change in the assessment of costs, but nevertheless admitted that there is presently little guidance as to how it should be applied.
Originally printed in Business Tax Voice in May 2016
Even by today’s standards when anti-avoidance legislation seems to be more and more radical, the Transactions in Securities rules (TIS) were widely seen as condemning tax avoidance transactions to history with some early judicial comment describing them as making tax avoidance no longer possible. As is now clear, this was true only so far as the tax avoidance was within their scope and over the intervening years the Revenue found that the scope of these provisions was very limited indeed. So much so that in the cases of Kleinwort Benson, Sema Group Pension fund and Laird Group, arrangements that the Revenue could reasonably believe were fairly within the cross hairs of the TIS rules escaped. Thus it is clear that where they did apply their impact was severe, so much so that even fifty years on no other provision operates quite like them, but they did not apply very often.
Ray McCann takes a look at the history of the TIS rules and considers the impact of the Tax Law rewrite programme and the 2016 changes.
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Originally published in Tax Journal on 27 May 2016
Swiss leaks, Luxembourg leaks, the Panama papers, BEPS and the EU Commission’s Anti-Tax Avoidance Package – where will all this get us? Despite the public furore over the tax affairs of multinationals, there is still no clear dividing line between acceptable and unacceptable tax planning arrangements for groups. This is because the OECD, the EU Commission, the CJEU, HMRC and other tax authorities employ a number of different doctrines that try to identify what tax avoidance means. All that is certain is that the boundaries are constantly shifting and may be defined differently by different players.
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Originally printed in Tax Journal on 11 May 2016
The Court of Appeal has handed down its judgment in the Prudential case, in what is hoped to be one of the final steps of this long lasting action between taxpayers invested in cross border portfolio holdings and HMRC. HMRC’s appeal was allowed on three esoteric issues of computation relating to ACT but was otherwise dismissed. The judgment sends out a broader message: it is not permissible, as HMRC sought to do in relation to ACT, to disregard the legislative system and seek to superimpose a newly devised system to replace it in circumstances where EU law was engaged. The issue of Prudential’s entitlement to compound interest remains subject to further litigation. Simon Whitehead and Philippe Freund (Joseph Hage Aaronson), who acted for the taxpayers, summarise the outcome of this judgment and explain why it has taken so long.
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In April 2015 the European Commission opened a formal antitrust investigation of Google in relation to its Android mobile operating systems and Google’s agreements associated with the use of Android and Google’s proprietary applications. Following from that investigation, the European Commission has (on 20 April 2016) issued a Statement of Objections. In effect, the European Commission alleges that Google, which has 90% of the market share for general internet searches, is abusing its dominant position. In its Statement of Objections, the Commission outlined three specific concerns:
It will be up to Google to reply to the Commission’s Statement of Position before the matter is concluded at the level of the European Commission.
This article appears in the JHA May 2016 Tax Newsletter, which also features:
The Court of Justice last Thursday handed down its judgments in C-607/14 Bookit and C-130/15 National Exhibition Centre, clarifying the application of the VAT payment and transfer exemption under Article 135(1)(d) of Council Directive 2006/112/EC. The decision has a bearing on the VAT treatment of card handling services.
In the first instance, the Court observed that the national court ought to consider whether the provision of such services was part of a single supply of tickets or constituted a separate service.
The Court went on to decide that an exchange of information between a trader and its merchant acquirer bank could not fall within the exemption. Collecting and sending cardholder details, receiving authorisation codes and sending authorisation codes and transaction data back to the cardholder bank via a merchant acquirer could not constitute a ‘specific and essential function’. Whether an authorisation code was obtained directly or through a merchant acquirer made no difference to the analysis. Further, Bookit and the NEC did not assume liability as regards changes in the financial and legal situation.
The decision at least partially undermines Bookit CA [2006] EWCA Civ 550 in which the Court of Appeal considered Bookit’s previous regime, which involved specifically transmitting card information and security information to its own bank without a merchant acquirer, as VAT exempt.
This article appears in the JHA May 2016 Tax Newsletter, which also features:
The Council of the European Union has been busy this week in the area of both direct and indirect taxation at EU and international level.
First, in the area of direct taxation, the Council adopted rules on the exchange of tax-related information on multinational enterprises (MNEs). The directive, which is part of the EU Commission’s Anti-Tax Avoidance Package, builds on OECD’s BEPS Action 13 and is aimed at groups of companies with a total consolidated group revenue of at least €750 million. Starting with the 2016 fiscal year, MNEs will be required to report information on their profits, taxes paid, tangible assets, number of employees, etc. Non-EU resident parent companies will have to file a report through their EU subsidiaries. The information will be exchanged automatically amongst tax authorities.
