Newsletters Tax 22nd Sep 2017

Tax Group Newsletter

Welcome to the first edition of 2 Hare Court’s Tax Group newsletter.

 The decision of The Commissioners for HM Revenue and Customs -v- BPP Holdings Ltd and Ors [2017] UKSC 55 provides clear guidance to HMRC on what their obligations are in litigation. Vivienne Tanchel considers the implications that this has for HMRC and specifically the fact that they are not immune from adverse consequences for non-compliance simply because they are executing a public function. This is undoubtedly a well received decision for taxpayers who are increasingly frustrated with HMRC’s non-compliance.

Laura Stephenson considers the impact of R (Hely-Hutchinson) -v- Revenue and Customs Commissioners [2017] EWCA Civ 1075. This is a decision about the circumstances in which reliance on HMRC guidance creates a legitimate expectation in a taxpayer. It sounds a warning to taxpayers to take care before placing reliance on HMRC guidance where it purports to confer substantial benefit on them.

Dishonesty in tax proceedings comes under the spotlight in an article by Howard Watkinson. He considers the forthcoming decision from the Court of Appeal (Civil Division) in the long running dispute between HMRC and Ebuyer UK Limited and Citibank NA about whether it is necessary to allege fraud against a taxpayer in Kittel and Mecsek-Gabona proceedings.

Leon Kazakos examines the detail of the Court of Appeal (Civil Division) decision in ABC Limited and Ors -v- The Commissioners for HM Revenue and Customs [2017] EWCA Civ 956. This decision highlights the importance and impact of AWRS refusals to alcohol wholesalers by HMRC including whether HMRC have power to grant a temporary registration pending an appeal. The Court also reconsiders, following on from the decision of CC & C -v- HMRC [2014] EWCA Civ 1653, the powers of the High Court to grant interim relief to enable wholesalers to continue trading pending an appeal to the First-tier Tribunal (Tax Chamber).

The jurisdiction of the First-tier Tribunal came under fire by HMRC who argued that it did not have jurisdiction to hear a dispute in the case of Revenue and Customs -v- SDI (Brookes EU) Ltd and Anor [2017] UKUT 327 (TCC). Joshua Carey considers the impact of the decision and what it may mean for the First-tier Tribunal (Tax Chamber) when it is considering its jurisdiction under s83 Value Added Tax Act 1994 in future appeals.

Comply or Fail
Vivienne Tanchel

In a judgment handed down on the 26th July 2017, the Supreme Court dismissed HMRC’s appeal in their long running dispute with BPP Holdings Limited. The case goes some way to re-dress the balance between HMRC and the taxpayer in proceedings brought in the First-tier Tribunal (Tax Chamber) and will certainly give HMRC pause for thought in reconsidering their historic position that because they fulfilled a public duty Tribunals would be more forgiving of lackadaisical compliance with orders and rules…

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R (on the application of Hely-Hutchinson) v Revenue and Customs Commissioners [2017] EWCA Civ 1075  
Laura Stephenson

Mr Hutchinson received share options through his employer and exercised then sold these in the late 1990s. He reported the transactions in his self-assessment tax return on the basis that no capital gains tax would be incurred, in line with the then effective Taxation of Capital Gains Act 1992.

In 2003 HMRC issued new guidance, reflecting and building on a Court of Appeal decision, stating that…

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Is Dishonesty the Best Policy?
Howard Watkinson

In the coming months the Court of Appeal, and a strong Court of Appeal at that (consisting of The Master of the Rolls, The Chancellor and Hallett LJ), will hand down its judgment in HMRC v E Buyer (UK) Ltd & Citibank NA. It is hoped that this will settle a fundamental dispute that has been festering since the well-known principle in Kittel was promulgated by the CJEU in 2006: does dishonesty have any role to play in deciding whether to deny a taxpayer the right to deduct input tax under the Kittel principle?

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The Alcohol Wholesalers Registration Scheme: Trading Pending Appeal
Leon Kazakos

ABC Ltd and X&Y Ltd v HMRC

The decision of the Court of Appeal in X&Y is one that ought to be welcomed by alcohol wholesalers, particularly those who have struggled to persuade HMRC that they ought to be allowed to trade pending appeal of HMRC’s decisions against them which can have the effect of putting them out of business.

In April 2016 a new regulatory scheme was introduced requiring…

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A Question of Jurisdiction or Questionable Jurisdiction?
Joshua Carey

The Commissioners for HM Revenue and Customs -v- SDI (Brookes EU) Limited and Retail Limited

SDI (Brookes EU) Limited and Retail Limited (“the Taxpayers”) brought an appeal in the First-tier Tribunal (Tax Chamber) (“the FTT”) against what they said was a decision (issued to them in January 2016) (“January 2016 letter”) by the Commissioners for HM Revenue and Customs (“the Commissioners”)…

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