“15. An obvious difficulty which affects allegations and oral evidence based on recollection of events which occurred several years ago is the unreliability of human memory. 16. While everyone knows that memory is fallible, I do not believe that the legal system has sufficiently absorbed the lessons of a century of psychological research into the nature of memory and the unreliability of eyewitness testimony. One of the most important lessons of such research is that in everyday life we are not aware of the extent to which our own and other people's memories are unreliable and believe our memories to be more faithful than they are. Two common (and related) errors are to suppose: (1) that the stronger and more vivid is our feeling or experience of recollection, the more likely the recollection is to be accurate; and (2) that the more confident another person is in their recollection, the more likely their recollection is to be accurate. 17. Underlying both these errors is a faulty model of memory as a mental record which is fixed at the time of experience of an event and then fades (more or less slowly) over time. In fact, psychological research has demonstrated that memories are fluid and malleable, being constantly rewritten whenever they are retrieved. This is true even of so-called ‘flashbulb’' memories, that is memories of experiencing or learning of a particularly shocking or traumatic event. (The very description ‘flashbulb’ memory is in fact misleading, reflecting as it does the misconception that memory operates like a camera or other device that makes a fixed record of an experience.) External information can intrude into a witness’s memory, as can his or her own thoughts and beliefs, and both can cause dramatic changes in recollection. Events can come to be recalled as memories which did not happen at all or which happened to someone else (referred to in the literature as a failure of source memory). 18. Memory is especially unreliable when it comes to recalling past beliefs. Our memories of past beliefs are revised to make them more consistent with our present beliefs. Studies have also shown that memory is particularly vulnerable to interference and alteration when a person is presented with new information or suggestions about an event in circumstances where his or her memory of it is already weak due to the passage of time. 19. The process of civil litigation itself subjects the memories of witnesses to powerful biases. The nature of litigation is such that witnesses often have a stake in a particular version of events. This is obvious where the witness is a party or has a tie of loyalty (such as an employment relationship) to a party to the proceedings. Other, more subtle influences include allegiances created by the process of preparing a witness statement and of coming to court to give evidence for one side in the dispute. A desire to assist, or at least not to prejudice, the party who has called the witness or that party’s lawyers, as well as a natural desire to give a good impression in a public forum, can be significant motivating forces. 20. Considerable interference with memory is also introduced in civil litigation by the procedure of preparing for trial. A witness is asked to make a statement, often (as in the present case) when a long time has already elapsed since the relevant events. The statement is usually drafted for the witness by a lawyer who is inevitably conscious of the significance for the issues in the case of what the witness does nor does not say. The statement is made after the witness’s memory has been “refreshed” by reading documents. The documents considered often include statements of case and other argumentative material as well as documents which the witness did not see at the time or which came into existence after the events which he or she is being asked to recall. The statement may go through several iterations before it is finalised. Then, usually months later, the witness will be asked to re-read his or her statement and review documents again before giving evidence in court. The effect of this process is to establish in the mind of the witness the matters recorded in his or her own statement and other written material, whether they be true or false, and to cause the witness's memory of events to be based increasingly on this material and later interpretations of it rather than on the original experience of the events. … 22. In the light of these considerations, the best approach for a judge to adopt in the trial of a commercial case is, in my view, to place little if any reliance at all on witnesses’ recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts. This does not mean that oral testimony serves no useful purpose – though its utility is often disproportionate to its length. But its value lies largely, as I see it, in the opportunity which cross-examination affords to subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of a witness, rather than in testimony of what the witness recalls of particular conversations and events. Above all, it is important to avoid the fallacy of supposing that, because a witness has confidence in his or her recollection and is honest, evidence based on that recollection provides any reliable guide to the truth.”
