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This is interesting
There is £900m of potential tax loss at stake here, so retrospective anti-avoidance legislation could be justified under the Protocol on unscheduled (i.e. outside of a Budget) announcements of changes in tax law (under the "wholly exceptional" and "significant" tests - see below). But this is prospective anti-avoidance legislation (i.e. only effective from the date of the announcement onwards) announced outside of a Budget .
By contrast, on 4th June 2013, HMRC made another unscheduled announcement on anti-avoidance legislation to block a newly disclosed SDLT scheme, where the potential tax loss was insignificant (see below the TIIN published at the time of the 2013 Budget and re-published with this announcement) and where this scheme will be blocked in 6 weeks time anyway on enactment of the 2013 Finance Act. Not only that, they made this change retrospective to the 2012 Budget. See:
http://www.hmrc.gov.uk/budget-updates/march2013/comp-guidance.pdf
http://www.hmrc.gov.uk/budget-updates/march2013/tiin.pdf
See the comments at section 5 of page 6 of the link below.
http://www.hm-treasury.gov.uk/d/taxprofessionalforum_270313.pdf
See page 17 et seq of HMRC’s own Protocol in the link below on such retrospective law changes outside of a Budget, which talks about “wholly exceptional” situations where “significant” tax loss is at stake.
http://cdn.hm-treasury.gov.uk/2011budget_taxavoidance.pdf
Does this not make a mockery of HMRC’s own Protocol on such things and bring our tax system into disrepute?
Does this mean that HMRC could simply say, 10 years from now out of the blue, that another SDLT scheme they don’t like (where there is no signifcant tax loss risk and that works despite GAAR) is blocked retrospectively to the 2012 Budget?
No this doesn't, as the "capital contributions" were funded by
... Does this not make a mockery of HMRC’s own Protocol on such things and bring our tax system into disrepute? ...
No, this does not, because the "capital contributions" were funded by some business etc customers of the companies, and not by the companies themselves. Agreed ?
To clarify
You are clearly of the view that the Treasury was well justified to close this capital allowance loophole that was costing c£900k and I do not disagree with that. The fact is that the Treasury did not close that CAs scheme on a retrospective basis, but closed the SDLT scheme on a retrospective basis. The latter measure was in breach of HMRC’s own Protocol on such things since there was, by HMRC's own admission, insignificant tax at stake and the SDLT scheme will get blocked under FA 2013 anyway in 6 weeks so, overall, there are no “wholly exceptional” circumstances to justify that SDLT measure.
I simply ask you to compare and contrast these two measures. One of them must be wrong and my view is that as the CAs measure was justified, the SDLT measure must be unjustified. Even if the CAs measure was made retrospectively, the SDLT measure still could not be justified due to the insignificant tax loss involved and the lack of “wholly exceptional” circumstances per HMRC’s Protocol.
Capex
Did the expenditure on the capital contributions funded by the original business customers get them any capital allowances? If not then they should be the ones claiming the capital allowances, even if they have to be given the information by the utility firms/inland revenue.
Temporary Legislation
Not sure if recent legislation is permanent or temporary.
It would seem sensible to allow temporary changes to legistlation provided it was included in the next, or even the one under discussion, as normal legislation may be too slow if all claims could be made before the primary legislation received royal assent.
The Treasury/HMRC
Have clearly read my comment above and agree with it and have blocked the potentially embarrassing links. Here they are cached (but probably not for much longer!):
More evidence that the retrospective SDLT change was unjustified
Also, read the HMT letter in the link below:
https://www.whatdotheyknow.com/request/what_constitutes_exceptional_cir
Interestingly, there was no similar reference to “wholly exceptional” circumstances in Mr Gauke’s SDLT announcement on 4.6.13.
Incriminating evidence from HMRC and David Gauke
HMRC confirm in the link below that they did not believe that this particular SDLT scheme worked and this retrospective legislation is just to put the matter beyond doubt. Therefore, HMRC seem to admit that there is no (significant) tax loss at stake and that this retrospective SDLT legislation is just to save them the trouble of proving in the courts that there is no tax loss (due to the scheme not working in their view). Thus, by implication, they admit that this retrospective legislation is a breach of the Protocol.
http://www.hmrc.gov.uk/budget-updates/march2013/comp-guidance.pdf
The following comment by David Gauke (from the subsequent parliamentary debate on this retrospective SDLT law change) in the link below confirms this:
“It is also worth pointing out that HMRC believes that the particular schemes do not work, so ultimately HMRC would win in litigation; but that would take a considerable length of time. In those circumstances, it would be better to address the matter now by making the situation clear and putting it beyond doubt.”
http://www.publications.parliament.uk/pa/cm201314/cmpublic/financeno2/13...
By contrast, in the case of the Barclays Bank retrospective tax legislation, HMRC did not claim that that scheme did not work (i.e. unlike the SDLT scheme, HMRC admitted there was (significant) tax loss at stake in the case of the Barclays Bank scheme, as it potentially worked).
What a farce!