"(1) Any person who – (a) conducts in the United Kingdom any business or agency for the negotiation, receipt or transmission of bets to which this section applies, or (b) knowingly issues, circulates or distributes in the United Kingdom, or has in his possession for that purpose, any advertisement or other document inviting or otherwise relating to the making of such bets, or (c) being a bookmaker in the United Kingdom, makes or offers to make any such bet with a bookmaker outside the United Kingdom, shall be guilty of an offence. (2) Except as mentioned in subsection 3 below, this section applies to – … (b) all bets made with a bookmaker outside the United Kingdom (whether or not made by way of pool betting or coupon betting)."
"General betting duty is charged on off-course bets made with a bookmaker in the United Kingdom …. 'Made' must refer to the bookmaker entering into a wagering contract. Where the contract is made is a question of fact .… In this case your client appears to have two places of business, one in the UK and one in Gibraltar. The latter has effectively been established as a separate trading entity. Having established a separate branch in Gibraltar it will be a question of fact as to whether punters are placing bets with that branch. Any such bets placed with that bookmaker will not incur a liability to general betting duty. For the sake of completeness I would point out that there are restrictions relating to overseas betting. These are contained insection 9 of the Betting and Gaming Duties Act 1981 …. You may wish to bring these to your client's attention if he is not already aware of them."
"we are unable to continue our voluntary undertaking not to accept business from UK residents at our Gibraltar office …. Our moving to Gibraltar will not only mean the loss of£3.5 million in GBD, but also a decline in horserace levy, corporation tax, income tax contributions and the loss of 45 jobs. We strongly urge you to convey our feelings to your Minister…"
"(1) Subject to section 747(4)(b), the following provisions of this section shall have effect for the purpose of preventing the avoiding by individuals ordinarily resident in the United Kingdom of liability to income tax by means of transfers of assets by virtue or in consequence of which, either alone or in conjunction with associated operations, income becomes payable to persons resident or domiciled outside the United Kingdom. (1A) Nothing in subsection (1) above shall be taken to imply that the provisions of subsections (2) and (3) below apply only if— (a) the individual in question was ordinarily resident in the United Kingdom at the time when the transfer was made; or (b) the avoiding of liability to income tax is the purpose, or one of the purposes, for which the transfer was effected. (2) Where by virtue or in consequence of any such transfer, either alone or in conjunction with associated operations, such an individual has, within the meaning of this section, power to enjoy, whether forthwith or in the future, any income of a person resident or domiciled outside the United Kingdom which, if it were income of that individual received by him in the United Kingdom, would be chargeable to income tax by deduction or otherwise, that income shall, whether it would or would not have been chargeable to income tax apart from the provisions of this section, be deemed to be income of that individual for all purposes of the Income Tax Acts. (3) Where, whether before or after any such transfer, such an individual receives or is entitled to receive any capital sum the payment of which is in any way connected with the transfer or any associated operation, any income which, by virtue or in consequence of the transfer, either alone or in conjunction with associated operations, has become the income of a person resident or domiciled outside the United Kingdom shall, whether it would or would not have been chargeable to income tax apart from the provisions of this section, be deemed to be income of that individual for all purposes of the Income Tax Acts …."
"Sections 739 and 740 shall not apply if the individual shows in writing or otherwise to the satisfaction of the Board either— (a) that the purpose of avoiding liability to taxation was not the purpose or one of the purposes for which the transfer or associated operations or any of them were effected; or (b) that the transfer and any associated operations were bona fide commercial transactions and were not designed for the purpose of avoiding liability to taxation. The jurisdiction of the Special Commissioners on any appeal shall include jurisdiction to review any relevant decision taken by the Board in exercise of their functions under this section."
"in relation to any transfer, an operation of any kind effected by any person in relation to any of the assets transferred or any assets representing, whether directly or indirectly, any of the assets transferred, or to the income arising from any such assets, or to any assets representing, whether directly or indirectly, the accumulations of income arising from any such assets"
"For the purposes of sections 739 to 741— (a) a reference to an individual shall be deemed to include the wife or husband of the individual; (b) 'assets' includes property or rights of any kind and 'transfer' , in relation to rights, includes the creation of those rights; (c) 'benefit' includes a payment of any kind; … (e) references to assets representing any assets, income or accumulations of income include references to shares in or obligations of any company to which, or obligations of any other person to whom, those assets, that income or those accumulations are or have been transferred."