“We start by recalling that the judge read Leggatt J’s statements in Gestmin v Credit Suisse and Blue v Ashley as an “admonition” against placing any reliance at all on the recollections of witnesses. We consider that to have been a serious error in the present case for a number of reasons. First, as has very recently been noted by HHJ Gore QC in CBX v North West Anglia NHS Trust [2019] 7 WLUK 57, Gestmin is not to be taken as laying down any general principle for the assessment of evidence. It is one of a line of distinguished judicial observations that emphasise the fallibility of human memory and the need to assess witness evidence in its proper place alongside contemporaneous documentary evidence and evidence upon which undoubted or probable reliance can be placed. Earlier statements of this kind are discussed by Lord Bingham in his well-known essay The Judge as Juror: The Judicial Determination of Factual Issues (from The Business of Judging, Oxford 2000). But a proper awareness of the fallibility of memory does not relieve judges of the task of making findings of fact based upon all of the evidence. Heuristics or mental short cuts are no substitute for this essential judicial function. In particular, where a party’s sworn evidence is disbelieved, the court must say why that is; it cannot simply ignore the evidence.”
“[y]ou would need to identify which services were being consumed by that legal entity in terms of – when we book cost and FTE [full time employees], is there a team in the US delivering that service, which components of that service is being delivered specifically by the US, and identify/provide evidence to support your delivery to, in this instance, Ireland, say, for example. It’s not as simple as just then adding it to the IGA. You need to interlock it and agree it with the legal entity recipient.”
“where a ringfenced body receives services and accesses facilities that it requires on a regular basis from an entity in its group, it may do so, whether directly or indirectly, only where that entity is a ‘permitted supplier.’”
“I’m hoping you can help me with the consequences of establishing a UK presence of a US service company, or at least point me in the right direction. Under the structural reform umbrella, there is a growing focus on the service companies within the group and ensuring their operational continuity, as well as economic efficiency. As a part of this, it is envisaged that there may become a need for there to be dedicated personnel based in the UK managing the service delivery model, service flows, IGAs (and so forth) for each of the group’s main service entities. BSC could be included in this bucket, and may strategically be required to have service delivery managers (and similar personnel/functionality) to be based in London. Would this create a UK branch/permanent establishment of BSC?”
“• Consideration is being given to setting up a UK branch of BSC. • The main purpose of the branch is to ensure BSC provides its services as efficiently as possible to the UK businesses. • The branch will enable this through building the relationships with senior figures in BSC and the UK business partners to ensure they receive the correct provision of services. • This means the branch needs to have a sufficient number of people in the UK in order to ensure it achieves this aim. • It is also important that the people in the UK are of the right level of seniority to provide the value needed. • The UK branch employees need to have sufficient technical resource to be able to adequately complete their jobs. • Where the above conditions are met the branch should be able to join the UK VAT group which will bring significant VAT efficiencies.”
“• Build relationships with BU COOs and the relevant service providers in BSC. • Gather and aggregate the demand. • Provide a management layer in the UK who can ensure the UK demands are met. • Share the information regarding demand with the relevant stakeholders. • Facilitate to remove any capacity or infrastructure bottlenecks. • Manage the UK employment taxes, payroll and other administrative tasks in relation to relevant staff. • Provide status and MI to the key stakeholders.”
“In order for the UK branch to form part of the UK VAT group there needs to be sufficient human and technical resource in the UK.”
“We had a discussion a few months ago about the possibility of establishing a UK branch of BSC; since then the plans to implement this have been analysed and developed here (including a discussion with MH), and the VAT team are looking to push towards sign-off and implementation (subject to the necessary approvals). It is estimated the benefit will be c.£5 -10m per annum of reverse charge VAT.”
“… establishing a UK branch/permanent establishment of Barclays Services Corporation; there would be some functionality (for example, possibly senior service delivery managers/coordinators) based in the UK, acting on behalf of BSC. This will bring services supplied from BSC to UK trading entities such as BBPLC [ie Barclays Bank PLC] within the UK VAT group, and mitigate reverse charge VAT of circa£5 -10m per annum.”
“… it might be helpful to have an initial session with you (I recall you mentioned you were the AE for this entity) to get you sufficiently sighted on the planning opportunity and also to formally seek your input on how we move this forward (the sooner we can implement the greater the P&L saving).”
