The tribunal takes a broad approach to applying an EU tax directive in the UK despite Brexit.
Over a year on from the end of the Brexit implementation period, the UK tax tribunals are yet to definitively rule on the approach to applying relevant EU directives to inform UK tax law. The recent First-tier Tribunal (FTT) decision in Cantina Levorato SRL v HMRC [2021] UKFTT 461 (TC) does give an indication of the current direction of travel, however. It suggests that a conforming (‘Marleasing’ (Case C-106/89)) interpretation can be applied to UK legislation to give general effect to a directive, without any scrutiny of whether the specific provision of the directive is ‘of a kind’ with one which has previously been given effect to by the UK or EU courts.
The FTT’s approach
The case concerned an assessment to excise duty by HMRC arising out of alleged irregularities in the movement of shipments of wine on which the duty payable had been suspended. As part of this, the FTT was called on to interpret two sets of UK regulations, each of which implemented an EU directive.
The impact of the end of the Brexit implementation period was considered only briefly (at para 12 of the decision). Both parties agreed the effect of the European Union (Withdrawal) Act 2018 (EUWA 2018) was that the UK Regulations continued to apply as ‘retained EU law’. That is uncontroversial.
Of more note was that the FTT stated that the requirement to construe those laws in conformity with the relevant EU directives in accordance with the Marleasing principle (and other general principles of EU law) also continues to apply. And it did so by reference only to the general provision of the EUWA 2018 dealing with the ongoing role of EU case law. No mention was made of the specific ‘gateway’ in s 4(2)(b) of the Act through which propositions based on EU directives must pass to remain part of EU law post-Brexit.
This represents one of the approaches we mooted (in relation to another EU directive) in our article ‘Using the Principal VAT Directive in the UK after Brexit’ (Tax Journal, 7 May 2021). It is perhaps the simplest, and may mean that most or all EU tax law, even as developed by CJEU caselaw after Brexit, remains relevant in the UK. It will be interesting to see whether the UK tribunals and higher courts also adopt this approach in other cases or whether they follow the more granular assessment of the effect of the specific provisions of the relevant directive which s 4 of the EUWA 2018 would seem to require.
Next steps
More cases (both tax and non-tax) where the question of the continuing role of the Marleasing principle arises can be expected throughout the course of this year and beyond. But it may still be some time before a clear and consistent approach emerges.
Home >Articles > Cantina Levorato SRL: interpreting EU law post-Brexit
Cantina Levorato SRL: interpreting EU law post-Brexit
The tribunal takes a broad approach to applying an EU tax directive in the UK despite Brexit.
Over a year on from the end of the Brexit implementation period, the UK tax tribunals are yet to definitively rule on the approach to applying relevant EU directives to inform UK tax law. The recent First-tier Tribunal (FTT) decision in Cantina Levorato SRL v HMRC [2021] UKFTT 461 (TC) does give an indication of the current direction of travel, however. It suggests that a conforming (‘Marleasing’ (Case C-106/89)) interpretation can be applied to UK legislation to give general effect to a directive, without any scrutiny of whether the specific provision of the directive is ‘of a kind’ with one which has previously been given effect to by the UK or EU courts.
The FTT’s approach
The case concerned an assessment to excise duty by HMRC arising out of alleged irregularities in the movement of shipments of wine on which the duty payable had been suspended. As part of this, the FTT was called on to interpret two sets of UK regulations, each of which implemented an EU directive.
The impact of the end of the Brexit implementation period was considered only briefly (at para 12 of the decision). Both parties agreed the effect of the European Union (Withdrawal) Act 2018 (EUWA 2018) was that the UK Regulations continued to apply as ‘retained EU law’. That is uncontroversial.
Of more note was that the FTT stated that the requirement to construe those laws in conformity with the relevant EU directives in accordance with the Marleasing principle (and other general principles of EU law) also continues to apply. And it did so by reference only to the general provision of the EUWA 2018 dealing with the ongoing role of EU case law. No mention was made of the specific ‘gateway’ in s 4(2)(b) of the Act through which propositions based on EU directives must pass to remain part of EU law post-Brexit.
This represents one of the approaches we mooted (in relation to another EU directive) in our article ‘Using the Principal VAT Directive in the UK after Brexit’ (Tax Journal, 7 May 2021). It is perhaps the simplest, and may mean that most or all EU tax law, even as developed by CJEU caselaw after Brexit, remains relevant in the UK. It will be interesting to see whether the UK tribunals and higher courts also adopt this approach in other cases or whether they follow the more granular assessment of the effect of the specific provisions of the relevant directive which s 4 of the EUWA 2018 would seem to require.
Next steps
More cases (both tax and non-tax) where the question of the continuing role of the Marleasing principle arises can be expected throughout the course of this year and beyond. But it may still be some time before a clear and consistent approach emerges.
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