One minute with Jeremy Woolf, barrister at Pump Court Tax Chambers.
What’s keeping you busy at work?
A number of different advisory and contentious issues covering both direct and indirect taxes and personal and corporate taxpayers. One of the things that I enjoy about practice is the range of issues that I have to advise upon. It ensures that I never get bored. In my role as chair of the CIOT EU and Human Rights Committee, I have been spending time contributing to its submissions on the EU (Withdrawal) Bill. While, in my role as chair of the indirect tax committee of the Confédération Fiscale Européenne, I have been contributing to its proposed submissions on the European Commission’s recent proposals to reform the VAT treatment of inter-community supplies.
If you make changes to tax law or practice, what would be top of your list?
The introduction of a reverse GAAR. It seems unfair that HMRC can rely on the GAAR to ignore the wording of legislation, yet it will frequently seek to rely on the literal wording of legislation even though the charge or failure to give relief is not within its spirit.
I also consider it wrong that the proposed enabler penalty provisions are not fault based. I appreciate that the penalty is linked to the GAAR. However, questions of whether the GAAR applies will frequently be judgmental, and therefore an issue on which views may reasonably differ. The provisions in my view also do not make adequate allowance for the fact that lawyers may be handicapped from protecting themselves by legal professional privilege. This includes being able to adduce grounds for mitigation of penalties. If penalties of this type are to be justified, then it should surely be right that proper procedures should be put in place that enable a lawyer to be able to defend themselves. One example of a step that could be taken would be to permit them on a confidential basis to make submissions to the First-tier Tribunal explaining why mitigation is appropriate.
The EU (Withdrawal) Bill is designed to provide certainty following Brexit. Will the Bill achieve that aim as currently drafted?
If it is not amended, one of the EU (Withdrawal) Bill’s main problems is its failure to give full effect to the general principles of EU law. This is likely to cause uncertainty going forward, as it becomes necessary to determine to what extent an existing judgment is based on a general principle of EU law, and therefore cannot be automatically relied upon to confer rights on taxpayers or, for that matter, HMRC, since the principle of abuse is presumably a general principle that works in its favour. Another related problem is that the Bill does not identify what is, or what is not, a general principle. For example, does the term extend to principles that underlie a particular area of the law, such as the principle of neutrality in VAT? Another unsatisfactory issue is the retrospective loss of the ability to rely on the general principles; as currently drafted, a taxpayer will only be able to fully rely on the principles if they have commenced proceedings prior to Brexit day. On the current wording, taxpayers may therefore lose the ability to rely on general principles, even though the dispute relates to events that took place prior to Brexit day.
Is there a recent tax case that has caught your eye?
The Murray case (RFC 2012 Plc [2017] UKSC 45) is very interesting. The reasoning of the Supreme Court is not easy to reconcile with a lot of the existing case law, which is no doubt going to raise some interesting questions going forward. Another interesting issue is how it interrelates with Part 7A of ITEPA 2003, which imposes a tax charge on arrangements involving third parties, and the rules relating to corporation tax deductions. HMRC’s former guidance suggested that it was taking the view that Part 7A entitled it to assess taxpayers on payments from EBTs or outstanding loans but would deny employers an ability to claim a full deduction on the basis that it should have been claimed when the contribution was made. It seemed very unfair to me that HMRC should be seeking to rely on retroactive legislation to impose a charge on sums that they would otherwise be out of time to assess but then refused to give corresponding corporation tax relief. It is therefore to be welcomed that the latest settlement opportunity would appear to accept that HMRC will, in any event, allow a full corporation tax deduction to be claimed.
One minute with Jeremy Woolf, barrister at Pump Court Tax Chambers.
What’s keeping you busy at work?
A number of different advisory and contentious issues covering both direct and indirect taxes and personal and corporate taxpayers. One of the things that I enjoy about practice is the range of issues that I have to advise upon. It ensures that I never get bored. In my role as chair of the CIOT EU and Human Rights Committee, I have been spending time contributing to its submissions on the EU (Withdrawal) Bill. While, in my role as chair of the indirect tax committee of the Confédération Fiscale Européenne, I have been contributing to its proposed submissions on the European Commission’s recent proposals to reform the VAT treatment of inter-community supplies.
If you make changes to tax law or practice, what would be top of your list?
The introduction of a reverse GAAR. It seems unfair that HMRC can rely on the GAAR to ignore the wording of legislation, yet it will frequently seek to rely on the literal wording of legislation even though the charge or failure to give relief is not within its spirit.
I also consider it wrong that the proposed enabler penalty provisions are not fault based. I appreciate that the penalty is linked to the GAAR. However, questions of whether the GAAR applies will frequently be judgmental, and therefore an issue on which views may reasonably differ. The provisions in my view also do not make adequate allowance for the fact that lawyers may be handicapped from protecting themselves by legal professional privilege. This includes being able to adduce grounds for mitigation of penalties. If penalties of this type are to be justified, then it should surely be right that proper procedures should be put in place that enable a lawyer to be able to defend themselves. One example of a step that could be taken would be to permit them on a confidential basis to make submissions to the First-tier Tribunal explaining why mitigation is appropriate.
The EU (Withdrawal) Bill is designed to provide certainty following Brexit. Will the Bill achieve that aim as currently drafted?
If it is not amended, one of the EU (Withdrawal) Bill’s main problems is its failure to give full effect to the general principles of EU law. This is likely to cause uncertainty going forward, as it becomes necessary to determine to what extent an existing judgment is based on a general principle of EU law, and therefore cannot be automatically relied upon to confer rights on taxpayers or, for that matter, HMRC, since the principle of abuse is presumably a general principle that works in its favour. Another related problem is that the Bill does not identify what is, or what is not, a general principle. For example, does the term extend to principles that underlie a particular area of the law, such as the principle of neutrality in VAT? Another unsatisfactory issue is the retrospective loss of the ability to rely on the general principles; as currently drafted, a taxpayer will only be able to fully rely on the principles if they have commenced proceedings prior to Brexit day. On the current wording, taxpayers may therefore lose the ability to rely on general principles, even though the dispute relates to events that took place prior to Brexit day.
Is there a recent tax case that has caught your eye?
The Murray case (RFC 2012 Plc [2017] UKSC 45) is very interesting. The reasoning of the Supreme Court is not easy to reconcile with a lot of the existing case law, which is no doubt going to raise some interesting questions going forward. Another interesting issue is how it interrelates with Part 7A of ITEPA 2003, which imposes a tax charge on arrangements involving third parties, and the rules relating to corporation tax deductions. HMRC’s former guidance suggested that it was taking the view that Part 7A entitled it to assess taxpayers on payments from EBTs or outstanding loans but would deny employers an ability to claim a full deduction on the basis that it should have been claimed when the contribution was made. It seemed very unfair to me that HMRC should be seeking to rely on retroactive legislation to impose a charge on sums that they would otherwise be out of time to assess but then refused to give corresponding corporation tax relief. It is therefore to be welcomed that the latest settlement opportunity would appear to accept that HMRC will, in any event, allow a full corporation tax deduction to be claimed.