“I spoke to Chiu Ming Man (the firm’s VAT expert) and he mentioned that there is some commercial rationale to look at setting up a UK branch (not a regulated branch) of Barclays Services Corporation given the interaction between service companies and countries. This branch would then be added to the UK VAT group. Not only would this eliminate the emergence of the£3.6m VAT for Card, it would also have an approx additional£10m VAT saving on recharges BSC makes out of US to UK which are currently VAT incurring.”
“There are numerous benefits to BSC having a presence in the UK of service delivery managers: ✓ Assure best practice of services provided to the UK ✓ Accurately prioritise and size demand ✓ Assess risks and track their mitigation and contingencies more efficiently ✓ Act as a key point of contact for the issues arising in the UK ✓ Provide regular updates and assurances to BSC senior management to ensure customer satisfaction ✓ Create anticipated VAT efficiencies in excess of£10m per annum” ✓ Assure best practice of services provided to the UK ✓ Accurately prioritise and size demand ✓ Assess risks and track their mitigation and contingencies more efficiently ✓ Act as a key point of contact for the issues arising in the UK ✓ Provide regular updates and assurances to BSC senior management to ensure customer satisfaction ✓ Create anticipated VAT efficiencies in excess of£10m per annum”
“The Proposal had been discussed at length with the CEO of BSC in the US who is fully supportive. Given that the proposal is wholly aligned with the service group model and service delivery would be more efficient/effective with people on the ground in the UK, the CEO would recommend proceeding even in the absence of any VAT benefit (estimated to be£10m per annum).”
“… to work closely with key stakeholders [to]: ✓ Assure best practice of services provided to the UK ✓ Accurately prioritise and size demand ✓ Assess risks and track their mitigation and contingencies more efficiently ✓ Provide accurate and compelling project/program propositions to the UK ✓ Act as a key point of contact for the issues arising in the UK ✓ Provide face-to-face contact in the UK where necessary in order to better understand the UK business’ requests and expedite the resolution of issues ✓ Work closely with the UK business partners to predict and overcome potential bottlenecks ✓ Provide regular updates and assurances to BSC senior management to ensure customer satisfaction ✓ Initiate knowledge transfer programs in order to maximise efficiencies ✓ Create VAT efficiencies of up to£10m * * This figure is based on a VAT charge of approximately£20 -25m, which at the average IB recovery rate leaves an irrecoverable VAT cost of£10m ” ✓ Assure best practice of services provided to the UK ✓ Accurately prioritise and size demand ✓ Assess risks and track their mitigation and contingencies more efficiently ✓ Provide accurate and compelling project/program propositions to the UK ✓ Act as a key point of contact for the issues arising in the UK ✓ Provide face-to-face contact in the UK where necessary in order to better understand the UK business’ requests and expedite the resolution of issues ✓ Work closely with the UK business partners to predict and overcome potential bottlenecks ✓ Provide regular updates and assurances to BSC senior management to ensure customer satisfaction ✓ Initiate knowledge transfer programs in order to maximise efficiencies ✓ Create VAT efficiencies of up to£10m * * This figure is based on a VAT charge of approximately£20 -25m, which at the average IB recovery rate leaves an irrecoverable VAT cost of£10m ”
“In order for the UK branch to achieve its aims and to form part of the UK VAT group there needs to be a sufficient level of human and technical resources in the UK required for its operation.”
