The Court of Appeal ruled that making a UK Court Order for interim maintenance payment does not unlawfully circumvent prohibitions in Ukrainian Sanctions Legislation and the appeal was dismissed.
This appeal raises a short but important point of law about whether the Court can make an Order for payment by a husband in favour of his former wife of interim maintenance into an account in Russia with a Russian bank. Both husband and wife are Russian citizens: the husband lives in Russia and the wife lives in the UK. The Order of Moor J dated 17 October 2014 (the subject of this appeal) provides for maintenance payment by the husband into the wife’s account in a Russian bank in Russia. As the wife lives in the UK, clearly she will remit those monies to the UK. The husband is subject to sanctions imposed by Council Regulation (EU) No 269/2014 (the EU Regulation). The primary effect of the EU Regulation is that his assets are “frozen” in the EU which means no one can “deal” with them in the EU and a person within the EU cannot participate in his dealing with them: it is that primary effect which gives rise to the issue on this appeal.
In most respects the EU Regulation is directly enforceable. However, certain matters require domestic regulations and in the case of the UK these are the Ukraine (European Union Financial Sanctions) (No 2) Regulations 2014 (2014 No. 693), (the UK Regulations). The EU Regulation has primacy over the UK Regulations.
The EU Regulation requires each member to nominate a “competent authority”, which is able to give releases in certain circumstances. HM Treasury is the competent authority nominated by the UK. HM Treasury confirmed that the EU Regulation did not prevent the husband from transferring money in Russia into her Russian account and that the wife was free to transfer money from her Russian account to the UK.
The husband submitted that it was not open to the Court to make an Order for interim maintenance in Russia. The UK Regulations did not contain any provision enabling him to do so. This was rejected by Mr Justice Moor.
The appeal upheld Moor J’s decision, citing two relevant guiding principles:
(1) Each set of Regulations must be construed as a consistent whole and which enables all the Articles or Regulations in question to have effect.
(2) Both sets of Regulations should so far as possible be construed consistently with the EU fundamental right to effective judicial protection.
The CJEU has once again had to consider a holding company’s right to deduct VAT. In a case to which the Sixth VAT Directive – as opposed to the more recent VAT Directive – was relevant, the referring German court was in doubt about how to apportion input VAT paid by a holding company for the acquisition of capital intended for the purchase of shares between the economic and non-economic activities of that company. First of all, the Court recalled the principles arising from its case-law on this topic, namely:
(1) A holding company whose sole purpose is to acquire shares in other undertakings and which does not involve itself directly or indirectly in the management of those undertakings, without prejudice to its rights as a shareholder, does not have either the status of taxable person or the right to deduct tax.
(2) The mere acquisition and holding of shares in a company is not to be regarded as an economic activity conferring on the holder the status of a taxable person. The mere acquisition of financial holdings in other undertakings does not amount to the exploitation of property for the purpose of obtaining income therefore on a continuing basis because any dividend yielded by that holding is merely the result of ownership of the property.
(3) However, it is otherwise where the holding is accompanied by direct or indirect involvement in the management of the companies in which the holding has been acquired and the involvement of a holding company in the management of companies in which it has acquired a shareholding constitutes an economic activity where it entails carrying out transactions which are subject to VAT, e.g. the supply of administrative, financial, commercial and technical services.
The right to deduct input tax arises even where there is no direct and immediate link between a particular input transaction and output transactions giving rise to the right to deduct, where the costs of the services in question are part of a taxable person’s general costs and are, as such, cost components of the taxable person’s supplies. The rules in Article 17(5) of the Sixth Directive provide for methods of deduction where input transactions are used to carry out both economic transactions which give rise to a right to deduct and those which do not. However, the determination of the methods and criteria for apportioning input tax between economic and non-economic activities – referred to in the UK as business and non-business activities – is in the discretion of the Member States who must, within that discretion, provide for a method of calculation which objectively reflects the part of the input expenditure actually to be attributed to those two types of activity. It was for the national courts to establish whether the Member State had had regard to the aims and broad logic of the Sixth Directive and had provided for such a method of calculation.
The CJEU also found that the Sixth VAT Directive precluded national legislation which reserved the right to form a VAT group solely to entities with legal personality and linked to the controlling company of that group in a relationship of subordination, except where those requirements were “appropriate and necessary in order to achieve the objectives seeking to prevent abusive practices or behaviour or to combat tax evasion or tax avoidance”, which were matters for the national court to determine. However, the relevant provision, Article 4(4) did not satisfy the criteria allowing taxable persons to claim direct effect (i.e., to claim the benefit of the provision in the event that their Member State’s legislation was not compatible with that provision and could not be interpreted in a way compatible with it).
