Last week Boris appointed Suella Braverman as his new Attorney General and tasked her with fettering the independence of the judiciary. Boris is allegedly unhappy with the decision of the Supreme Court last September to rule that the Government’s decision to suspend Parliament was unlawful.
I am not sure I welcome this reform. In recent years I have observed new tax legislation overstep what many consider to be fair and reasonable.
Last Wednesday I asked Ross Birkbeck, tax barrister at 15 Old Square Tax Chambers, about the rights of a taxpayer to question tax legislation and in particular whether this would be cut down as a result of the UK leaving the EU.
Let’s take the new Accelerated Payment Notices as an example.
This legislation introduced in Finance Act 2014 allows HMRC to demand payment of tax before a dispute has been resolved, with no right of appeal and penalties for late payment. Once demanded HMRC then has no incentive to determine the dispute, which it could then drag on for years if not decades!
The legislation was immediately challenged as a breach of our fundamental principles of natural justice and human rights under the European Convention of Human Rights.
The issue came before the Court of Appeal in the cases of Rowe and Vital Nut.
The case of Rowe involved a film production investment that produced large losses in the first year, which could be written off against other tax liabilities. Vital Nut considered corporations which claimed a deduction in corporation tax for employer financed retirement benefit schemes.
Although the Court dismissed the Appeals against and let the legislation stand, it made it clear that HMRC had to show that any Notices issued are properly considered and reasonable. In other words, in the opinion of HMRC the arrangement was unlikely to succeed as and when it came before a Judge!!!
It is true that 80% of disputes with HMRC are lost, but this is not always because the case is worthless. It could be that the taxpayer had not sought good advice soon enough, had missed the deadline for a Judicial Review or simply ran out of time and effort to fight HMRC.
What was of most concern which was brought up in both cases was that the issuing of a Notice reversed the burden of proof against the taxpayer.
The Judge nevertheless determined that HMRC had taken reasonable steps to consider that the case would not succeed before issuing a Notice and therefore the taxpayers in both cases lost their appeal and had to pay the tax HMRC deemed due before the matter came to court.
My question then to Ross Birkbeck of 15 Old Square Tax Chambers was whether this right to challenge harsh tax legislation would be lost following our departure from the EU.
His answer was no.
The UK’s commitment to upholding human rights is embedded in our Human Rights Act 1988 which became law in accordance with our membership of the Council of Europe.
Formed in 1949, the Council of Europe is completely separate from the European Union and much larger with 47 members compared to the EU’s 28. The UK became a Council Member 24 years before it joined the EU and is unaffected by its departure from the EU.
The European Convention on Human Rights (ECHR) protects the human rights of people in countries that belong to the Council of Europe not only to having a fair trial Article 6, but also to our right to privacy Article 8.
The rights which come and go with the EU are primarily restricted to the freedoms: freedom to physically move around the EU, freedom to establish anywhere in the EU and freedom to move capital anywhere in the EU.
However, what our rights will look like after Boris has had a go at reforming them remains to be seen.
At tonight’s GFOS Talks four of our podcast professionals will discuss how leaving the EU will affect Wealth Creators. Our discussion will be highlighted in next week’s Note from Caroline.
And if you would like to meet with Caroline for advice on Good Governance or any other concern to which she or her network can assist simply call Deborah on 020 3740 7423 or contact her on deborah@garnhamfos.com