“Summary This paper sets out a proposal to employ service managers of Barclays Services Corporation’s (“BSC”) in the UK (“BSC UK”). The purpose of BSC UK will be to manage the delivery of services provided by BSC to entities in the Barclays group outside of the US and to manage supplies into BSC from Barclays entities outside of the US. The benefit of this proposal will be to improve the efficiency of service delivery between BSC and both the entities to whom it provides services and the entities from whom it receives services. BSC UK will manage the provision of services from and to BSC in the US, in respect of the relevant recipients and providers of services located outside of the US and to ensure that the quality of services is consistently maintained. This arrangement will allow a more efficient delivery of services from and to BSC and is aligned with the structure of service provision elsewhere in the group (as explained in more detail below) and the Service Management Framework. Following the stand up of Barclays Services Limited (“BSerL”) in September 2017, it is expected that BSC UK will liaise regularly with the local Service Managers in the trading entities as envisaged by the Service Management Framework. BSC UK will constitute a fixed establishment for UK VAT purposes and as such will be eligible for addition to Barclays’ UK VAT group (the “UK VAT group”). As a result of the addition of BSC UK to the UK VAT group, supplies made by BSC to other members of the UK VAT group will be disregarded for the purposes of calculating the UK VAT group’s liability in respect of VAT. It is expected that this will lead to a saving of c.£15m -20m of otherwise irrecoverable VAT per annum for the Barclays group. It is expected that the cost of setting up BSC UK will be c.£30k and that the ongoing operating costs will be c.£400k per annum. …”
“The operating model to be implemented as part of the Structural Reform Programme includes service delivery managers employed by each trading entity whose role is to manage the delivery of services from those trading entities to their ultimate service recipients. In respect of BSC, locating Service Managers in the UK ensures that the Service Managers will be in the same time zone and location as some of BSC’s principal service recipients and service providers, whilst also allowing Service Managers covering Europe and most of Asia Pacific to be available at times at which those markets are open.”
“It was highlighted that the aim of the Transaction was to improve the quality of services, both received by BSC and provided from BSC, through the set-up of BSC UK. The background explanation included a brief overview of the current VAT treatment of the services which BSC provides to UK recipients, and the consequences of establishing BSC UK. It was noted that the proposal was consistent with the service delivery model which has been adopted by Barclays Shared Services (BSS) and Barclays Technology Centre India (BTCI) for a number of years.”
“You will recall that I mentioned we are supporting the creation of a US (sic) Branch of BSC …: the structure [ie the UK Branch] is forecast to provide an accretive P&L Benefit of£6.5m this year, and perhaps£15m a year, annually. … It is the same point for BTCI and BSS; the structure obviates the need to account for c£40m of reverse charge VAT but it costs c£1.1m to run the Branches.”
“… a dotted line into me as CEO of BSC if that helped.”
“Manual billing is required to evidence the direct billing of [Corporate Real Estate Services] costs to the UK branch for UK VAT grouping requirements.”
“Proposal • BSC will set up a UK establishment that will manage BSC’s customer and supplier relationships outside of the US. The aim of BSC UK is to improve services provided and received by BSC and it will operate a similar model to the model currently in place in respect of the UK establishments of Barclays Shared Services (BSS) and Barclays Technology Centres India (BTCI). • BSC UK will comprise 3 service delivery managers and a Head of BSC UK (at Director level). An individual in Chennai will be dedicated to providing BSC UK with Finance support. BSC UK will therefore involve 5 FTEs in total. BSC UK will pay for IT facilities necessary for its day-to-day operations and desk space locally in the UK. It is anticipated that the running costs will be c.£500k per annum. UK Tax Analysis As a result of having a UK establishment, BSC may be added [to] Barclays’ UK VAT group. Accordingly, supplies made between BSC and other members of the group will be disregarded for VAT purposes. Accordingly, UK service recipients (e.g. BBPLC and BSerL) will no longer be subject to a reverse charge for VAT purposes. It is expected that this will lead to a cost saving for the Group of£15m -£20m . Approvals forums The proposal has been signed off by the relevant functions (including Tax, TAG, Reg Policy, Reg Relations, Risk, Compliance, Legal) and has been through the following formal approvals forums: • Tax Risk Assessment Panel • Committee for Transactions with Tax Risk • Tax Management Oversight Committee • Legal Entity Review Committee Request for Approval • Establishment of BSC UK • Registration of BSC UK with Companies House and HMRC • Application to HMRC for addition of BSC to the UK VAT group • Appointment of Head of BSC UK to the Board of BSC • Authority to approve the Head of BSC UK to be delegated to 1 Director • Opening of a GBP bank account for BSC UK”
“Barclays Services Corporation UK (“BSC UK”) will be set-up to manage the delivery of services provided by its Head Office, Barclays Services Corporation to the Service Recipient, Barclays Bank PLC. Correspondingly, this proposed change will capture the role of BSC UK in the provision of services.”
