This week it is the question of HMRC’s powers and the latitude which it enjoys to agree an interpretation of legislation. HMRC clearly recognises that it has considerable freedom in its approach to construction in cases where it considers tax should be paid. What is less clear is why HMRC takes the view that this latitude does not apply in other cases. The concern in my particular case is that statements as to the clarity of the legislation is being used as an excuse to avoid public law obligations of reasonableness.
Are there any new rules that are causing a particular problem?
Analysing and addressing the impact of the EU (Withdrawal) Act 2018 on areas of the tax code where the freedoms of movement had an impact is a thorny issue, and it is one that I suspect will take years to resolve.
If you could make one change to a tax law or practice, what would it be?
I think it is a great pity that the tax tribunals have decided that they have no jurisdiction to hear public law issues relating to HMRC’s practices. It can create an artificial distinction following on from an enquiry where, as a practical matter, there is a single dispute with a number of different aspects. The distinction between those matters which a tax tribunal can decision and those which it cannot is one which a lot of people don’t understand. The rationale for that distinction is even less well understood. It can be difficult trying to explain it to frustrated clients.
An unwelcome side effect of the issue has also been that the courts’ time is increasingly being taken up with technical jurisdictional disputes. There have been a number of cases on this in recent years. In a recent (single) dispute, HMRC put forward the proposition that to resolve all of the issues we would have to go to three separate courts. When resolving disputes has become that complicated something has clearly gone wrong.
It would be a better use of resources all round to ensure that tribunals can resolve the substantive issue between the parties without unnecessary complication. The tribunals were created and are qualified to do this. Given that, it may be time to review their jurisdiction.
What should we look out for later this year?
I have just finished arguing HMRC v Fisher with Philip Baker QC in the Court of Appeal. Notwithstanding my evident interest in this case, I think it raises a lot of important issues in relation to the very difficult transfer of assets abroad code. The arguments cover the treatment of transfers by companies and the application of the motive defence. Those are points the decisions on which are going to be of wider and continuing relevance even if the consideration of EU law (which also arises) might be of more limited relevance to the future.
Separately, the Supreme Court decision in HMRC v Tinkler is one that I will be keeping an eye out for. It is the latest in a series of cases where the operation of the assessment machinery is subject to detailed consideration by the courts. In that case, the issue is whether the taxpayer could deny that HMRC had opened a valid enquiry which the notice had been sent to the wrong address, but his advisers had dealt with HMRC as if a valid enquiry had been opened.
What do you know now that you wish you’d known at the start of your career?
Not at the start of my career, but if I had known Brexit was coming I would not have spent a substantial period of time researching and writing a book on how EU law impacts on direct tax in the UK.
And finally, you might not know this about me but...
A large part of the recent lockdown was spent competing in a range of made-up sports and games with my wife and children in the Donegal countryside, and winning sometimes.
This week it is the question of HMRC’s powers and the latitude which it enjoys to agree an interpretation of legislation. HMRC clearly recognises that it has considerable freedom in its approach to construction in cases where it considers tax should be paid. What is less clear is why HMRC takes the view that this latitude does not apply in other cases. The concern in my particular case is that statements as to the clarity of the legislation is being used as an excuse to avoid public law obligations of reasonableness.
Are there any new rules that are causing a particular problem?
Analysing and addressing the impact of the EU (Withdrawal) Act 2018 on areas of the tax code where the freedoms of movement had an impact is a thorny issue, and it is one that I suspect will take years to resolve.
If you could make one change to a tax law or practice, what would it be?
I think it is a great pity that the tax tribunals have decided that they have no jurisdiction to hear public law issues relating to HMRC’s practices. It can create an artificial distinction following on from an enquiry where, as a practical matter, there is a single dispute with a number of different aspects. The distinction between those matters which a tax tribunal can decision and those which it cannot is one which a lot of people don’t understand. The rationale for that distinction is even less well understood. It can be difficult trying to explain it to frustrated clients.
An unwelcome side effect of the issue has also been that the courts’ time is increasingly being taken up with technical jurisdictional disputes. There have been a number of cases on this in recent years. In a recent (single) dispute, HMRC put forward the proposition that to resolve all of the issues we would have to go to three separate courts. When resolving disputes has become that complicated something has clearly gone wrong.
It would be a better use of resources all round to ensure that tribunals can resolve the substantive issue between the parties without unnecessary complication. The tribunals were created and are qualified to do this. Given that, it may be time to review their jurisdiction.
What should we look out for later this year?
I have just finished arguing HMRC v Fisher with Philip Baker QC in the Court of Appeal. Notwithstanding my evident interest in this case, I think it raises a lot of important issues in relation to the very difficult transfer of assets abroad code. The arguments cover the treatment of transfers by companies and the application of the motive defence. Those are points the decisions on which are going to be of wider and continuing relevance even if the consideration of EU law (which also arises) might be of more limited relevance to the future.
Separately, the Supreme Court decision in HMRC v Tinkler is one that I will be keeping an eye out for. It is the latest in a series of cases where the operation of the assessment machinery is subject to detailed consideration by the courts. In that case, the issue is whether the taxpayer could deny that HMRC had opened a valid enquiry which the notice had been sent to the wrong address, but his advisers had dealt with HMRC as if a valid enquiry had been opened.
What do you know now that you wish you’d known at the start of your career?
Not at the start of my career, but if I had known Brexit was coming I would not have spent a substantial period of time researching and writing a book on how EU law impacts on direct tax in the UK.
And finally, you might not know this about me but...
A large part of the recent lockdown was spent competing in a range of made-up sports and games with my wife and children in the Donegal countryside, and winning sometimes.
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