Market leading insight for tax experts
View online issue

2022: that was the year that was

printer Mail
Speed read
It was a slow start to the year, but we didn’t appreciate this at the time because we thought issues like Brexit and a global pandemic were real problems. But once things got going, there was no stopping 2022. This was the year that ‘fiscal events’ became almost an everyday occurrence. It was also the year the tax community gave up on knowing what the tax rates were or ever would be.


We are so fortunate to have VAT cases as a lens through which to examine the human condition. For example, the case of Gray & Farrar International LLP v HMRC [2021] UKUT 293 (TCC) showed us that helping people to find love is a VAT-able endeavour, albeit the place of the supply of that service is outside the UK because the post-introduction services are ancillary to the main service of actually introducing the matches. Rumour has it HMRC considered an appeal on the basis that this does not accurately reflect how people fall in love.


The government published its ‘Benefits of Brexit’ policy paper. Say what you like about Brexit, but it’s very hard to argue against the promise of ‘electric flying taxis’. Our children will thank us. Of course, what the paper failed to mention was the feeling of smugness UK tax advisers now get when the EU announces another entirely unworkable tax directive. DEBRA anyone?


The Treasury announced that it would suspend the exchange of tax information with Russia thereby hitting Putin exactly where it hurts.


The press discovered that the chancellor’s wife had filed her tax returns on the basis of not being domiciled in the UK and so naturally the tax rules surrounding domiciliation became the subject of calm and measured debate. It was widely agreed that the taking of an entirely legal position by his wife on this point meant that the then-chancellor had no chance of ever becoming prime minister.

The case of JTI Acquisitions v HMRC [2022] TC/2019/04496 showed us that if you agree to buy a company, then after the event pay tax advisers to develop something you call a ‘global tax planning idea’ pursuant to which you change the acquisition structure, there is a risk the courts might not view this as entirely benign. It is fully expected HMRC will successfully argue that the unallowable purpose rule is a thought crime on appeal.

In Glanbia Milk Ltd v HMRC [2022] UKFTT 108 (TC), the FTT accepted that a flapjack was not a cake in part because it is not typically enjoyed at celebratory functions, which left the author struggling to remember the last time she had witnessed the happy couple cutting a Jaffa Cake at a wedding.


The case of R Borra (aka Gupta) v HMRC and another [2022] EQHC 1195 (Ch) demonstrated that you cannot avoid being pursued for bankruptcy by HMRC by claiming to be someone else. However, you can try and it is likely that the result of your attempts will be a pretty scathing decision by the English courts.


It is often said that punctuality is a virtue. This is clearly not a virtue always valued by HMRC, as demonstrated by the case of Quayviews Ltd v HMRC [2022] UKFTT 190 (TC). The poor taxpayer was taken to court over penalties issued because it had filed its tax returns early. Fortunately, not knowing that early tax returns create problems for HMRC’s computer systems was considered to be a ‘reasonable excuse’.


A new chancellor!

And Happy L-Day! It really should be a sort of national holiday.

Boris Johnson was forced to resign, in part over the controversy surrounding ‘party-gate’. The tax profession was especially disapproving of the lockdown parties because everyone knows there is no point having a party at work unless you can get a tax deduction for it.

The UT released its decision on the appeal of Euromoney Institutional Investor PLC v HMRC [2022] UKUT 205 (TCC) and the taxpayer won. It turns out that a teensy bit of tax avoidance is OK as long as the taxpayer doesn’t seem too interested in it and it is supported by incomplete tax advice. Mindful of the statements in the article written last year, this author duly served up a set of yellow books, cooked rare, together with a peppercorn sauce, as a feast for an eager trainee*.


The most Dickensian-sounding of all government offices – the Office of Tax Simplification – announced a consultation on hybrid and remote working (sadly to be its last, see below). However, tax professionals couldn’t get their colleagues interested because they were too busy lying on the beach with their laptops.

The rainforests wept but lawyers cheered as the decision of the UTT in Blackrock LLC 5 v HMRC [2022] UKUT 199 (TCC) seemed to demand full-scale, multi-page loan agreements for simple intra-group lending arrangements.

The GAAR panel published its first ever opinion in favour of the taxpayer and so after nearly a decade of wondering we now finally know what a reasonable person would reasonably regard as a reasonable course of action (acting reasonably).