“The Service Provider through its representative in the UK (Barclays Services Corporation UK) manages the provision of services to the Service Recipient: • Demand Planning – Regular sizing of activities and assessment of Service Recipient requirements • Stakeholder Management – Relationship development with end users • Service Monitoring – Review of ongoing service delivery, issue escalation and resolution” • Demand Planning – Regular sizing of activities and assessment of Service Recipient requirements • Stakeholder Management – Relationship development with end users • Service Monitoring – Review of ongoing service delivery, issue escalation and resolution”
“The UK resources (one D, 1 VP & 2 AVPs) will be based in Radbroke, …; they will be employed on a BSC UK Branch contract (this is essential, to make the VAT construct work) and will have reporting lines in the UK and to the Board of BSC in the US?”
“Would comprise 4-5 people [for a] tax benefit of 15mm GBP back to BI [Barclays International]. This is not a requirement for SRP [the Structural Reform Programme] but rather a commercial decision that will also prepare a blueprint for BBI.”
“… and we are on the same page. He is supportive of the [5] heads reporting to either/or Sylvia & Nick. He just needs some visibility as CEO of BSC – which he is flex. i.e. can be in the form of submitting papers, etc. just something so he and BSC board is aware of flow and issues. I am [to] have a call with the tax folks at 11:30 to discuss our the (sic) cost centers are setup and flow, and any other questions. Will keep you posted.”
“… two benefits to the firm: • a£15 mm p.a. accrual [which] will start as soon as we can get people funded. • A 1 time£21 mm tax benefit will be realized this year if we can establish this effort in time (ie need to demonstrate operationalization this year).” • a£15 mm p.a. accrual [which] will start as soon as we can get people funded. • A 1 time£21 mm tax benefit will be realized this year if we can establish this effort in time (ie need to demonstrate operationalization this year).”
“… please can I ask that we try not to refer to tax benefits in these mails? Apologies but this is a tax request and I am trying to ensure we meet their requirements as best we can?”
“The Change/Transformation are working through the SAP build and we are just waiting for Legal to confirm which legal entity this needs to be set up in SAP against. They have flagged that it is probably unlikely that payroll will be able to backdate costs against the new cost center, back to December. From an HMRC perspective, does this have any impact that we need to be aware of? With regards to timescales for Nick [Doddy] I am happy to speak to him if this is causing an issue.”
“Hi Mike, Hope you're well and having an easy last week in your old role. Looking forward to you starting next week and to seeing you on Thursday at the Christmas Party. Just wanted to let you know that you’ve been booked on a site induction on Tuesday 12th December at 8.45am. Hope that’s ok? Can you email me your staff number so that I can arrange a permanent pass for you too.”
“… a technical transfer. A technical transfer is when a colleague changes their Legal Employing Entity, which Michael [Curran] will do. Lisa confirmed the new Legal Employing Entity should be Barclays Services Ltd and not BTCI, so this won't affect his pension. A technical transfer can only be effective from the 1st of the month, largely for tax reasons. The HMRC see a change of Legal Employing Entity like a change in employers, so if the start date were mid month it would look like he had 2 jobs for the same month and he would be heavily taxed. So our start date has to either be 1st Dec or 1st Jan. To achieve the 1st Dec we must have the salary all approved and the details in Taleo fully approved by payroll cut off for Oct, which is Thursday 9th Nov. So we have a little over a week. I wanted to make you aware as I think you are already having start date conversations with Michael’s current line manager. This obviously won’t give them the full 4 weeks notice so they would have to be in agreement also.”
“I guess it depends if getting them started, albeit slightly incorrectly, is more important or if it’s more important that everything is right first time. If the later then the start dates would need to be1st Jan 2018 .”
“December 1st is key – we need them in place (and the Director position) to ensure that we can benefit from a material transaction planned pre year-end.”
“… the BI service office is representative of the BI legal entity recipients. Our role was very specific around representing Barclays Services Corporation as a provider, but we liaise very closely with the BI service office. They were established some months – I’m not sure of the exact dates – prior to us. They will have been involved in phase 1 and developed a playbook of – that detailed their responsibilities, the escalation points, the responsibilities of their head of business services. So should a legal entity recipient have an issue with a particular service, with a particular SLA [Service Level Agreement] that they – is not being resolved in a timely manner, it clearly details that escalation route.”
