“739 Prevention of avoidance of income tax (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 transfer 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) 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. (4) In subsection (3) above “capital sum” means, subject to subsection (5) below— (a) any sum paid or payable by way of loan or repayment of a loan, and (b) any other sum paid or payable otherwise than as income, being a sum which is not paid or payable for full consideration in money or money's worth. (5) For the purposes of subsection (3) above, there shall be treated as a capital sum which an individual receives or is entitled to receive any sum which a third person receives or is entitled to receive at the individual's direction or by virtue of the assignment by him of his right to receive it. (6) Income shall not by virtue of subsection (3) above be deemed to be that of an individual for any year of assessment by reason only of his having received a sum by way of loan if that sum has been wholly repaid before the beginning of that year.”
“(b) “assets” includes property or rights of any kind and “transfer”, in relation to rights, includes the creation of those rights; … (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.”
“(1) For the purposes of sections 739 to 741 “an associated operation” means, 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.”
“741 Exemption from sections 739 and 740 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.”
“(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.”
“(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 transfer 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.”
"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 whereof, either alone or in conjunction with associated operations, income becomes payable to persons resident or domiciled out of the United Kingdom, it is hereby enacted as follows:- "(1) 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 out of 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 provision of this section, be deemed to be the income of that individual for all the purposes of the Income Tax Acts."
“he based this submission on the words in the preamble to section 478, “For the purpose of preventing the avoiding by individuals ordinarily resident in the United Kingdom of liability to income tax …”
“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.”
“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 , 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 over confident 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.” (Emphasis added).
“...whatever the ordinary residence status of the individual when the transfer is made, and - where a purpose of the transfer is to avoid any form of direct taxation.”
“…the question in relation to an individual sought to be taxed under s412, is, is that person “such an individual” as is mentioned in subss (1) and (2) of s412, that is to say, a person who has sought to avoid liability to income tax by means of a transfer of assets, which being reduced to its simplest element, means that the individual in question must, as the first step, be a transferor of assets.”
“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 per cent. of the interest transferred, the second B per cent." and so on, the series adding up to 100, I do not think s 412 bites at all. I put my qualifications in the manner I have done because I can see an argument open to the Revenue, under many circumstances, that such a dissection is possible. 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. Of course, Mr. Nichols recognised the difficulties in his way, and I shall note in a moment the way in which he attempted to deal with them. Those difficulties simply are that, in the circumstances put, the section provides no machinery whatsoever for attributing anything less than the whole of the income referred to any transferor. Where an identifiable portion of the asset transferred can be attributed to a particular transferor then, of course - at any rate in any normal case - that part actually transferred will produce a similar part of the income, and in no case is there any difficulty in applying the section, since one will apply it separately to each of the individual transfers, or each identifiable portion. But, if there is no such identifiable portion, then what one is dealing with is, in the case of each individual, "the transfer" and all the consequences which it produces, leading to the result that each individual transferor or quasi-transferor is liable to tax on precisely the same income. "Arbitrary, unjust and unconstitutional" are some of the milder adjectives with which such a situation may be properly described.”
“ In limine , I would myself regard this suggestion as completely unworkable, even if it were the law. It is very simple to say that something is a question of fact, or mixed fact and law, and leave it at that, but this does not solve anything at all. Moreover, how one could apportion the amount of the income between not only, of course, the taxpayers, but also all the other persons—all the directors and shareholders of M and J—who 'concurred' in the transfer, is a mind-boggling exercise of the first water. Fortunately, all this is, in my view, completely bogus. It was really dealt with by Lord Wilberforce in the 1980 Vestey case, because precisely the same problem arose as to apportionment—or suggested apportionment—in relation to discretionary beneficiaries, but what was going to be apportioned, if apportionment was going to take place, was the very same income with which I am now dealing.”
“one is dealing with…in the case of each individual “the transfer” and all the consequences it produces leading to the result that each individual transferor or quasi-transferor is liable to tax on precisely the same income.”
“a reasonable inference from the facts found that 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.”
“Now is it in relation to any of the transferred assets? And it is said that it is because the loan reduced the overdraft. There again I propose not to attempt any definition of the phrase "in relation to any of the assets transferred". Speaking for myself, 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 the company as an interest-free unsecured loan and the Company could have used that in any way that it pleased. I cannot see that it bears any relation to any of the transferred assets or to the charge.”
