One minute with Paul Farmer, a barrister and consultant to Joseph Hage Aaronson LLP.
You have seen the ECJ from within and later as a practitioner. What do you think of its record over the years?
Arguably the court’s most important contribution to tax law has been its application of general principles, particularly effective protection of taxpayers’ rights. Introducing teleological or purposive interpretation to the UK courts, particularly in the VAT area, was also transformational.
More controversial is the ECJ’s record on direct tax. I doubt that back in the 1980s the court appreciated the enormity of the challenge it would face. It started out with what in effect was an enhanced version of international tax principles, but then encountered trickier cases, particularly the outbound cases like cross-border loss relief, foreign dividend taxation and exit taxes. It had to refine the mantra ‘loss of revenue is no defence’ and was forced to invent novel principles. It has consequently struggled sometimes to find a coherent and consistent line, making its rulings less predictable. Ultimately, though, not tackling direct tax obstacles would have been a dereliction of duty.
And the European Commission, where you also worked?
At a political level, the Commission adroitly rekindled direct tax policy discussions in the late 1990s by latching on to the tax competition and anti-avoidance agenda, while still promoting its aim of reducing barriers to cross-border business. Its flagship policy of a common consolidated tax base was ambitious. Many governments did not want it, some were attracted to the idea of a consolidated base with formulary apportionment while others, motivated more by the tax competition agenda, were really only interested in a compulsory common base and minimum rate.
What tends not to hit the headlines is the Commission’s role as amicus curiae in every ECJ reference. A huge workload for the Legal Service and the relevant DGs, but a major contribution.
What challenges do you see going forward?
European tax law depends on national courts for its application. Not all national courts play ball. Hungary and Poland have been in the news recently, but reticence in applying EU tax law is more widespread. Recently I was surprised to find Danish, Dutch and Swedish courts not referring cases or seeking to defeat ECJ rulings. In truth, the application of EU tax law is patchy. This is a significant issue for clients operating in the EU.
What is keeping you busy at JHA?
After joining JHA in 2013, my work broadened to other EU areas beyond tax. Last year, I stepped back from the partnership and now work as a consultant, mainly on EU tax matters. I continue to contribute to the firm’s UK cases – we are currently preparing for a series of hearings over the next year. A significant part of my recent work, however, has been assisting clients’ foreign lawyers with cases in national courts and the ECJ (in areas such as fiscal state aid, anti-avoidance and withholding taxes).
What was the worst moment in your career so far?
Litigators have bad moments. The one that stands out though was when I came over from Brussels to give a talk at the London IFA branch and met Graham Aaronson for the first time. I gave what was meant to pass for an erudite expose on EU tax law. Graham’s talk consisted essentially in reading out the (recent) Hoechst judgment in a scornful voice, repeatedly shaking his head in dismay and muttering words like ‘Disneyworld’ and ‘Alice in Wonderland’. He evidently knew his audience, who were in stitches, and of course the comedy was intended to make a serious point. One attendee asked me privately if I would ever share a podium with him again. Little did I know that a few months later I would be in the room next to him in Chambers, starting a close working relationship that continues to this day.
You might not know this about me but...
My main hobby is ancient history. At school I had always planned to be an archaeologist, switching to law at the last minute. Some probably think I should have stuck to archaeology!
One minute with Paul Farmer, a barrister and consultant to Joseph Hage Aaronson LLP.
You have seen the ECJ from within and later as a practitioner. What do you think of its record over the years?
Arguably the court’s most important contribution to tax law has been its application of general principles, particularly effective protection of taxpayers’ rights. Introducing teleological or purposive interpretation to the UK courts, particularly in the VAT area, was also transformational.
More controversial is the ECJ’s record on direct tax. I doubt that back in the 1980s the court appreciated the enormity of the challenge it would face. It started out with what in effect was an enhanced version of international tax principles, but then encountered trickier cases, particularly the outbound cases like cross-border loss relief, foreign dividend taxation and exit taxes. It had to refine the mantra ‘loss of revenue is no defence’ and was forced to invent novel principles. It has consequently struggled sometimes to find a coherent and consistent line, making its rulings less predictable. Ultimately, though, not tackling direct tax obstacles would have been a dereliction of duty.
And the European Commission, where you also worked?
At a political level, the Commission adroitly rekindled direct tax policy discussions in the late 1990s by latching on to the tax competition and anti-avoidance agenda, while still promoting its aim of reducing barriers to cross-border business. Its flagship policy of a common consolidated tax base was ambitious. Many governments did not want it, some were attracted to the idea of a consolidated base with formulary apportionment while others, motivated more by the tax competition agenda, were really only interested in a compulsory common base and minimum rate.
What tends not to hit the headlines is the Commission’s role as amicus curiae in every ECJ reference. A huge workload for the Legal Service and the relevant DGs, but a major contribution.
What challenges do you see going forward?
European tax law depends on national courts for its application. Not all national courts play ball. Hungary and Poland have been in the news recently, but reticence in applying EU tax law is more widespread. Recently I was surprised to find Danish, Dutch and Swedish courts not referring cases or seeking to defeat ECJ rulings. In truth, the application of EU tax law is patchy. This is a significant issue for clients operating in the EU.
What is keeping you busy at JHA?
After joining JHA in 2013, my work broadened to other EU areas beyond tax. Last year, I stepped back from the partnership and now work as a consultant, mainly on EU tax matters. I continue to contribute to the firm’s UK cases – we are currently preparing for a series of hearings over the next year. A significant part of my recent work, however, has been assisting clients’ foreign lawyers with cases in national courts and the ECJ (in areas such as fiscal state aid, anti-avoidance and withholding taxes).
What was the worst moment in your career so far?
Litigators have bad moments. The one that stands out though was when I came over from Brussels to give a talk at the London IFA branch and met Graham Aaronson for the first time. I gave what was meant to pass for an erudite expose on EU tax law. Graham’s talk consisted essentially in reading out the (recent) Hoechst judgment in a scornful voice, repeatedly shaking his head in dismay and muttering words like ‘Disneyworld’ and ‘Alice in Wonderland’. He evidently knew his audience, who were in stitches, and of course the comedy was intended to make a serious point. One attendee asked me privately if I would ever share a podium with him again. Little did I know that a few months later I would be in the room next to him in Chambers, starting a close working relationship that continues to this day.
You might not know this about me but...
My main hobby is ancient history. At school I had always planned to be an archaeologist, switching to law at the last minute. Some probably think I should have stuck to archaeology!