“I’ve been through the slides and thinking about the BSC framework you mentioned ... just one question, which may be a little stupid, I’m not entirely sure where we actually fit in the document? So I’m not too sure where to pull our objectives from.”
“… we were starting off in terms of developing this service management functionality. The HMRC piece was one element. Once we’d answered those [ie HMRC’s] questions, we were then very much focused on: we need to build this framework. We need to start understanding what costs are consumed by BSC, which services they are aligned to, how many FTE [ie Full Time Employees] sit in the US with those services, and who do they deliver services to. That was very much the focus of – of the Branch”
“I was asking somebody [Ms McAlinden] who led phase 1 of this initiative who her engagement points were in relation to Barclays Services Corporation. She was the one person that could give me the names of many people.”
“BSC UK Branch - update for the week starting December 4th Wanted to give you an update on the progress made in the UK Branch last week, Achievements/progress over the last week. • BSC UK Branch application filed with HMRC on the 1st December – as yet no response received from HMRC. I will let you know as soon as they do. • BSC UK Branch Team – very pleased to welcome Nikki McEnaney & Michael Curran to the team. Nikki joins us from the Barclays.net migration team where she worked as a Performance Manager and Mike was a Business Manager at a central Manchester Barclays branch. Looking forward to working with them both as we build out the UK Branch. • Recruitment – we have now filled the fourth and final position in the UK Branch team. A formal offer was made to Nick Leason last week which he has since accepted, Nick is currently a Service Delivery manager in BUK and he will hopefully join the UK Branch team in the 1st week of Jan. • ServCo Management Office Engagement – I have linked in with Nicola McAlinden and team on the BSC IGAs. A list of IGAs has been shared and a review meeting scheduled for w/c 11th December. I will continue to support and work with the UK ServCo team to agree a way of presenting service reviews to ServCo management and ensure the UK Branch is involved in the service management reviews. • Employment contract amendments – continued work with HR/on-boarding teams to amend the contracts for all UK Branch employees such that the employing entity is identified as a UK establishment of Barclays Services Corporation. All team members have been recruited on ServCo contracts, As the proposed amendment is a change in legal entity, it impacts T&C’s and further complicates the process. Confirmation of next steps is expected from the on-boarding team w/c 11th December. • Continued work with Financial Control to ensure they are set up with necessary systems. i.e. Baclays.net access to support BSC UK Branch. Focus for this week (w/c 11th December) • Introductory meeting with Sylvia Veitia to introduce myself/team and understand how the UK Branch can add value to her/team’s objectives. • Draft BSC UK Branch framework-working with the team to outline the objectives of the UK Branch. I hope to share a first draft with you in our meeting on the 22nd December. • Engagement with our FBPs and finance cost management to ensure all financials are managed and transferred to the correct cost centre on a monthly basis and build a regular monthly financial report in relation to BSC UK branch. • Follow up with ServCo Management Office on service management review meetings & IGA review; this will remain a focus for the coming weeks as we build to the formal service meetings. • Work with HR & Tax team to re-issue employment contracts for BSC UK Branch team under the correct employing entity. The team have been made aware of pending contract amendments requited to demonstrate “substance” of the UK Branch Risks and issues • HMRC review; remains a risk until approval of BSC’s UK branch application is received from HRMC. Please do not hesitate to contact me if you have any questions or require any further information. If you’re happy with this approach I’ll aim to provide you with a similar update each week to keep you up to speed on progress?”
“… continue to support and work with the UK ServCo team, Eugene Gorfin and Kevin Kammer to ensure the UK Branch is captured in the IGAs and is involved in the service management reviews.”
“I think it’s fair to say we were all still kind of figuring things out and trying to determine the appropriate procedures to put in place to meet internal outsourcing standards.”