“81. In construing this provision I bear in mind that: 'It has been said more than once that [s739] is a broad spectrum anti-avoidance provision which should not be narrowly or technically construed' (see IRC v Brackett[1986] STC 521 at 539 per Hoffmann J) and also that the definition of associated operations is extremely broad. In Fynn v IRC[1958] 1 WLR 585 at 592, 37 TC 629 at 637 Upjohn J applied the ordinary use of language to determine whether there was any relationship between two transactions. The assets transferred are the taxpayer's shares in Holdings (the old majority shares); the assets representing them are the taxpayer's shares in International Holdings (the new majority shares). On the ordinary use of language, and, indeed, however wide a meaning one gives to the expression 'in relation to', it is difficult to see how any of these transactions are operations which relate to either the old or the new majority shares. They either relate to different shares (such as the repurchase of the new minority shares or the purchase of Mr Bassett's shares) or they do not relate to any shares at all (such as the employment arrangements or the brokerage sharing agreement). If I am wrong about this, they are not associated operations which are relevant because no income becomes payable to International Holdings by virtue or in consequence of any of these transactions; the income, ie the dividends on the old majority shares becomes payable to International Holdings solely by virtue of the transfer of the old majority shares to International Holdings. Nor do any of these transactions give the taxpayer power to enjoy the income of International Holdings; he has that power by virtue of holding the new majority shares which he obtained solely as a result of the transfer. 82. In particular, the purchase by the taxpayer of Mr Bassett's shares in International Holdings (see para 52 above) did not relate in any way to the old or new majority shares. Nor did any income become payable to International Holdings by virtue of the purchase; all International Holdings income continued to be payable to it. 83. The repurchase of the new minority shares in 1986 has no relationship with the old majority shares and the asset representing them, being the new majority shares. The new majority shares owned by the taxpayer remained as they were before and after the repurchase of the new minority shares and therefore the repurchase is not an operation of any kind in relation to either the old or new majority shares. The new majority shares carried with them, rights which varied in extent according to the number of other shares in issue but that was an economic relationship not a legal relationship. Mr Vallance on the other hand, contended that the result of the repurchase of the new minority shares was that the taxpayer became entitled to the whole of the income of International Holdings, thus emphasising the economic relationship. I agree with the taxpayer that the repurchase of the new minority shares is not an operation relating to the taxpayer's new majority shares. The reason why the taxpayer can enjoy all the dividends paid by Holdings to International Holdings is not because of anything which has happened to his shares but because the other shares have been repurchased so that his entitlement relates to a smaller cake. The taxpayer also contends that, even if the repurchase of the new minority shares is an associated operation, it is not a relevant one for the section because first the income which became payable to International Holdings by virtue of the transfer of the old majority shares, being the dividends on the old majority shares, remained unchanged, and secondly, the taxpayer's power to enjoy that income was unchanged by the purchase of the new minority shares. I also agree that even if it were an associated operation it would not be a relevant one for the purpose of the section. The change relates to the taxpayer's power to enjoy the income from the old minority shares but since he was not the transferor of those shares this is not within the section. 84. Nor is there any relationship between the six items listed above and the transfer of the old majority shares and the asset representing them, the new majority shares, because none of them relates to shares at all. 85. Accordingly, I hold that none of the transactions is an associated operation as a matter of law and even if they are they are not relevant transactions because they do not contribute to income becoming payable to International Holdings or to the taxpayer's power to enjoy that income. However, I should add that if, contrary to my findings, that the purpose of the transfer was to avoid tax (assuming that these constitute tax avoidance within the meaning of the section) by means of any of the six listed items, then that would inevitably be at least one of the purposes of the transfer and therefore it makes little difference to the result under s 741 whether or not they are associated operations.”
“741 Exemption from sections 739 and 740 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.”
“…where the taxpayer’s chosen course is seen upon examination to involve tax avoidance (as opposed to tax mitigation) it follows that tax avoidance must be at least one of the taxpayer’s purposes in adopting that course, whether or not the taxpayer has formed the subjective motive of avoiding tax…”
“Was the purpose of avoiding liability to taxation the purpose or one of the purposes…?”
“What he says is not the only means: it is just one of the means of finding out what his intentions were. You may find it out also by what was said to him and his reactions to it, the circumstances and so forth.”