"In computing the liability to income tax of an individual chargeable by virtue of section 739, the same deductions and reliefs shall be allowed as would have been allowed if the income deemed to be his by virtue of that section had actually been received by him."
"(1) No amount of income shall be taken into account more than once in charging tax under the provisions of sections 739 and 740; and where there is a choice as to the persons in relation to whom any amount of income can be so taken into account— (a) it shall be so taken into account in relation to such of them, and if more than one in such proportions respectively, as appears to the Board to be just and reasonable; and (b) the jurisdiction of the Special Commissioners on any appeal against an assessment charging tax under those provisions shall include jurisdiction to review any relevant decision taken by the Board under this subsection. (2) In subsection (1) above references to an amount of income taken into account in charging tax are— (a) in the case of tax which under section 739 is charged on income, to the amount of that income; (b) in the case of tax charged under that section by virtue of section 743(5), to an amount of the income out of which the benefit is provided equal to the amount or value of the benefit charged; (c) in the case of tax charged under section 740, to the amount of relevant income taken into account under subsection (2) of that section in charging the benefit."
"But even if we were prepared to accede to the argument that the preamble connoted activity by the individual concerned, we think this condition would be fulfilled if the execution of the transfer were procured by the individual concerned, even though it was not actually executed by him or his agent. [Counsel for Mrs Congreve], in commenting on the judgment of the learned Judge in the Court below, said, and [counsel for the Crown] agreed, that execution by a company could not be said to be execution by the individual, even though the individual owned all or practically all the shares in the company. We think, however, that the decision of the learned Judge can be upheld on the ground we have stated, since it is, we think, in the present case, a reasonable inference from the facts found that the execution and performance of the transfers and associated operations in question by all the companies concerned were procured by Mrs. Congreve acting through her agent Mr. Glasgow. We should have been prepared, if it had been necessary, on this alternative ground to uphold the decision of the Commissioners."
"The House also accepted an argument that in any event certain transfers had been organised or brought about by the taxpayer herself, but this ground, though capable of supporting the correctness of the actual decision on liability to tax, was plainly a subsidiary one."
"So here we have it established that a person who is not a transferor may nevertheless be liable as if he were a transferor, if he 'procured' the transfer. It is convenient to use the phrase of junior counsel for the Crown and call such a person a 'quasi transferor'."
"What the Special Commissioners had to decide on this topic was, quite simply, notwithstanding that the transfer was a transfer made by M and J itself, was the reality of the matter that somebody else was the real transferor? To answer that question, nobody has so far produced a better suggestion than that of 'procurement'. It may not be completely apt, but it is far nearer an apt definition than anything else which has so far been suggested."
"As a matter of law, it appears to me that in the case of a plurality of transferors, if it is impossible to separate out their respective interests so as to be able to say, 'the first transferor transferred A% of the interest transferred, the second B%' and so on, the series adding up to 100, I do not think s 412 bites at all…. Without in any way deciding that this is indeed the position, I can well see that if A and B own an asset jointly, and transfer it abroad, then one might for this purpose be able to separate out their beneficial interests as being equal, or, if the transfer was in fact a sale, according to the division between them of the purchase money. Something of the sort might even be possible in the case of quasi transferors, where two or three of them own the company which makes the transfer, but where it is not possible to do just that, s 412 does not bite at all."
"There is a single transfer. That transfer was either made with the purpose or not with the purpose of avoiding liability to taxation. How could one apply that to, say, a two-transferor situation where A had the purpose of avoiding tax and B had only a simple commercial purpose? The answer of counsel for the Crown was to say that, in such a case, B should show that so far as he was concerned the purpose was a simple commercial purpose, and that will enable him to claim the benefit of that subsection. But this is not what the subsection says. It is not 'the transferor's purpose in effecting the transfer' but 'the purpose for which the transfer was effected'."