The deadlines set by the directive include:
Member States are to implement penalties in cases of breaches.
In the area of indirect taxation, the Council has adopted a directive, amending the VAT Directive, whereby the minimum standard VAT rate of 15% will be maintained until 31 December 2017. This, according to the Council, will help prevent excessive divergence in VAT rates applied across different Member States, distortions of competition that could arise as a result, and ensure legal certainty. Discussions on the features of a definitive EU VAT regime are ongoing. At global level, the Council agreed on the establishment of an EU list of third country non-cooperative jurisdictions, more commonly known as tax havens. The Code of Conduct Group will commence work on such a list by September 2016.
This article appears in the JHA May 2016 Tax Newsletter, which also features:
The General Court of the European Union (“the General Court”) today heard oral argument in challenges by Viktor Fedorovych Yanukovych (Case T-346/14) and Oleksandr Viktorovych Yanukovych (Case T-348/14) to the EU Sanctions imposed on them in 2014 and 2015.
In these Cases, which started in May 2014, the Applicants challenge the freezing of their assets by the EU, and seek the annulment of the relevant EU Council Decisions and Regulations insofar as they apply to them.
Each Applicant has a different case based on different circumstances, but the Court joined the Cases for the purposes of the oral hearing.
The oral hearing was in front of the Ninth Chamber of the General Court sitting with five judges rather than the usual three.
For part of the hearing the public was excluded.
The Applicants argued in the open part of the hearing, amongst other things, that the Sanctions had been imposed for impermissible political reasons, but that, in any event, the Applicants did not fulfil lawful sanction listing criteria set by the Council, and that the Council’s assessment that they did fulfil such criteria was wrong.
The judgments of the General Court on these Cases are expected to be delivered within three to six months.
ENDS
Notes to editors
The Applicants were represented before the General Court by Joseph Hage Aaronson LLP, a law firm based in London:
www.jha.com
An action for annulment seeks the annulment of acts of the institutions of the EU, in these cases the Council, that are contrary to EU law.
Further information about the Cases, including a summary of the pleas in law and main arguments, is available at the website of the Court of Justice of the EU at:
http://curia.europa.eu
OR alternatively direct links:
Case T-346/14 (Viktor Yanukovych)
Case T-348/14 (Oleksandr Yanukovych)
Enquiries to Joseph Hage Aaronson LLP, Tel. +44 (0) 20 7851 8888.
29 April 2016
Christoph Jumpelt
Head of Corporate Communications
Deutsche Welle
Kurt-Schumacher-Str. 3
53113 Bonn
Germany
By email to: christoph.jumpelt@dw.com; info@dw.com
Dear Sirs
This firm represented President Yanukovych in the annulment application hearing in the General Court of the European Union today.
In your article published a few hours ago you suggest that President Yanukovych has complained (through his lawyers) that an excessive amount of his European assets have been frozen. You have completely misunderstood the nature of the legal submissions made on his behalf. There was no suggestion at the hearing that President Yanukovych has any European assets or even any discussion of his assets, let alone any suggestion that “too many” of these assets have been frozen.
It is important that all reports of legal proceedings are fair and accurate. In the circumstances, we would invite you to correct your misleading article and to publish the content of this letter.
Yours faithfully,
Joe Hage
In two recent cases concerning applications for relief from sanctions pursuant to CPR3.9 the Court of Appeal has applied the 3-stage tests set out in Denton v TH White Ltd [2014] 1 WLR 3926 and emphasised the need to act promptly when applying for relief.
In Gentry v Miller and another [2016] EWCA Civ 141 an insurance company’s application to set aside a default judgment and damages award against its insured was dismissed, even though there was evidence suggesting that the claim was fraudulent.
Vos J held that it is now established that the Denton tests apply to applications under CPR 13.3 (setting aside a default judgment) and that it is “equally clear” that the same tests also apply to an application under CPR 39.3 to set aside a judgment or order made at a hearing not attended by the party affected. The crucial factor in this case was the insurer’s delay in applying for relief, which had to be considered both as one of the requirements under CPR 13.3 and CPR 39.3, and at the third stage of the Denton tests.
The applicant’s failure to act promptly was also the determining factor in Oak Cash & Carry Ltd v British Gas Trading Ltd [2016] EWCA Civ 153 where the Court refused to grant relief from the sanction of striking out following the applicant’s non-compliance with an unless order. In this case Jackson LJ also clarified that when assessing the seriousness and significance of a breach of an unless order (Denton first stage) the Court must also look at the underlying breach which gave rise to the unless order.