“• Data continues to be collated for HMRC in response to the UK Branch’s application to join the UK VAT Group. We're making good progress, and are on track to provide all requested information by HMRC’s deadline of the 15th January.” • Employment contract amendments – progress has been made in updating the team's employment contracts. Revised copies are expected by the end of this week and I have set up consultation meetings with the team on Monday to take them through the minor amendments. Subject to their authorisation we will be in a position to share with HMRC and demonstrate that the team is directly employed by BSC UK Branch.”
“… to start to piece together the information available relating to BSC’s IGAs from a service recipient and service provided perspective. They were good meetings and both were keen for us to help support the process. Understand that there is a working group and workshops in the process of being set up to prepare a draft of BSC’s IGAs as required by the FCA & PRA in its capacity as a “permitted supplier”
“Not sure if you can help but I’ve recently joined BSC UK and I’m looking to get access to sections within the Service Portal site. IGAs, Service Reviews, etc. do you know who owns those and how myself and team can get access?”
“The letter has been amended following your [Mr Westwood’s] feedback. Richard Crane reviewed today and was comfortable. He particularly liked the framework however requested we remove the work [sic] “draft” and add “version as at8 Jan 2018 ” in the footer to give additional weight to the document. The letter will also reference that the framework will be presented at the next BSC Board meeting. Final amendments will be made and the response submitted to HMRC on Monday 15th January.”
“… updates continue to be made to the framework to include cost flows & IGAs, following our discussion on the 22nd December. This will be work in progress over the next few weeks however hope to be in a position to share a second draft with you by our next 1-2-1.”
“… with the UK ServCo team to ensure the UK Branch continues to play an active role in supporting the BSC IGA process and service management reviews.”
“… reviewed the team members and their respective roles. She advised that there is good communication between her team and Mr Westwood with monthly catch-up meetings and weekly email updates. There was discussion on the payment and how fees are charged for the UK Office services. Mr Westwood advised that all services outside of the US for internal affiliates were performed through the UK Office. Mr Westwood explained the VAT tax benefit that is received by having the UK Branch Office of BSC. Mr Westwood explained that BSC has applied to the UK VAT office to receive the same VAT treatment as Barclays Bank PLC (VAT Grouping); he noted the benefits of the UK Branch primarily include strategy, service and business management and that the VAT treatment is more in keeping with the approach taken both by other Barclays' Branches and indeed across the industry.”
“… keep good notes of the entire process. You should keep written records of all the factors that you took into consideration when making the decision and details of your reasons for exercising your powers. These notes should be sufficiently full and legible to be capable of production at a Tribunal hearing. Failure to be able to produce an audit trail for the decision may lead to the refusal being unsustainable.”
“To enable us to consider as much relevant information as is possible within statutory time limits, I would be grateful if you would provide your responses to all of the points covered in this letter no later than15th January 2018 . I recognise that this is a tight deadline to respond given the Christmas & New Year break but HMRC only have 90 days from 4 December to accept or refuse the application to join the Group and would appreciate it if you could supply the information as soon as possible.”
“… no specific question within my letter that covered that one point, no.”
“We need to be mindful that the 90 day deadline will fast approach and the time scale to consider the information/draft a TAR /obtain Policy approval and issue decision letter will be very tight.”
“HMRC should refuse the application as it appears the newly created UK branch is not a fixed establishment for VAT grouping purposes and also refuse the application because, in our view it is necessary for the protection of the revenue. The two decisions can be made at the same time and should go in a single letter providing the reasons for both decisions.”
“Objectively, on the information provided to us, we consider that the UK branch of BSC was set up in order to remove substantial supplies provided from outside the UK from a charge to UK VAT. In our view, this amounts to a revenue loss beyond the normal operation of VAT grouping. Despite the claims made by you regarding the commercial reasons behind the UK branch structure, the evidence that has been produced to HMRC does not point to a real commercial function for BSC UK, and that the benefits of any such function are insignificant compared with the VAT benefits of sheltering supplies from the main overseas establishment. This is supported by reference to the direct profit impact statement made under paragraph 6.1.1. of the BSC UK Proposal – CTTR memo which provides that the direct profit impact is a VAT saving to service recipients of c£15m -£20m per annum. There appears to be little or no administrative burden on the business that arises from our refusal to allow the UK branch of BCS [sic] to VAT group. You have already stated, within the final paragraph of your letter dated15th January 2018 , that there would be no additional costs or burdens, other than the VAT cost. If the branch continues without VAT grouping, the administration costs and accounting for VAT on supplies it incurred would be negligible compared with the VAT revenue at stake. There would not appear to be any need for the UK branch to register for VAT. In consequence we consider that, in this case, the requirements for exercising HMRC’s protection of the revenue powers are met.”