"How different—how very, very different—are the facts in the present case. The sale here was obviously a board matter, about which the board was duly consulted and approved. There was no question of any one of the three taxpayers in this particular case, either alone or in concert, assuming that that could be material, being able, either at board or at shareholder level, to 'procure' M and J to do anything. And, indeed, this is precisely why the submission from counsel for the Crown … adopts the words 'have a hand in' and 'associated with', which undoubtedly were used by Lord Wilberforce. But, as I have already observed, those words are not to be treated as if they were in a statute: they plainly are not. Nor, however widely one construes any wording to be found in s 412, is the substance of a person being 'associated with' or 'having a hand in' a transfer necessarily equivalent in any way to that person himself making the transfer. It may be stretching the words of the section—indeed, I think it is—to say 'la société anonyme, c'est moi', but the elastic will have snapped long before one can say, 'I had a hand in the transfer, therefore I made it', or, 'I am associated with the transfer, therefore I made it.'"
"The opening few lines of [section 478 of the Income and Corporation Taxes Act 1970 ] set out the purpose to be served by the enactment. That purpose is the prevention of avoidance by individuals ordinarily resident in the United Kingdom of liability to income tax by means of certain kinds of transaction. It is not required that the transaction should itself be carried out with that purpose. The statute is simply expressing the purpose of the section, not of the substance of the transaction."
"The crucial words, as it seems to me, are those in subsection (1) which state that the section is to 'have effect for the purpose of preventing the avoiding by individuals ordinarily resident in the United Kingdom of liability to income tax by means of transfer of assets,' coupled with the identification in subsection (2) , of 'such an individual' as the subject of liability. What can the words 'such an individual' refer to save for an individual of the kind described in subsection (1), that is an individual ordinarily resident in the United Kingdom seeking to avoid liability by means of transfers of assets? Although the point was not determined in Vestey[1980] AC 1148 , the view there taken that the individual to be charged must be the individual who made the transfer seems to me to lead inevitably to the conclusion that the individual concerned must be the only type of transferor with which the section is concerned, and that is a transferor ordinarily resident in the United Kingdom. At the risk of seeming overconfident in expressing an opinion about language which has been construed in diametrically opposite senses by your Lordships' House in the past, I would say in the light of Vestey that this is the natural and plain meaning of the words used."
"All three appellants were directors and shareholders of SJA. Between them they had a controlling shareholding. Anne Fisher entrusted her responsibilities to Stephen Fisher and Peter Fisher and was happy to go along with their decisions. In playing an active role in achieving the transfer Stephen Fisher and Peter Fisher were not simply acting in their own capacities as directors and shareholders but were also acting under the authority of Anne Fisher in relation to her directorship and shareholder functions. We agree with HMRC the transfer was jointly procured by all three appellants. SJA was a family run business, and each of the appellants was in reality a transferor of the telebetting business."
"It is understandable why it would be accepted that such a person could not circumvent the statute by making someone else carry out the transfer. Nothing said in Congreve or in Vestey would justify putting a gloss on the interpretation of the statute to bring within its ambit someone who is not seeking to avoid a liability to income tax and whose income tax position is unaffected by the transfer."
"If there were two joint transferors and A had the purpose of avoiding tax, and B had a commercial purpose, then how could the purpose of the transfer be ascertained?"
"86. In the present case, none of the Fishers was able to, or did, tell SJA what to do. None of them individually had a controlling interest in SJA. Stephen and Peter were collectively responsible as directors for giving effect to the transfer, but together they held only 50% of the shares which is not a controlling interest. In any event, in making the transfer they were acting on behalf of SJA, not vice versa. It is only if one adds Anne's shareholding that one gets to a controlling interest of 88% - but even then, the three of them did not own 100% of the share capital of SJA, because Dianne held the remaining 12%. On HMRC's case, each of Anne, Stephen and Peter would be treated as having transferred 100% of the business of SJA, not a smaller percentage of it – even though Peter only had a 12% shareholding at the time of the decision, and Anne played no active part in the decision making but was happy to entrust the running of the company to her husband and son. That result cannot be achieved on any proper interpretation of the statute. None of the Fishers, individually or collectively, did anything which would justify treating each of them as being the 'real' Transferor of SJA's assets or treating SJA as a mere instrument or mechanism by which they each personally (and simultaneously) brought about the transfer of 100% of the assets. 87. Moreover, in finding that Anne Fisher 'procured' the transfer because she entrusted her responsibilities as director to Stephen and Peter, and they were 'acting under her authority,' when they made their decisions as directors, the FTT misinterpreted 'procure'. It does not mean passively allowing someone else to do something. It does not mean being content that someone else should take a decision, or agreeing to go along with whatever they decide. It means doing something positive to bring something about, and in the specific context in which it is used in Congreve , it means exerting a controlling influence on a company to make it effect the transfer. Anne Fisher did nothing to transfer the company's assets. She did nothing to influence what Peter or Stephen did. She did not use her voting power to bring anything about. Peter and Stephen were not acting in any sense as her agents. We consider that irrespective of whether it is possible to ascribe a transfer by a company to individual shareholders or directors it was not possible to treat Anne Fisher as having transferred assets in this case."