“The genuine application of the taxpayer’s money in the acquisition of a species of property for which Parliament has determined a special tax regime does not amount to tax avoidance merely on the ground that the taxpayer might have chosen a different application which would have subjected him to a less favourable treatment. [emphasis added]”
“…income tax is avoided…when the taxpayer reduces his liability to tax without involving him in the loss or expenditure which entitles him to that reduction”
“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 any taxpayer qualifying for such reduction in his tax liability…”
“(1) Subject to the provisions of this Part of this Act, on any bet which— (a) is made with a bookmaker in Great Britain otherwise than by way of pool betting or coupon betting, or … there shall be charged a duty of excise to be known as general betting duty.”
“(1) Any person who— (a) conducts in Great Britain 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 Great Britain, 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 Great Britain, makes or offers to make any such bet with a bookmaker outside Great Britain, shall be guilty of an offence. (2) Except as mentioned in subsection (3) below, this section applies to— (a) all bets made by way of pool betting or coupon betting unless— (i) in the case of bets made by means of a totalisator, the totalisator is situated in Great Britain, (ii) in the case of bets made otherwise than by means of a totalisator, the promoter of the betting is in Great Britain; and (b) all bets made with a bookmaker outside Great Britain (whether or not made by way of pool betting or coupon betting).”
“Section 9(1) and its predecessors prevent bookmakers who are based off-shore (and are therefore not subject to United Kingdom general betting duty) from soliciting bets in the manner specified from individuals within the United Kingdom. The statutory policy behind imposing this prohibition was to prevent loss of revenue by bookmaker acting in this way and (incidentally) to protect bookmakers based within the United Kingdom (who are liable for United Kingdom general betting duty) from unfair competition within the United Kingdom betting market by overseas bookmakers who are not so liable…”
“In my view the nature of the proviso, instead of requiring a strict interpretation of the word "taxation" in favour of the taxpayer, calls for a liberal interpretation in favour of the Crown. The draughtsman no doubt had in mind to cover what he would have called all bona fide transfers, that is to say transfers which would be regarded by the Revenue as not made for any fiscal purpose which they would regard as improper. The word "taxation" is a short expression of such an idea and I think a happy one. Death duties, National Defence Contribution, perhaps other taxes or duties, would all be within the Revenue's mind in deliberately choosing the wide word "taxation", in order to make sure that their concession of transfers for other purposes should not be used to deprive the Revenue of other taxes than Income Tax or Sur-tax.”
“Primarily it is intended that this business will obtain a gaming licence in Gibraltar to enable it to set up a web site for use by non UK residents to place bets over the Internet. The secondary purpose is to provide tele-betting facilities for non UK customers…”
“…in order to be sure of compliance with these prohibitions, it is in the highest degree desirable to achieve as clean and clear a separation as possible between the United Kingdom aspects of an organisation’s relevant betting operations, and those aspects conducted off-shore…For this purpose, by far and away the most efficacious structure to is to conduct off-shore betting operations through a corporate entity entirely separate from the UK company …The most satisfactory structure is …that of a company indirectly controlled by, but not owned by the shareholders of [SJA]… but the option of a Gibraltarian company owned not by the [SJA] but by [SJA’s] shareholders, would probably be only marginally less acceptable.”
“There is no tax avoidance motive, save that of having to protect the market position of the business by no paying betting duties, which are payable by similar operations. As demonstrated above, the UK business is seriously contracting, whilst there is an increasing move for customers to deal with Gibraltar providers.”
“it was reiterated that our only stipulation would be that there could be no advertising of the service in the UK and that controls must be in place to ensure UK residents could not participate.”
“General betting duty is charged on off-course bets made with a bookmaker in the United Kingdom…”
“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£3.5million 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…”
“I had to structure the business in way that the customer would place his bets with me. I could not structure the bet – I could not stand the tax in the UK. I have got two options: close the business or find somewhere else to carry on. Legally carry on. What am I going to do? I am going to look for the opportunity.”… “…I had to look somewhere where we could legally trade, where customers were going to bet with us because the duty was lower than the UK.”
“Was the purpose of reducing liability to betting duty the purpose or one of the purposes of the transfer to Gibraltar?”
“in my mind at the time…[if] duty applied on those bets in the branch in Gibraltar and…you have conducted business from the UK you have breached Section 9 and therefore you are either going to jail or you pay duty on the bets that you have undertaken.”
“…that the transfer and any associated operations were bona fide commercial transactions and were not designed for the purpose of avoiding liability to taxation.”
