I’ve been defending HMRC’s VAT treatment of gaming machines, the next stage of this long saga, with its trips to the ECJ and the Supreme Court, is a rehearing in May of the FTT’s decision in Rank – a decision taken nine years ago! Gambling is becoming a theme, as I’m also now gearing up for a gaming duty case in the Court of Appeal in March, about free chips given by casinos to certain customers. I’m also acting for Jolyon Maugham QC in his challenge to HMRC’s VAT treatment of Uber. Like many cases in the law books, there’s an important principle arising out of a small sum of money: Jo is claiming an input tax deduction of an Uber trip he took for business purposes, and that raises the key question of whether the non-registered driver, or VAT-registered Uber, supplied the service.
What’s your view on the EC’s fiscal state aid challenges?
There’s nothing new about the point that if the state bends the tax rules in favour of a company, or creates a special tax rule for a particular company’s benefit, then there is a state aid: it has the same effect, and is rightly treated the same way, as a straightforward grant to that company. The difficulty is how you judge whether the rules have been ‘bent’ or a special rule adopted (or, in the jargon of state aid, whether the treatment of the taxpayer is a ‘selective advantage’). Most of these cases involve transfer pricing rules: so the issue is whether these taxpayers have got better treatment than they would have got had those rules been ‘normally’ applied. So that means deciding what is a ‘normal’ application of the rules, and that is complex when many of the supplies are ones for which there is no obvious equivalent arm’s length transaction. One factor that may be important in forensic terms is evidence that the states concerned were consciously trying to interpret the rules to benefit the taxpayers concerned, or accepted the taxpayers’ approach uncritically. Though of doubtful legal relevance, one can see that any judge may be tempted not to accept a justification of tax treatment if it looks as if it has been constructed after the event, and was not actually the approach taken at the time.
What should we look out for in 2018?
For me, it’s all about Brexit. Brexit will profoundly affect VAT: and it is likely to be a key area in which critical concepts in the EU Withdrawal Bill, such as retained EU law and the way in which EU legal principles will continue to operate, are likely to be tested.
I would also point to the Trade Bill and the Taxation (Cross-border Trade) Bill. I am particularly interested in the new regime for UK trade remedies, which will give the government power to impose duties to deal with dumping and foreign subsidies: a new Trade Remedies Authority will look at whether the conditions laid down in WTO rules for imposing these duties has been met, but the final public interest decision will be for the secretary of state. For someone like me, interested in both tax and economic regulation, this is fascinating stuff. But there is much else in those Bills that tax advisers will need to get on top of.
It will also be interesting to see what the government is planning to do about state aid law after Brexit. My view is that we will have to have a domestic regime as a condition of any deep trade deal with the EU, but there are real issues in how that is going to work.
More immediately, I am worried that HMRC simply doesn’t have the resources properly to prepare for its new work-load after Brexit and the challenge of dealing with new law: that will affect all of us and all of our clients.
Finally, you might not know this about me but …
I play the piano (badly) and clarinet (not so badly). I’m probably happiest when playing the piano in our place in Nice: as it’s an electronic one with a silent/headphone mode, I don’t have to worry about inflicting my playing on anyone else!
I’ve been defending HMRC’s VAT treatment of gaming machines, the next stage of this long saga, with its trips to the ECJ and the Supreme Court, is a rehearing in May of the FTT’s decision in Rank – a decision taken nine years ago! Gambling is becoming a theme, as I’m also now gearing up for a gaming duty case in the Court of Appeal in March, about free chips given by casinos to certain customers. I’m also acting for Jolyon Maugham QC in his challenge to HMRC’s VAT treatment of Uber. Like many cases in the law books, there’s an important principle arising out of a small sum of money: Jo is claiming an input tax deduction of an Uber trip he took for business purposes, and that raises the key question of whether the non-registered driver, or VAT-registered Uber, supplied the service.
What’s your view on the EC’s fiscal state aid challenges?
There’s nothing new about the point that if the state bends the tax rules in favour of a company, or creates a special tax rule for a particular company’s benefit, then there is a state aid: it has the same effect, and is rightly treated the same way, as a straightforward grant to that company. The difficulty is how you judge whether the rules have been ‘bent’ or a special rule adopted (or, in the jargon of state aid, whether the treatment of the taxpayer is a ‘selective advantage’). Most of these cases involve transfer pricing rules: so the issue is whether these taxpayers have got better treatment than they would have got had those rules been ‘normally’ applied. So that means deciding what is a ‘normal’ application of the rules, and that is complex when many of the supplies are ones for which there is no obvious equivalent arm’s length transaction. One factor that may be important in forensic terms is evidence that the states concerned were consciously trying to interpret the rules to benefit the taxpayers concerned, or accepted the taxpayers’ approach uncritically. Though of doubtful legal relevance, one can see that any judge may be tempted not to accept a justification of tax treatment if it looks as if it has been constructed after the event, and was not actually the approach taken at the time.
What should we look out for in 2018?
For me, it’s all about Brexit. Brexit will profoundly affect VAT: and it is likely to be a key area in which critical concepts in the EU Withdrawal Bill, such as retained EU law and the way in which EU legal principles will continue to operate, are likely to be tested.
I would also point to the Trade Bill and the Taxation (Cross-border Trade) Bill. I am particularly interested in the new regime for UK trade remedies, which will give the government power to impose duties to deal with dumping and foreign subsidies: a new Trade Remedies Authority will look at whether the conditions laid down in WTO rules for imposing these duties has been met, but the final public interest decision will be for the secretary of state. For someone like me, interested in both tax and economic regulation, this is fascinating stuff. But there is much else in those Bills that tax advisers will need to get on top of.
It will also be interesting to see what the government is planning to do about state aid law after Brexit. My view is that we will have to have a domestic regime as a condition of any deep trade deal with the EU, but there are real issues in how that is going to work.
More immediately, I am worried that HMRC simply doesn’t have the resources properly to prepare for its new work-load after Brexit and the challenge of dealing with new law: that will affect all of us and all of our clients.
Finally, you might not know this about me but …
I play the piano (badly) and clarinet (not so badly). I’m probably happiest when playing the piano in our place in Nice: as it’s an electronic one with a silent/headphone mode, I don’t have to worry about inflicting my playing on anyone else!
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