"We have concluded that the language of s.739 does not admit of the interpretation which found favour with the FTT. What happened in this case had no connection with the mischief against which the provisions of the TOAA code was aimed. If the assets had been transferred within the UK, or stayed where they were, the income tax position of the shareholders and directors of SJA would have been the same. There was no connection between the transfer of those assets abroad, and their liability to income tax. As the FTT found, avoidance of income (or corporation) tax was not the purpose, or even a purpose, of this transaction. That is enough to distinguish this case from the context in which the Court of Appeal in Congreve and the House of Lords in Vestey were willing to conceive that it would be possible to treat an individual as a 'quasi-transferor'. The transfer in this case was made by SJA and not by any of its individual shareholders or directors; there is no basis for treating any of them as the 'real' Transferor and SJA as merely an instrument by which they effected the transfer of the assets. The FTT fell into error in treating acts by SJA's directors as acts 'procuring' SJA to do something when in fact they were acts carried out for and on behalf of the company. It is not possible to impute the transfer to any of the taxpayers in this case as 'quasi-transferors'"
"In my judgment, there is no warrant for this submission. The words quoted refer not to the intention of the transferor of the assets or the effect of such transfer but to the intention of Parliament in enacting the section. That parliamentary intention is certainly relevant in construing the section. But the words of subsection (1) make it clear that the actual avoidance of tax is not a precondition to the application of the section. The income is deemed to be the income of the United Kingdom resident 'whether it would or would not have been chargeable to income tax apart from the provisions of this section.' It is therefore clear that section 478 can still apply even though the effect of the transfer of assets abroad would not have been successful in avoiding United Kingdom income tax."
"First, once the Ramsay principle is applied there is no scope for the application of section 470 because for fiscal purposes the assignment to Mallardchoice is disregarded. Secondly, I would reject the argument that it is a condition precedent to section 478 applying that there must be proof of an actual avoidance of tax liability. Such a construction treats section 478 as a power of last resort and it substantially emasculates the effectiveness of the power under section 478. Nothing in the language or purpose of section 478 compels such a construction. Properly construed the opening words of section 478 merely provide that there must be an intention to avoid liability for tax. The sensible construction is that section 478 can be applied even if there are other provisions which could be invoked to prevent the avoidance of tax. That the revenue authorities should have overlapping taxation powers is an unremarkable consequence. And such a construction cannot cause any unfairness to the taxpayer since he cannot be taxed twice in respect of the same income."
"The 'object' which has to be considered is a subjective matter of intention. It cannot be narrowed down to a mere object of a company divorced from the directors who govern its policy or the shareholders who are concerned in and vote in favour of the resolutions for the increase and reduction of capital. For the company, as such, and apart from these, cannot form an intention. Thus the object is a subjective matter to be derived in this case from the intentions and acts of the various members of the group."
"Originally, in 1936 there was a single let-out provision exempting a transfer of assets 'effected mainly for some purpose other than the purpose of avoiding liability to taxation'.Section 28 of the Finance Act 1938 changed this to the present wording of s 741 which in para (a) applies a more stringent test of one of the purposes of the transfer (and associated operations) not being tax avoidance, and in para (b) merely refers to the transfer (and associated operations) not being designed for that purpose. Clearly, this cannot mean one of the purposes for which it was designed being tax avoidance, because otherwise para (b) would add nothing to para (a). It is odd that Parliament did not lay down any level of purpose in para (b) when it was replacing a test which depended mainly on tax avoidance with a test in para (a) depending on none of the purposes being tax avoidance. It was obviously clear from para (a) that a transfer could have more than one purpose and therefore in para (b) could be designed for more than one purpose. One must ask in para (b) whether the transfer was designed for the purpose of avoiding tax or not. This seems to me to require that the main purpose was not tax avoidance because if one has to categorise a transaction as being either designed for the purpose of tax avoidance or not, when it is clearly accepted that a transaction may be designed for more than one purpose, the only way to categorise the design into one purpose is to look at the main purpose of the design. I think, therefore, that the taxpayer's contention of sole purpose is too loose a test and the Revenue's contention of significant purpose is too stringent a test although it will in practice be difficult to determine the difference between a significant and a main purpose."