“… is the concept of two or more bodies corporate being ‘established’ or having a ‘fixed establishment’ in s 43A of VATA, which it is common ground purports to implement the words ‘any persons established in the territory of that Member State’ in art 11 of the PVD, to be interpreted.”
“15. … (3) There is no jurisprudence of the CJEU on the meaning of the phrase ‘persons established in the territory of that Member State’. However, there is jurisprudence on the phrases ‘has established his business’ and ‘a fixed establishment’ which appear in art 43 of the PVD (concerned with the place of supply), and that jurisprudence should inform the interpretation of ‘established’ and ‘a fixed establishment’ in s 43A; (4) HMRC say that on the basis of the case law relating to the meaning of ‘fixed establishment’, primarily in the context of the place of supply rules, in order for a UK branch of an overseas company to be regarded as a ‘fixed establishment’ it must (i) have a real trading presence in the UK and must supply goods or services in its own right, those goods or services being neither preparatory or auxiliary, but material to the business of the person in question; (ii) have sufficient permanent resources to be able to supply those goods or services; and (iii) have sufficient permanent resources to receive the supplies required to enable it to provide those goods or services.”
“… may not in future be cited before any court unless it clearly indicates that it purports to establish a new principle or to extend the present law. In respect of judgments delivered after the date of this direction, that indication must take the form of an express statement to that effect.”
“… This is because, even if a fixed establishment does not necessarily require its own human and technical resources, the taxable person must nevertheless—based on the requirement for a sufficient degree of permanence in relation to the establishment—have comparable control over the human and technical resources. Therefore employment and lease contracts are required in particular in relation to the human and technical resources which put the latter at the taxable person’s disposal as if they were his own and which therefore also cannot be terminated at short notice.”
“… Moreover, we do not consider that in framing the test in this way, as requiring control comparable to that of an owner, the Advocate General can be said, as HRMC [sic] argued, to be setting an unduly high hurdle compared with the other authorities. In RAL and ARO Lease it was envisaged that the relevant resources had to be under the “direct dependence” of or actually to be employed by the relevant entity.”
“28. … Danske Bank’s principal establishment is part of the Danish VAT group at issue. As a result of the fact that it belongs to that VAT group, it must be held, for VAT purposes, that it is that group which supplies the services at issue in the main proceedings. 29. Furthermore, having regard to the territorial limits resulting from the first paragraph of art 11 of the VAT Directive, the Swedish branch of Danske Bank cannot be regarded as forming part of the Danish VAT group in question. 30. Accordingly, for VAT purposes, the Danish VAT group to which Danske Bank’s principal establishment belongs, on the one hand, and the Swedish branch of that company, on the other, cannot be regarded as forming together a single taxable person.”
“This was that the test focuses exclusively on the reasonableness of the decision reached, as opposed to the process by which it was reached. Accordingly, even if HMRC had erred in one of the four ways identified by HSBC, the FTT should not allow an appeal if HMRC could nevertheless have reasonably specified the date which was in fact contained in the notice on some other basis.”
“Beyond that, we do not think it is appropriate to direct that any particular fact or circumstance is to be excluded from consideration, or to be given no weight. The FTT should be free to have regard to all the circumstances it considers are relevant in concluding whether HMRC could reasonably have been satisfied that it was appropriate to specify the date contained in the notice. HMRC accepted, and we agree, that in carrying out that exercise the FTT could consider if relevant any legitimate expectation (in a public law sense) which could be established by the taxpayer.”
“… are not designed to confer exemption or relief from tax. They are designed to simplify and facilitate the collection of tax by treating the representative member as if it were carrying on all the businesses of the other members as well as its own, and dealing on behalf of them all with non-members.”