In Burlington Loan Management DAC v HMRC [2022] UKFTT 00290 (TC) we had a rare example of a taxpayer win on a ‘main purpose’ test. Somewhat concerningly for tax advisers, it seems plausible that the victory had something to do with the taxpayer having received no tax advice in connection with the transaction.

The case of Thursford Enterprises Ltd v HMRC [2022] UKFTT 240 (TC) was a cautionary tale in ensuring that your performance is sufficiently ‘dramatic’ if you want to claim theatre tax relief. HMRC’s threshold for the ‘dramatic’ is seemingly pretty high, so be sure your productions include plenty of fire-breathing and axe-throwing, just to be on the safe side.


A new chancellor!

The new chancellor immediately held something called a ‘fiscal event’, which was a curious way to describe a speech that threatened economic apocalypse. In life, opinions are divided on whether surprises are a Good Thing or a Bad Thing. When it comes to tax policy, the author submits that the ‘mini-Budget’ established that surprises are a Bad Thing.

Many Things were announced as part of the mini-budget, but by far the most significant Thing was that the Office of Tax Simplification would be disbanded. But why? Did the government consider the OTS had finally achieved its aim? Because any tax adviser who has ever had to explain the jurisdictional scope of UK stamp duty would beg to differ. There is still work to do! Or does the government actually prefer complexity in tax legislation? In which case – round of applause – the anti-hybrid rules represent excellent work.

We were also saddened by the news of the death of Queen Elizabeth II. As the world mourned, the tax community was furiously trying to identify when exactly Her Majesty’s Revenue and Customs became His Majesty’s Revenue and Customs.


A new chancellor!

The author was slightly concerned because she was expecting a busy run-up to Christmas. However, upon checking the rota she was relieved to discover that she wasn’t due to get the red box until May 2023. Phew.

Another fiscal event! But this was definitely not a Budget or a mini-Budget. As it overturned essentially all aspects of the previous month’s mini-budget (other than disbanding the Office of Tax Simplification – see above), it was really more of an ‘un-Budget’.

The ‘Longshot Argument in a Tax Case of the Year Award’ goes to Averdieck v HMRC [TC/2022/02324] in which we learned that having a busy lane at the end of the extensive ‘grounds’ of your ‘stunning cotemporary home’ does not make it ‘mixed use’ for SDLT purposes because that lane does not constitute the business premises of your local Amazon driver.

More importantly, we had a landmark decision in the form of Innovative Bites Ltd v HMRC [2022] UKFTT 352 (TC) on the VAT treatment of giant marshmallows. Precocious children and sweet-toothed adults everywhere started appealing to ‘VAT-efficiency’ when insisting upon giant marshmallows in their hot chocolate. We expect more super-sized confectionary going forwards.


The same chancellor!

Another fiscal event! This time it was a real Budget. The new chancellor crossed his fingers and hoped that because he had made sure that the main tax rates remained the same, the people wouldn’t notice that all the announcements meant they would be paying more tax.

Uber announced that it had settled its long-running VAT-dispute with HMRC for a cool £615m. This author wonders how many stars Uber and HMRC would have given each other for the journey to settlement.

While everybody agrees that ‘shell companies’ are a Bad Thing, sadly nobody can agree on what they actually are. A new ATAD 3 proposal to combat shell companies was due to be released this month and this was widely expected to offer absolutely no clarity on the point. However, this failed to materialise. Waiting for an updated draft ATAD 3 directive to be released is proving to be like waiting for the release of Top Gun 2: Maverick during the pandemic – only that was actually good.

It was reported that the government’s plan to consider whether to scrap all EU-derived laws by the end of 2023 had been undermined by the discovery of around 1,400 additional bits of legislation down the back of the sofa.

As FTX collapsed, tech-bros across the nation suddenly had to familiarise themselves with the concept of a capital loss.


2022 was the year we learned that you should always stop to smell the roses because things can always get worse. The best we can say for 2023 is that tax will continue to make headlines and nobody will be able to agree on whether any particular tax is a Good Thing or a Bad Thing. However, we don’t want to leave you on a low note. How about a joke? How many tax advisers does it take to change a lightbulb? Two – one to change the lightbulb and another to confirm it is at arm’s length. 

The author would like to thank Wanipa Ndhlovu and Lucy Cole for their assistance with this article.

* As an entirely separate point, no trainees were harmed in the writing of this article.

Issue: 1601
Categories: Analysis