"Tax avoidance was to be distinguished from tax mitigation. The hallmark of tax avoidance is that the taxpayer reduces his liability to tax without incurring the economic consequences that Parliament intended to be suffered by any taxpayer qualifying for such reduction in his tax liability. The hallmark of tax mitigation, on the other hand, is that the taxpayer takes advantage of a fiscally attractive option afforded to him by the tax legislation, and genuinely suffers the economic consequences that Parliament intended to be suffered by those taking advantage of the option."
"534. There was simply no other reason (that was not a consequence of the betting duty avoidance purpose) for the transfer. It is inconceivable the transfer would have gone ahead were it not for the betting duty being lower in Gibraltar. 535. The purpose the appellants rely on as the main reason for the transfer was survival of the business. But this is in the context of betting duty avoidance being the means for survival. We doubt whether in examining whether an avoidance purpose was the main purpose one can go as far as relying on the consequence of a tax avoidance reason. It cannot be the intention of the legislation that someone who looks beyond the tax avoidance to the consequences of that can be allowed to supplant those consequences as their main purpose. If it were, such consequences would virtually always operate to stop a tax avoidance purpose being the main purpose. Except in the theoretical case where the goal for which the transfer was designed was to avoid tax for the sake of it without any concern for the benefits that would bring, this part of the motive defence would for practical purposes always be available. 536. The appellants do not therefore succeed on the motive defence."
"Clearly this analysis applies only in respect of the pre-existing customers, but if a set of transactions have such an effect then it is correct to apply the label of 'avoidance' to them."
"Parliament has legislated for two potential motive defences. The first requires a taxpayer to establish that there was no tax avoidance purpose at all for the relevant transactions; the second, only available where the relevant transactions were 'bona fide commercial transactions', requires the taxpayer to establish that the transactions were not 'designed for the purpose' of avoidance; as was observed in Carvill , it is implicit in this that tax avoidance may result from the transactions (as it did in Brebner ) without disqualifying the taxpayer from benefiting from the second limb of the defence. If the FTT's analysis were correct, the existence of any tax avoidance purpose at all would always disqualify a taxpayer from reliance on the second limb of the motive defence, rendering it pointless and effectively overruling Brebner . This cannot be right. There is a qualitative difference between a situation in which a taxpayer voluntarily enters into a tax avoidance arrangement in order to save tax and a situation in which a taxpayer is effectively forced to restructure in the same tax efficient way as its competitors in order to secure the survival of the business."
"Within the framework of the provisions set out below, restrictions on the freedom of establishment of nationals of a Member State in the territory of another Member State shall be prohibited. Such prohibition shall also apply to restrictions on the setting-up of agencies, branches or subsidiaries by nationals of any Member State established in the territory of any Member State. Freedom of establishment shall include the right to take up and pursue activities as self-employed persons and to set up and manage undertakings, in particular companies or firms within the meaning of the second paragraph of Article 54, under the conditions laid down for its own nationals by the law of the country where such establishment is effected, subject to the provisions of the Chapter relating to capital."
"being capable of limiting the right of a member state to lay down conditions concerning the liability to taxation of a national of another member state and the manner in which tax is to be levied on the income received by him within its territory, since that article does not allow a member state, as regards the collection of direct taxes, to treat a national of another member state employed in the territory of the first state in the exercise of his right of freedom of movement less favourably than one of its own nationals in the same situation"
"In relation to direct taxes, the situations of residents and of non-residents in a given state are not generally comparable, since there are objective differences between them both from the point of view of the source of the income and from that of their ability to pay tax or the possibility of taking account of their personal and family circumstances (see Wielockx[1995] STC 876 at 887,[1995] ECR I-2493 at 2515, para 18, citing Schumacker[1995] STC 306 at 325,[1996] QB 28 at 52–53, para 31 et seq)."
