One minute with Constantine Christofi, senior associate in RPC’s tax team.
What’s keeping you busy at work?
Any and every type of tax dispute you can think of. We are seeing in particular a number of challenges from HMRC in respect of loan relationships, and one case in which we are instructed (JTI v HMRC [2022] UKFTT 166 (TC)), will be heard by the Upper Tribunal in March of this year. As I commented in this journal last year (‘Purpose-based rules: have we hit BlackRock-bottom?’, 2 September 2022), I think the law has taken a horribly wrong turn on these ‘unallowable purpose’ cases, and hopefully that will be corrected in the next year or so (hope springs eternal).
For individual taxpayers, it is extremely varied. I have dealt with some very novel income tax cases in the past year (for example, in relation to benefits-in-kind and employment-related securities), and HMRC continue their focus on domicile status, residence and offshore trust matters.
If you could make one change to tax, what would it be?
As I am confined to only one change, I won’t mention that I think the tribunal’s jurisdiction should be expanded so that it has a general supervisory jurisdiction over HMRC, or that taxpayers should be able to seek their enquiry-related costs from HMRC via an application to the tribunal, in circumstances where HMRC’s enquiry has been shown to be ill-founded or misconceived.
My one change would be to establish a specialist division in the High Court for the most complex and high value tax cases, from which the unsuccessful party could appeal to the Court of Appeal (or even leapfrog to the Supreme Court, where appropriate). High value commercial disputes are dealt with effectively in the High Court by full-time former lawyers who are experienced in adversarial litigation, and I can see no good reason why the most important tax cases should not be dealt with in a similar way.
What do you know now that you wish you’d known at the start of your career?
If I had to pick one thing, I would say that it’s important to remember that, when analysing a statutory provision, you should pan the proverbial camera back as far as possible – starting with the provision itself, then the Chapter, then the Part, and so on – even looking at predecessor provisions and surrounding case law. It’s only when you construe a provision in context that it can be properly understood, and the intention of Parliament ascertained.
Has a recent tax case caught your eye?
Kwik-Fit Group [2021] UKFTT 283 (TC) was the latest in a number of cases published in 2022 that concerned the loan-relationships rules in CTA 2009 ss 441–442. As with JTI and BlackRock [2022] UKUT 199 (TCC), I struggle to see how a decision by a group to locate transaction debt in the UK can give rise to a main avoidance (or ‘unallowable’) purpose by the taxpayer, simply because another company in its group knew that it would obtain a debit on the bona fide commercial borrowing, which could be surrendered intra-group.
It is also the lack of tax cases in one particular court that has caught my eye. I find it disappointing that so few tax cases appear to be passing to the highest court in the land, with the Supreme Court declining to hear the appeals in Hoey v HMRC [2022] EWCA Civ 656 and Khan v HMRC [2021] EWCA Civ 624 last year, which I think merited review at that level.
What should we look out for this year?
Recent statistics have shown that during the pandemic there was a steep drop in tax yield from HMRC’s compliance activities. Given the growing pressure on HMRC to reverse that trend, the HMRC compliance officer may become king again this year. I expect HMRC to continue with further ‘nudge’ campaigns, and an increase in general enquiry work which will lead, in due course, to an increase in assessments and appeals.
You might not know this about me but...
As well as being addicted to tax, I also obsess over cooking, and am a closet Elvis superfan (I would recommend Baz Lurhman’s latest epic motion picture, for those who are uninitiated with the King’s good work) and not-so-closet Arsenal fan (it finally feels safe to say that again).
One minute with Constantine Christofi, senior associate in RPC’s tax team.
What’s keeping you busy at work?
Any and every type of tax dispute you can think of. We are seeing in particular a number of challenges from HMRC in respect of loan relationships, and one case in which we are instructed (JTI v HMRC [2022] UKFTT 166 (TC)), will be heard by the Upper Tribunal in March of this year. As I commented in this journal last year (‘Purpose-based rules: have we hit BlackRock-bottom?’, 2 September 2022), I think the law has taken a horribly wrong turn on these ‘unallowable purpose’ cases, and hopefully that will be corrected in the next year or so (hope springs eternal).
For individual taxpayers, it is extremely varied. I have dealt with some very novel income tax cases in the past year (for example, in relation to benefits-in-kind and employment-related securities), and HMRC continue their focus on domicile status, residence and offshore trust matters.
If you could make one change to tax, what would it be?
As I am confined to only one change, I won’t mention that I think the tribunal’s jurisdiction should be expanded so that it has a general supervisory jurisdiction over HMRC, or that taxpayers should be able to seek their enquiry-related costs from HMRC via an application to the tribunal, in circumstances where HMRC’s enquiry has been shown to be ill-founded or misconceived.
My one change would be to establish a specialist division in the High Court for the most complex and high value tax cases, from which the unsuccessful party could appeal to the Court of Appeal (or even leapfrog to the Supreme Court, where appropriate). High value commercial disputes are dealt with effectively in the High Court by full-time former lawyers who are experienced in adversarial litigation, and I can see no good reason why the most important tax cases should not be dealt with in a similar way.
What do you know now that you wish you’d known at the start of your career?
If I had to pick one thing, I would say that it’s important to remember that, when analysing a statutory provision, you should pan the proverbial camera back as far as possible – starting with the provision itself, then the Chapter, then the Part, and so on – even looking at predecessor provisions and surrounding case law. It’s only when you construe a provision in context that it can be properly understood, and the intention of Parliament ascertained.
Has a recent tax case caught your eye?
Kwik-Fit Group [2021] UKFTT 283 (TC) was the latest in a number of cases published in 2022 that concerned the loan-relationships rules in CTA 2009 ss 441–442. As with JTI and BlackRock [2022] UKUT 199 (TCC), I struggle to see how a decision by a group to locate transaction debt in the UK can give rise to a main avoidance (or ‘unallowable’) purpose by the taxpayer, simply because another company in its group knew that it would obtain a debit on the bona fide commercial borrowing, which could be surrendered intra-group.
It is also the lack of tax cases in one particular court that has caught my eye. I find it disappointing that so few tax cases appear to be passing to the highest court in the land, with the Supreme Court declining to hear the appeals in Hoey v HMRC [2022] EWCA Civ 656 and Khan v HMRC [2021] EWCA Civ 624 last year, which I think merited review at that level.
What should we look out for this year?
Recent statistics have shown that during the pandemic there was a steep drop in tax yield from HMRC’s compliance activities. Given the growing pressure on HMRC to reverse that trend, the HMRC compliance officer may become king again this year. I expect HMRC to continue with further ‘nudge’ campaigns, and an increase in general enquiry work which will lead, in due course, to an increase in assessments and appeals.
You might not know this about me but...
As well as being addicted to tax, I also obsess over cooking, and am a closet Elvis superfan (I would recommend Baz Lurhman’s latest epic motion picture, for those who are uninitiated with the King’s good work) and not-so-closet Arsenal fan (it finally feels safe to say that again).
