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3rd appeal?
How many appeals are allowed? Is this a normal occurrence? What is the criteria needed to get an appeal, be it first, second, third, etc.?
@shirleym
I'm sure it's 3. First Tier, second tier and court of appeal. Congrats on your victory (sometimes common sense prevails if you get the right person).
dodgy tax schemes
Its great to see these offensive schemes defeated. It also makes it much easier for us on the coal face to demonstrate to clients tempted by aggresive tax avoidance that they are increasingly unlikely to work.
@johnjenkins
What victory?
@jon_griffey - I agree. I want it to reach the stage where the promoters of artificial schemes have to repay the fees, or some other financial penalty. It still cost us, the taxpayers, a bundle to get the scheme closed down! At the moment, the promoters seem to keep the fees earned, whereas their clients have to pay the tax that was due. It seems a bit one sided.
Wouldn't it be better
if these artificial schemes were bought before the courts (paid for by the initiators) before they are erroneously sold to greedy clients.
@john
I think there is something like that in the USA, where a scheme has to be 'approved' before it can be marketed. I am a bit vague on the details, though.
In theory, there can be 4 levels of Appeal - FTT, UTT, Court of Appeal and Supreme Court.
Broadly similar to the "old" regime with the General/Special Commissioners at the bottom of the totem pole.
A Matter of opinion
The transcript makes interesting reading.
Frankly I am surprised that the plaintiffs took it as far as they did; quite apart from the fine points of law regarding the various reliefs claimed, there was no commercial purpose to the series of transactions, none at all so the scheme should have failed on that ground alone.
Still, no doubt it provided several pay days for barristers from the original opinion on the construction of the scheme to the QCs at the second appeal.
Don't forget that HMRC don't only collect the tax but also pretty hefty penalties and interest. As to whether the promoter does or should keep their fees I think it again, does or should, depend on why a scheme fails.
As this cases shows, some should perhaps have been stillborn and it does leave one wondering how clients were introduced to NT and what sort of supportive and personalized advice they had, whereas in others HMRC may properly investigate and attack a scheme successfully (double dipping under S48 and some Technology funds) while in others have their case rebuffed. Sometimes, the decision will be a fine one either way and sometimes there is clear blue water and HMRC should never have moved on them e.g. certain film related EIS Ingenious Media etc.
When HMRC loses you don't, of course, tend to hear about them
I do not
think there is any fine line between real and artificial. It's either one or the other. There are some grey areas in law but that is because not every eventuality can be thought of. Then it is the job of the courts to decide.
To me the easiest way of defining real and artificial is "putting the wife on the books". If the money goes into her account (even joint) that is real. If no money passes hands that is artificial.
The devil is in the detail.
I largely agree but HMRC would quite properly, crawl all over each and every scheme claiming S48/S42 film relief and I know one firm of accountants who did virtually nothing except pre-release compliance checking; even the tiniest slip could turn an otherwise legitimate scheme into a failed one.
On your other point, 'real and artificial' used to be, I believe, as clear cut as you suggest. Perhaps unhelpfully, the courts have muddied the water with such notions as constructive trusts. I think there was a case a few years ago where a couple owned a let property but contended that all the income belonged to one of them, (might have been the other round) the courts agreed. There was another which I am sure involved an MP or local councilor in Enfield. The case I'm thinking gof related to a parent being taxable (or not) on cash invested for the child. I think the money had originated from a third party but invested by the parent. Perhaps a legal eagle could set me right?
GAAR
Never mind GAAR and complicated anti-avoidance legislation. What is needed is a simple duck test. The person on the Clapham omnibus can tell instantly that a contrived arrangement with no commercial purpose is artificial tax avoidance. We don't need a room full of QC's to tell us that.