"The existence of these disparities has inevitable distortive effects on investment, employment and, in the case of companies and self-employed persons, establishment decisions. Clearly, differences between member states in levels of effective business taxation, of administrative tax burdens, and in the structure of national tax regimes influence the location of economic activity. However, as the court has recently confirmed in Schempp , and as I emphasised in my opinion in that case, possible distortions resulting from mere disparities between tax systems do not fall within the scope of the free movement provisions of the Treaty. In that case, which concerned a claim under the citizenship provisions of the Treaty, the court recalled that, 'the court has already held that the Treaty offers no guarantee to a citizen of the Union that transferring his activities to a member state other than that in which he previously resided will be neutral as regards taxation. Given the disparities in the tax legislation of the member states, such a transfer may be to the citizen's advantage in terms of indirect taxation or not, according to circumstances.' Precisely the same principle applies to claims under art 43 EC. Thus, obstacles to freedom of establishment resulting from disparities or differences between the tax systems of two or more member states fall outside the scope of art 43 EC. These may be contrasted with obstacles resulting from discrimination, which occurs as a result of the rules of just one tax jurisdiction."
"In reality, at issue here are distortions of economic activity resulting from the fact that different legal systems must exist side-by-side. In certain cases, these distortions provide disadvantages for economic actors; in other cases, advantages. While in the first case they are 'restrictive', in the second case they stimulate cross-border establishment activity. Although the court is as a rule faced with what can be termed the 'quasi-restrictions' flowing from these distortions, one should not forget that there is a second side to the coin—that is, where particular advantages arise for cross-border establishment. In the latter case, the taxable subject concerned does not generally invoke Community law."
"in the current state of harmonisation of Community tax law, Member States enjoy a certain autonomy. It follows from that tax competence that the freedom of companies and partnerships to choose, for the purposes of establishment, between different Member States in no way means that the latter are obliged to adapt their own tax systems to the different systems of tax of the other Member States in order to guarantee that a company or partnership that has chosen to establish itself in a given Member State is taxed, at national level, in the same way as a company or partnership that has chosen to establish itself in another Member State."
"47. Legislation such as that as issue in the main proceedings is such as to produce those restrictive effects, inasmuch as it makes affiliation to the care insurance scheme dependent on the condition of residence in either a limited part of national territory, viz, the Dutch-speaking region and the bilingual region of Brussels-Capital, or in another member state. 48. Migrant workers, pursuing or contemplating the pursuit of employment or self-employment in one of those two regions, might be dissuaded from making use of their freedom of movement and from leaving their member state of origin to stay in Belgium, by reason of the fact that moving to certain parts of Belgium would cause them to lose the opportunity of eligibility for the benefits which they might otherwise have claimed. In other words, the fact that employed or self-employed workers find themselves in a situation in which they suffer either the loss of eligibility care insurance or a limitation of the place to which they transfer their residence is, at the very least, capable of impeding the exercise of the rights conferred by arts 39 and 43 EC."
"Just as a French national living in the French-speaking sector of Belgium would have to move outside Belgium or into the Dutch-speaking area or Brussels-Capital in order to obtain the benefits in Walloon , Anne Fisher would have to move outside the UK or to Gibraltar in order to establish SJG's business without being made liable to pay income tax on SJG's profits. It is irrelevant that the TOAA code applies to all UK residents irrespective of nationality: in Walloon the measure applied without discrimination to people of all nationalities residing in certain areas of Belgium, but still unlawfully restricted freedom of movement and freedom of establishment."
"18. According to settled case law of the court, the measures prohibited by art 63(1) TFEU as restrictions on the movement of capital include those that are such as to discourage non-residents from making investments in a member state or to discourage that member state's residents from doing so in other states (see, inter alia, judgment in European Commission v Finland (Case C-342/10 )[2013] STC 280 , para 28 and the case law cited). 19. In the present case, it is common ground that the effect of s 13 of the TCGA is that taxable gains made by non-resident close companies, including those resident in another member state of the European Union, are immediately attributed for tax purposes to participators in those companies who are United Kingdom residents, if they hold rights over more than 10% of the gains. Those participators are then liable to tax on the amount of those gains, whether or not they have actually received them, the tax being calculated according to the gain made by the company itself. By contrast, for close companies resident in the United Kingdom, tax is charged only in the event of a distribution of the gains to the participators, or if the participators dispose of their interests in the company in question, the tax then being calculated, moreover, according to the amount actually received by the participator. 20. Consequently, in so far as that legislation is such as, first, to discourage residents of the United Kingdom, whether natural or legal persons, from contributing their capital to non-resident close companies and, secondly, to impede the possibility of such a company attracting capital from the United Kingdom, it constitutes a restriction of the free movement of capital, which is prohibited in principle by art 63 TFEU."