The government has published the responses to the consultation on the proposed minimum claim period for the remittance basis charge for non-UK domiciled individuals.
At Autumn Statement 2014, the government announced it would consult on making the claim to pay the remittance basis charge apply for a minimum of 3 years, so that non-UK domiciled individuals could not easily arrange their tax affairs so as to only pay the charge occasionally. The consultation sought to better understand the reasons why individuals choose not to pay the remittance basis charge consistently from year to year. It also sought views on how a minimum claim period for the charge might apply, but also any alternatives that would also meet the government’s objectives.
Respondents did not support the introduction of a minimum claim period for the remittance basis charge. It was argued that there is very little evidence of individuals actively arranging their affairs to plan around the remittance basis charge and that the fluctuation of income and gains from year to year was more likely to be the reason for an individual opting in and out of paying the charge. It was also considered to be complex and unnecessary because of the scale of the issue. Some responses indicated that if the government wished to take action then there would be greater support for restricting the ability to pay the remittance basis charge for a period of time once an individual chooses not to pay the charge.
As a result of significant reforms to the taxation of non-UK domiciled individuals and the responses to the consultation, the government announced at Summer Budget 2015 that it will not introduce a minimum claim period for the remittance basis charge.
HM Treasury, Summary of responses on minimum claim period consultation, July 2015
The European Commission has opened two formal antitrust investigations into possible abusive behaviour by Qualcomm in the field of baseband chipsets used in consumer electronic devices.
Qualcomm is the world’s largest supplier of baseband chipsets.
The first antitrust investigation focuses on Qualcomm’s conditions related to the supply of certain chipsets that comply with 3G (UMTS) and 4G (LTE) standards and are used to deliver cellular mobile connectivity in smartphones and tablets. In particular, the Commission will investigate whether Qualcomm has granted payments, rebates or other financial incentives to its customers on condition that they purchase all or a significant part of their baseband chipsets requirements from Qualcomm, and whether any such behaviour might hinder the ability of rivals to compete.
The second investigation concerns Qualcomm’s pricing practices with regard to certain chipsets that comply with 3G (UMTS) standards and are used to deliver cellular mobile connectivity. In particular, the Commission will be assessing whether Qualcomm has engaged in “predatory pricing” by selling these chipsets at prices below costs, with the intention of hindering its competition from remaining in the market and competing with Qualcomm.
The Summer Finance Bill 2015-2016 is now available here.
Summary of the Bill: A Bill to grant certain duties, to alter other duties, and to amend the law relating to the National Debt and the Public Revenue, and to make further provision in connection with finance.
The Court of Appeal ordered that, whatever the outcome of an appeal, costs associated with preparation of the Court of Appeal bundle will not be recoverable if the bundle does not comply with Paragraph 27 of Practice Direction 52C (appeals to the Court of Appeal) of the Civil Procedure Rules.
The appeal raised a question concerning the proper operation of CPR Part 24 (Summary Judgment) in the context of multi-party construction litigation. However, before addressing this question, Lord Justice Jackson made the following comments on the appeal bundle:
Lord Justice Tomlinson and Lord Justice Floyd agreed with Lord Justice Jackson and the decision not to award costs for preparing the bundle to either party was held.
In relation to the pivotal question in the appeal, the Court of Appeal held that the appeal should be allowed as the requirements of CPR 24.2 (grounds for summary judgment) had not been met.
Denmark’s implementation notifications under the agreement between itself and the EU on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters have been published in the Official Journal.
According to Article 4 of the Agreement of 19 October 2005 between the EU and Denmark on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, whenever implementing measures are adopted, Denmark’s decision on whether or not to implement the content of such measures shall be notified to the Commission.
Denmark has notified the Commission of its decision to implement a number of such measures, following amendments to relevant EU Regulations (notably the Brussels I Regulation).
The Commission has adopted its Annual Report on how it monitors the application of EU law in 2014.
The 32nd Annual Report on Monitoring the Application of EU Law reviews Member States’ performance on key aspects of the application of EU law and highlights the main enforcement policy developments of 2014.
The Commission launches infringement procedures when a Member State does not resolve an alleged breach of Union law. The Commission opens infringement procedures when a Member State has not notified the measures transposing a directive into national law within the agreed deadline. The Commission can also open an infringement procedure on the basis of a Commission investigation or a complaint by individual citizens or businesses when a country’s legislation is not in line with the requirements of EU legislation or when Union law is not applied correctly or at all by national authorities.