“1. Within the framework of the provisions set out in this chapter, all restrictions on the movement of capital between Member States and between Member States and third countries shall be prohibited. 2. Within the framework of the provisions set out in this chapter, all restrictions on payments between Member States and between Member States and third countries shall be prohibited.”
“1. Every citizen of the Union shall have the right to move and reside freely within the territory of the Member States, subject to the limitations and conditions laid down in this Treaty and by the measures adopted to give it effect….”
“in this respect, it must be borne in mind that it is settled case-law that the Treaty rules governing freedom of movement for persons and the measures adopted to implement them cannot be applied to activities which have no factor linking them with any of the situations governed by Community law and which are confined in all relevant respects within a single Member State (see, inter alia, with regard to freedom of establishment and freedom of movement for workers, respectively, Case 20/87 Gauchard [1987] ECR 4879, paragraphs 12 and 13, and Case C ‑ 18/95 Terhoeve [1999] ECR I ‑ 345, paragraph 26, and the decisions there cited).”
“ affects nationals of other Member States or nationals of the Member State concerned who have made use of their right to freedom of movement within the European Community.”
“ Mr Werner is a German national who obtained his degrees and professional qualifications in Germany; he has always practised his profession in Germany and is subject to German tax legislation. The only factor which takes his case out of a purely national context is the fact that he lives in a Member State other than that in which he practises his profession. ”
“ individuals such as the appellants in the main proceedings, who worked in Germany whilst residing in their own home in another Member State, were not entitled, in the absence of positive income, to have income losses relating to the use of their home taken into account for the purposes of determining their income tax rate, in contrast with individuals working and residing in their own homes in Germany .”
“…measures which have the effect of causing workers to lose, as a consequence of the exercise of their right to freedom of movement, social security advantages guaranteed them by the legislation of a Member State have in particular been classed as obstacles…”
“…although the provisions of the Treaty relating to freedom of establishment could not be applied to situations which were purely internal to a Member State, the scope of Article 52 of the Treaty, nevertheless, could not be interpreted in such a way as to exclude a given Member State’s own nationals from the benefit of Community law where, by reasons of their conduct, they were, with regard to their Member State of origin, in a situation which could be regarded as equivalent to that of other persons enjoying the rights and liberties guaranteed by the Treaty.”
“All such rights, powers, liabilities, obligations and restrictions from time to time created or arising by or under the Treaties, and all such remedies and procedures from time to time provided for by or under the Treaties, as in accordance with the Treaties are without further enactment to be given legal effect or used in the United Kingdom shall be recognised and available in law, and be enforced, allowed and followed accordingly; and the expression “enforceable EU right” and similar expressions shall be read as referring to one to which this subsection applies.”
“The only constraints on the broad and far-reaching nature of the interpretative obligation are that: (a) The meaning should 'go with the grain of the legislation' and be 'compatible with the underlying thrust of the legislation being construed.' (Per Lord Nicholls in Ghaidan at 33; Dyson LJ in EB Central Services at 81) An interpretation should not be adopted which is inconsistent with a fundamental or cardinal feature of the legislation since this would cross the boundary between interpretation and amendment; (See Ghaidan per Lord Nicholls at 33; Lord Rodger at 110 – 113; Arden LJ in IDT Card Services at 82 and 113) and (b) The exercise of the interpretative obligation cannot require the courts to make decisions for which they are not equipped or give rise to important practical repercussions which the court is not equipped to evaluate. (See Ghaidan per Lord Nicholls at 33; Lord Rodger at 115; Arden L in IDT Card Services at 113.)”
“It must be emphasised that the difference of treatment applied according to whether or not the business of the holding company belonging to the consortium consists wholly or mainly in holding shares in subsidiaries having their seat in non-member countries lies outside the scope of Community law. 33. Consequently, arts 52 and 58 of the Treaty do not preclude domestic legislation under which tax relief is not granted to a resident consortium member where the business of the holding company owned by that consortium consists wholly or mainly in holding shares in subsidiaries which have their seat in non-member countries. Nor does art 5 of the Treaty apply. 34. Accordingly, when deciding an issue concerning a situation which lies outside the scope of Community law, the national court is not required, under Community law, either to interpret its legislation in a way conforming with Community law or to disapply that legislation. Where a particular provision must be disapplied in a situation covered by Community law, but that same provision could remain applicable to a situation not so covered, it is for the competent body of the state concerned to remove that legal uncertainty in so far as it might affect rights deriving from Community rules. 35. Consequently, in circumstances such as those in point in the main proceedings, art 5 of the Treaty does not require the national court to interpret its legislation in conformity with Community law or to disapply the legislation in a situation falling outside the scope of Community law.”