"240. The new ventures of the internet and casino businesses only got off the ground with income which arises in relation to the transferred assets and not with other funding. These new ventures do in our view relate to income from the transferred assets. 241. The position may be contrasted with the facts of Fynn where the company was not buying assets with income from the original transferred assets. Instead there was new money which came in. If SJG had been lent finance from elsewhere and used that to invest in the new businesses then we would accept the new business venture would not be in consequence (or only partly) in consequence of the transferred assets and to that extent it would fall out of charge. … 243. In relation to the poker business which was set up from a mixture of telebetting, and internet/casino profits, the question needs to be asked whether the poker venture is in relation to transferred assets, or more pertinently in relation to 'income arising from' the transferred telebetting assets? 244. In our view it follows from the setting up of the internet and casino ventures being associated operations that the internet / casino income is also income arising from the transferred assets. The question which is then posed is whether the poker venture can be said to be 'in relation to' the telebetting / internet /casino income. In our view the answer is yes. As to whether the poker venture results in income becoming payable to the person abroad the answer in our view is that it does."
"I cannot see that the making of the unsecured loan can be said in any ordinary use of language to have any relation to the previously created charge. It was an unsecured loan made on the facts of this case, not for the purpose of reducing the overdraft because the bank were pressing for payment; nor for the purpose of freeing the assets from the charge. It was made to Crescent [i.e. the Irish company] as an interest-free unsecured loan and Crescent could have used it in any way that it pleased. I cannot see that it bears any relation to any of the transferred assets or to the charge."
"If an officer of the Board or the Board discover, as regards any person (the taxpayer) and a year of assessment— (a) that any income … which ought to have been assessed to income tax, or chargeable gains which ought to have been assessed to capital gains tax, have not been assessed, or (b) that an assessment to tax is or has become insufficient, or (c) that any relief which has been given is or has become excessive, the officer or, as the case may be, the Board may, subject to subsections (2) and (3) below, make an assessment in the amount, or the further amount, which ought in his or their opinion to be charged in order to make good to the Crown the loss of tax."
"the situation mentioned in subsection (1) above is attributable to fraudulent or negligent conduct on the part of the taxpayer or a person acting on his behalf"
"The second condition is that at the time when an officer of the Board— (a) ceased to be entitled to give notice of his intention to enquire into the taxpayer's return under section 8 or 8A of this Act in respect of the relevant year of assessment; or (b) informed the taxpayer that he had completed his enquiries into that return, the officer could not have been reasonably expected, on the basis of the information made available to him before that time, to be aware of the situation mentioned in subsection (1) above."
"For the purposes of subsection (5) above, information is made available to an officer of the Board if— (a) it is contained in the taxpayer's return under section 8 or 8A of this Act in respect of the relevant year of assessment (the return), or in any accounts, statements or documents accompanying the return; (b) it is contained in any claim made as regards the relevant year of assessment by the taxpayer acting in the same capacity as that in which he made the return, or in any accounts, statements or documents accompanying any such claim; (c) it is contained in any documents, accounts or particulars which, for the purposes of any enquiries into the return or any such claim by an officer of the Board, are produced or furnished by the taxpayer to the officer, whether in pursuance of a notice 5 under section 19A of this Act or otherwise; or (d) it is information the existence of which, and the relevance of which as regards the situation mentioned in subsection (1) above— (i) could reasonably be expected to be inferred by an officer of the Board from information falling within paragraphs (a) to (c) above; or (ii) are notified in writing by the taxpayer to an officer of the Board."