Overall, the number of formal infringement procedures has decreased in the last five years. The Commission considers that this reflects the effectiveness of the structured dialogue with Member States via EU Pilot before a formal infringement procedure is launched. The Commission has stated that it also reflects the Commission’s determination to work with the Member States in improving compliance at an early stage and resolving potential infringements quickly, to the benefit of citizens and businesses.
As in 2013, environment, transport and internal market and services remain the policy areas in which most infringement cases were open in 2014.
Report on 2014 infringements: Commission enforces correct implementation of EU law (press release)
The Supreme Court has provided a valuable discussion of the differences between the principle and tests of proportionality in ECHR and EU law.
The case concerned a EU law challenge brought by barristers to the UK’s Quality Assurance Scheme for Advocates (QASA), which required criminal barristers to be judicially assessed before they may accept certain categories of cases. The appellants sought judicial review of the bringing into effect of QASA, alleging that it was contrary to the Provision of Services Regulations 2009. This SI (and the Directive it implemented, 2006/123/EC) stated that authorisations schemes had to satisfy two conditions: the need was justified by an overriding reason relating to the public interest, and the objective pursued could not be attained by a less restrictive measure.
The Supreme Court held as follows:
R (on the application of Lumsdon) v Legal Services Board [2015] UKSC 41, 24 June 2015
The ECJ has given its judgment in a case concerning the fulfilment of obligations entailed by Community transit procedures. Community transit is a customs procedure allowing the movement of goods that are not in free circulation, i.e., non-EU goods that have not been cleared into the EU, between two points in the EU under suspension of customs duties.
DSV, a Danish transport and logistics undertaking, initiated external Community transit procedures for some goods from Copenhagen (Denmark) to Jönköping (Sweden). The goods were not accepted by the consignee in Jönköping and were then returned to Copenhagen, without having been presented to either the Jönköping or Copenhagen customs offices. DSV argued that the goods were included in a later transit procedure which was correctly discharged, whereas the Danish authorities disputed this. The Danish authorities sought to establish that DSV had incurred a customs debt under Article 203 or, in the alternative, Article 204 of Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code, as amended, (the “Customs Code”) and denied DSV the right to deduct the import VAT it had to pay on the goods.
The Court ruled that if it could not be established that the two transit procedures concerned the same goods, then a customs debt is incurred under Article 203, because the goods would be regarded as removed from customs supervision, having never been presented to the customs authority. If on the other hand, the two transit procedures did concern the same goods, the mere fact that the goods were not presented to either the customs office of destination or at origin as part of the first transit procedure is insufficient to constitute removal from customs supervision if it is established that the same goods were subsequently transported again to their destination under a second, correctly discharged transit procedure. Accordingly no customs debt would be incurred under Article 203 and Article 204 would need to be considered instead.
Article 204 concerns customs debts incurred through the failure to fulfil obligations generated by transit procedures. The relevant question regarding Article 204 was whether the late presentation of the goods at the customs office constituted an omission leading to a customs debt being incurred. The Court ruled that it did on the basis of its previous case-law. The instant case was also distinguishable from situations where an authorised consignor had, by mistake, generated two external transit procedures for one and the same consignment of goods – in any event DSV, did not make the dispatches as authorised consignor – or where the goods at issue were never transported under the first transit procedure. However, it was also necessary to consider Article 356(3) of Commission Regulation (EEC) No 2454/93 of 2 July 1993 laying down provisions for the implantation of Council Regulation (EEC) No 2913/92, as amended, (the “Implementing Regulation”), which provides that a carrier or principal is deemed to have complied with the prescribed time limit where the failure to comply is explained to the satisfaction of the customs office of destination and which is beyond the carrier’s or principal’s control. It was for the referring court to ascertain whether this was the case. Alternatively, the negative conditions in Article 204 of the Customs Code exclude a customs debt being incurred where the “failures have no significant effect on the correct operation of the temporary storage or customs procedure in question”. Article 859 of the Implementing Regulation gives an exhaustive list of the situations likely to satisfy that condition. Again, this is a matter for the referring court. Of particular interest in these proceedings were the requirement that there should not be obvious negligence and that the goods should be presented at the destination office within a reasonable time.
Lastly, the Court ruled that Article 168(e) of the VAT Directive did not preclude national legislation excluding the deduction of import VAT by the carrier of goods who is neither the importer nor owner of the goods in question.
Case C‑187/14 Skatteministeriet v DSV Road A/S (Danske Speditører), 25 June 2015