“The provisions of this Treaty shall apply to the European territories for whose external relations a Member State is responsible.”
“The Court of Justice of the European Union shall have jurisdiction to give preliminary rulings concerning: (a) the interpretation of the Treaties; (b) the validity and interpretation of acts of the institutions, bodies, offices or agencies of the Union; Where such a question is raised before any court or tribunal of a Member State, that court or tribunal may, if it considers that a decision on the question is necessary to enable it to give judgment, request the Court to give a ruling thereon. Where any question is raised in a case pending before a court or tribunal of a Member State against whose decisions there is no judicial remedy under national law, that court or tribunal shall bring the matter before the Court…”
“The provisions of this Treaty shall apply to the European territories for whose external relations a Member State is responsible.”
“The authorities of these territories [Channel Island and Isle of Man] shall apply the same treatment to all natural and legal persons of the Community.”
“However, since Channel Islanders are British nationals, the distinction between them and other citizens of the United Kingdom cannot be likened to the difference in nationality between the nationals of two Member States. Nor can relations between the Channel Islands and the United Kingdom be regarded as similar to those between two Member States because of other aspects of the status of those Islands.”
“such wording suggests, that for the purposes of the application of those Community rules, the United Kingdom and the Islands are, as a rule, to be regarded as a single Member State.”
“It is clear from all the preceding points, that for the purposes of the application of Articles 23 EC, 25 EC, 28 EC and 29 EC, the Channel Islands, the Isle of Man and the United Kingdom must be treated as one Member State.”
“The answer to this question is that, in the absence of special provision, Gibraltar is not an EEA State; it is a British Overseas Territory, in accordance with theBritish Overseas Territories Act 2002 and Schedule 6 to theBritish Nationality Act 1981 , for whose external relations the United Kingdom is responsible. It is by virtue of that responsibility for the external relations of Gibraltar that Gibraltar is made subject to the Treaty on the Functioning of the EU (see Article 355(3) of the TFEU); and it is because the TFEU applies to Gibraltar that the EEA agreement also applies to it (see Article 126 of the EEA agreement). The correct position therefore, I am satisfied, is that Gibraltar is not in its own right a party to the EEA agreement, but is rather treated for the purposes of the EU and the EEA as part of the United Kingdom.”
“…any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the common market.”
“ It cannot be inferred form this fact that Gibraltar, is as a matter of Community law, part of the United Kingdom”
“To accept that the United Kingdom is responsible for the implementation of Community law in Gibraltar does not in any way imply acceptance of the false proposition that Community law considers Gibraltar to be part of the United Kingdom of Great Britain and Northern Ireland.”
“because Gibraltar is not part of the United Kingdom under national law, international law or Community law.”
“…a status separate and distinct from the territory of the State administering it…”
“If the Commission considers that a Member State has failed to fulfil an obligation under this Treaty, it shall deliver a reasoned opinion on the matter after giving the State concerned the opportunity to submit its observations. If the State concerned does not comply with the opinion within the period laid down by the Commission, the latter may bring the matter before the Court of Justice.”
“A jeopardy amendment is made to a taxpayer’s self assessment during a s9A enquiry if there is reason to believe that the subsequent settlement of the additional liability may be in jeopardy. For example, you may become aware that the taxpayer has plans to leave the country, or is disposing of assets.”
“Since I believed that tax was at risk I raised jeopardy amendments for the years in which the returns were under enquiry and discovery assessments for the years when they were not.”
“…no new information, of fact of law is required for there to be discovery. All that is required is that it has newly appeared to an officer acting honestly and reasonably that there is an insufficiency in an assessment. That can be for any reason, including a change of view, change of opinion, or correction of an oversight. The requirement for newness does not relate to the reason for the conclusion reached by the officer, but to the conclusion itself.”
“…an officer’s discovery must be a reasonable conclusion from the evidence available to him. To that extent, although the test in s29(1) is a subjective test, an element of objectivity is introduced in examining the reasonableness of the officer’s conclusion…”
“If the assessment is not made within a reasonable period after that conclusion is reached, it might depending on the circumstances be the case that the conclusion would lose its essential newness by the time of the actual assessment.”