"The power of HMRC to make an assessment under section 29(1) following the discovery of what, for convenience, I shall refer to as an insufficiency in the self-assessment depends upon whether an officer 'could not have been reasonably expected, on the basis of the information made available to him before that time, to be aware of the insufficiency'. It is clear as a matter of authority: (1) that the officer is not the actual officer who made the assessment … but a hypothetical officer; (2) that the officer has the characteristics of an officer of general competence, knowledge or skill which include a reasonable knowledge and understanding of the law: see HMRC v Lansdowne Partners LLP[2012] STC 544 ; (3) that where the law is complex even adequate disclosure by the taxpayer may not make it reasonable for the officer to have discovered the insufficiency on the basis of the information disclosed at the time: see Lansdowne at [69]; (4) that what the hypothetical officer must have been reasonably expected to be aware of is an actual insufficiency: see Langham v Veltema[2004] STC 544 per Auld LJ at [33]–[34]: '33. More particularly, it is plain from the wording of the statutory test in section 29(5) that it is concerned, not with what an Inspector could reasonably have been expected to do, but with what he could have been reasonably expected to be aware of. It speaks of an Inspector's objective awareness, from the information made available to him by the taxpayer, of 'the situation' mentioned in section 29(1), namely an actual insufficiency in the assessment, not an objective awareness that he should do something to check whether there is such an insufficiency …; (5) that the assessment of whether the officer could reasonably have been expected to be aware of the insufficiency falls to be determined on the basis of the types of available information specified in section 29(6). These are the only sources of information to be taken into account for that purpose: see Langham v Veltema , at [36]: 'The answer to the second issue - as to the source of the information for the purpose of section 29(5) -though distinct from, may throw some light on, the answer to the first issue. It seems to me that the key to the scheme is that the Inspector is to be shut out from making a discovery assessment under the section only when the taxpayer or his representatives, in making an honest and accurate return or in responding to a section 9A enquiry, have clearly alerted him to the insufficiency of the assessment, not where the Inspector may have some other information, not normally part of his checks, that may put the sufficiency of the assessment in question. If that other information when seen by the Inspector does cause him to question the assessment, he has the option of making a section 9A enquiry before the discovery provisions of section 29(5) come into play. That scheme is clearly supported by the express identification in section 29(6) only of categories of information emanating from the taxpayer. It does not help, it seems to me, to consider how else the draftsman might have dealt with the matter. It is true, as Mr Sherry suggested, he might have expressed the relevant passage in section 29(5) as "on the basis only of information made available to him", and the passage in section 29(6) as "
"[78] The correct construction of s 29(6)(d)(i) is that it is not necessary that the hypothetical officer should be able to infer the information; an inference of the existence and relevance of the information is all that is necessary. However, the apparent breadth of the provision is cut down by the need, firstly, for any inference to be reasonably drawn; secondly that the inference of relevance has to be related to the insufficiency of tax, and cannot be a general inference of something that might, or might not, shed light upon the taxpayer's affairs; and thirdly, the inference can be drawn only from the return etc provided by the taxpayer. [79] As we have described, the balance provided by s 29 depends on protection being provided only to those taxpayers who make honest, complete and timely disclosure. That balance would be upset by construing s 29(6)(d)(i) too widely. Inference is not a substitute for disclosure, and courts and tribunals will have regard to that fundamental purpose of s 29 when applying the test of reasonableness."
"before HMRC would be entitled to make an assessment, it must be shown that the hypothetical inspector did not (at the relevant date) have imputed awareness of one or both of the elements of a s.739 liability for the particular year, namely (i) a transfer of assets (with or without associated operations), by virtue or in consequence of which (ii) the taxpayer had power (forthwith or in the future) to enjoy income of a non-resident person"
"Clearly the second element itself requires both the existence of income for the non-resident person and the taxpayer's power to enjoy that income (forthwith or in the future), so if it can be established that the hypothetical inspector did not have imputed awareness of either the existence of the income or the power to enjoy, then there would be no bar to the making of an assessment."
"In the present case, HMRC's assessments were based on a time apportioned allocation of SJG's profits for the two accounting years ended31 December 2005 and 2006 …. We can see no other basis for proceeding, and certainly no warrant for applying income tax principles to calculate (and allocate amongst the Appellants) a notional amount of income to SJG for the tax year 2005-06 calculated by reference to a basis period which had no application or relevance to it."