CoA effectivley says GAAR is now redundant

https://www.bailii.org/ew/cases/EWCA/Civ/2024/92.html

Didn't find your answer?

https://www.bailii.org/ew/cases/EWCA/Civ/2024/92.html

Mayes was the reason for the GAAR, but the CoA has basically now distinguished it as not being concerned with commercial matters (prescriptive legislation is not enough now it seems) and so SC Hurstwood Properties is now basically an HMRC panacea to do down pretty much any tax avoidance scheme notwithstanding recent UT comments here to the contrary: https://caselaw.nationalarchives.gov.uk/ukut/tcc/2022/185

 

Replies (14)

Please login or register to join the discussion.

avatar
By FactChecker
08th Feb 2024 18:05

The appellants' faces must have been a sight to behold when Mr Birkbeck, at the outset of his submissions opened by saying that 'the scheme did not work for two substantive reasons' ... *before* continuing 'but that for procedural and administrative reasons, HMRC were not entitled to rely on either of those substantive reasons'!

Thanks (1)
Replying to FactChecker:
avatar
By Justin Bryant
08th Feb 2024 18:12

Eh? What's wrong with that submission? Taxpayers often win avoidance scheme cases for procedural (cf. substantive) reasons.

Thanks (0)
Replying to Justin Bryant:
avatar
By FactChecker
08th Feb 2024 18:23

Nothing at all wrong with the submission ... but I was imaging the not uncommon situation where the taxpayers are not fully au fait with the presentation.
And, and if so, the pause after the admission that the scheme didn't work may have felt painful ... until the subsequent continuation.
It was but a light-hearted comment!

Thanks (2)
Replying to Justin Bryant:
avatar
By richard thomas
08th Feb 2024 19:58

It's a perfectly good submission but I think that FactChecker was suggesting that the clients might not have understood the niceties of pleading and been concerned that counsel was throwing in the towel before the bout had begun.

EDIT: Written before dinner and a very good bottle of Veneto wine, so I came back to my computer and knocked off the post before checking if anything more had been said. Glad I got it right though.

Thanks (1)
avatar
By richard thomas
08th Feb 2024 20:08

And hurrah for Kim Lewison, who even though a mere Downing man, has dared to say (or hint in a judicial sort of way) what (boasting in a JB sort of way) I have said for yonks, that Mayes was wrongly argued and therefore wrongly decided in an abstract intellectual way. There were many debates within HMRC about the strategy but I lost.

The best argument in a lot of these cases is the Star Trek one: they were premiums, Jim (not Harra), but not as we ought to know them. See eg Carreras, a conscious, I think, nod by Lenny Hoffmann to his idol Lord Wilberforce, and maybe to the best and greatest judge on tax avoidance, Justice Learned Hand, in particular in Helvering v Gregory (2nd Circuit Court of Appeals).

Thanks (0)
Replying to richard thomas:
avatar
By Justin Bryant
09th Feb 2024 09:12

Without wanting to be accused of sounding boastful (that's a first for me there I think), I expect us two are the only ones here who appreciate the significance of this decision re Ramsay.

It's almost as if the CoA were smarting from what the SC said in Hurstwood and have taken their revenge on taxpayers at large.

It's a bit ironic that Lord Justice Lewison was the judge quoted at para 86 here with approval.

http://taxandchancery_ut.decisions.tribunals.gov.uk/Documents/decisions/...

It's also a bit ironic given what the CoA (including Lewison LJ) said recently at para 66 here.

https://www.bailii.org/ew/cases/EWCA/Civ/2023/1481.html

And where HMRC's Ramsay challenge failed, despite it obviously being a tax avoidance scheme.

By widening the Ramsay principle as they have here, they have not explained what is and is not commercial legislation where, contrary to the previous narrower Ramsay principle, there is now an implied penumbra of anti-tax avoidance meaning (regardless of how prescriptive the so-called commercial legislation is).

It also seems to narrow the possibility of taxpayers applying the so-called reverse Ramsay principle.

Finally, the CoA did not go so far as to say Mayes was wrongly decided (and they were right not to do so) as a pure matter of applying the law to the facts in case that's what you're suggesting.

Thanks (1)
Replying to Justin Bryant:
avatar
By richard thomas
09th Feb 2024 09:57

I had almost forgotten Bowring - check the FTT panel in that case. The problem we faced in Bowring at FTT was that HMRC did not argue Ramsay or any kind of anti-avoidance doctrine - we even asked counsel to confirm that they were not arguing Ramsay.

I am probably more sanguine than you about "the end of tax avoidance", but I think Tax Dragon's comments are well wide of the mark. It would be odd indeed if the Hurstwood decision applied only to real property based tax schemes as that is the area where some of the most legalistic and formulaic law is found. In my view the real beginning of the end of tax avoidance was SPI (delivered by HL on the same day as BMBF, which itself must be open to some question) which was of course about choses in action not land. And it's not just tax, because clearly Ramsay is now just another canon of statutory interpretation (as the Americans rather pompously like to call it).

Thanks (0)
Replying to richard thomas:
avatar
By Justin Bryant
09th Feb 2024 10:11

How interesting!
https://www.pumptax.com/wp-content/uploads/old/documents/bowring250613.pdf

Unlike para 37 and 62 comments here respectively, statutory anti-tax avoidance penumbral spirits are now in it seems:
http://taxandchancery_ut.decisions.tribunals.gov.uk/Documents/decisions/...
https://publications.parliament.uk/pa/ld200001/ldjudgmt/jd010208/macniv-...

And see p36 here (Judge
Hand was dissenting in Ickelheimer): https://taxbar.com/wp-content/uploads/2016/01/words_from_the_heart_dg_00...

This is all now unsatisfactory in my view, as it in turn begs the (circular) question "what is tax avoidance" (at least where it is not admitted), when there is no universally agreed definition of tax avoidance.

Thanks (0)
Replying to richard thomas:
avatar
By Tax Dragon
09th Feb 2024 10:59

richard thomas wrote:

that is the area where some of the most legalistic and formulaic law is found.

With that, I appreciate I had my logic back to front below. Thank you for explaining.

Thanks (0)
Replying to Tax Dragon:
avatar
By Justin Bryant
09th Feb 2024 11:05

That's not the first time of course.

Thanks (0)
avatar
By Tax Dragon
09th Feb 2024 08:31

Hurstwood and the case you link to are property-based cases, so to say all tax avoidance is dead, based on those alone, might be overstating.

A similar recent discussion in a different area of tax may be found in Bluecrest.

Thanks (1)
Replying to Tax Dragon:
By Ruddles
09th Feb 2024 13:34

Tax Dragon wrote:
to say all tax avoidance is dead, based on those alone, might be overstating.

That's not the first time of course.

Thanks (2)
avatar
By Bobbo
13th Feb 2024 16:37

Was there any particular reason an unlimited company was used for the scheme, rather than a 'normal' limited company?

Thanks (0)
Replying to Bobbo:
avatar
By Justin Bryant
14th Feb 2024 08:58

Yes; it's a lot easier to reduce its capital with a dividend in specie. The Vardy version of the scheme (done by Deloitte) failed for that reason re bad implementation (that's what happens when accountants try to be company lawyers).

Thanks (1)