“at one point an officer is not of the view that there is an insufficiency such that an assessment ought to be raised, and at another he is of that view. That is the only threshold that has to be crossed.”
“..must be assumed to have such level of knowledge and understanding that would reasonably be expected in an officer considering the particular information provided by the taxpayer. Whilst leaving open the exceptional case where the complexity of the law itself might lead to a conclusion that an officer could not reasonably be expected to be aware of an insufficiency, the test should not be constrained by reference to any perceived lack of specialist knowledge in any section of HMRC officers. What is reasonable for an officer to be aware of will depend on a range of factors affecting the adequacy of the information made available, including complexity. But reasonableness falls to be tested, not by reference to a living embodiment of the hypothetical officer, with assumed characteristics at a typical or average level, but by reference to the circumstances of the particular case.”
“Taking a Different View 18. It is open to a taxpayer properly informed or advised to adopt a different view of the law from that published as HMRC’s view. To protect against a discovery assessment after the enquiry period, the return or accompanying documents would have to indicate that a different view had been adopted. This might be done by comments to the effect that the taxpayer has not followed HMRC guidance on the issue or that no adjustment has been made to take account of it. This would offer an opportunity to HMRC to take up the return for enquiry. It is not necessary to provide all the documentation that HMRC might need to quantify that insufficiency if an enquiry into the Return is made.”
“Subsequently HMRC has issued assessments to income tax for the years ended5 April 2001 and5 April 2002 in the proportions: Stephen Fisher 26%, Mrs A P Fisher 26%, Mr Peter Fisher 24%. These assessments reflect the shareholding in SJG.”
“As you are aware we have been asked by the above to carry out an independent review of the facts in respect of the transactions undertaken, which are currently subject to a long running enquiry by HM Revenue and Customs under ICTA 1988 s.739, and to set out our findings thereon.”
“Ultimate Controlling Party In the opinion of the directors, the ultimate controlling parties of the group are S.D. Fisher and A.P. Fisher jointly, by virtue of their 52% shareholding in the company.”
“From this we can immediately conclude that the test is again an objective test, looking at what the hypothetical officer could reasonably infer from the taxpayer's return or any claim, and accompanying documents, or documents, accounts or particulars produced or furnished by the taxpayer or his agent for the purpose of HMRC enquiries. The information is only treated as made available for s 29(5) purposes if both its existence and relevance could reasonably be inferred.”
“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 s29 when applying the test of reasonableness.”
“It is clear that s 29(6) should be construed in a manner consistent with the purpose of the overall scheme of s 29(5). That purpose was described by Auld LJ in Langham v Veltema in the following terms ([2004] STC 544 at [36], 76 TC 259 at [36]): '… 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 s 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 s 9A enquiry before the discovery provisions of s 29(5) come into play. That scheme is clearly supported by the express identification in s 29(6) only of categories of information emanating from the taxpayer.’ ”
“The information referred to in s29(6)(d)(i) must relate to something more than the thought processes by which the officer would reasonably conclude that an assessment was justified.”
“the group accounts in your possession contain the amount of the Gibraltar company alone on the last 2 pages of the accounts. These pages are entitled “Detailed Profit & Loss – Company only.”
“…in circumstances such as this the valuation might not in fact support the figure in the taxpayer’s tax return. In that event, in my judgment on the true construction of s29(6)(d)(i) the inspector is not to have attributed to him the further information that he would actually have obtained if he had asked for that valuation, unless and until it is produced to him.”
“Ultimate Controlling Party In the opinion of the directors, the ultimate controlling parties of the group are S.D. Fisher and A.P. Fisher jointly, by virtue of their 52% shareholding in the company.”
“We have reviewed the enquiry correspondence that has taken place to date and feel that, for whatever reason, the facts of this case have never been completely put forward in a clear and systematic format. We therefore think that a sensible place to start is with the full fact pattern of events.”
“An assessment on any person (in this section referred to as “the person in default”) for the purpose of making good to the Crown a loss of income tax or capital gains tax attributable to his fraudulent or negligent conduct or the fraudulent or negligent conduct of a person acting on his behalf may be made at any time not later than 20 years after the 31st January next following the year of assessment to which it relates”
“I can confirm that Mr Fisher submitted a 2002/3 tax return which we understand he submitted to Cardiff 3 direct. We therefore do no have a signed photocopy, but we enclose an unsigned copy which we trust in the circumstances is sufficient.”