“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 in section 9 of [the BGDA] 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…”
“…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.”
“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.”
“My Lords, the assessment to tax here was made undersection 478 of the Income and Corporation Taxes Act 1970 . The opening few lines of that section 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 itself should be carried out with that purpose. The statute is simply expressing the purpose of the section, not the substance of the transaction.”
“I do not see why the choice of an offshore bond or policy, for the taxation of which Parliament has made express and recent provision, should be regarded as tax avoidance at all. The tax is not avoided it is deferred. Moreover it is deferred to an event which Parliament has prescribed not to a time of the taxpayer’s choice… 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 less favourable tax treatment.”
“There are undoubtedly two possible interpretations of section 412, particularly having regard to the preamble. The first is to regard it as having a limited effect: to be directed against persons who transfer assets abroad, who by means of such transfers avoid tax, and who yet managed when resident in the United Kingdom to obtain or to be in possession to obtain benefits from those assets. For myself I regard this as being the natural meaning of the section.”
“The alternative which is supported by the language is to suppose that the section was intended by Parliament as a limited section, attacking, with penal consequences, those who removed assets abroad so as to gain tax advantages while residing in the United Kingdom…” (2) Viscount Dilhorne at 1183A: “Cohen LJ with whose judgment Lord Simonds agreed on all points treated the words “such an individual” in subsections (1) and (2) as meaning an individual ordinarily resident in the United Kingdom. Their meaning does not appear to have been debated in the House. A possible meaning appears to me an individual ordinarily resident who has sought to avoid liability to income tax by means of a transfer abroad. If that was their meaning, then the scope of section 412 is limited.”
“In my judgment, the words “such an individual” appearing in subsections (1) and (2) hark back to the opening words of the preamble, namely to individuals whose purpose is the avoidance of liability to tax, and do not refer simply to any individual “ordinarily resident in the United Kingdom.”” (4) Lord Keith of Kinkel at 1197G: “Thus I consider that the natural and intended meaning of the words “such an individual” in section 412(1) is that they indicate not merely an individual ordinarily resident in the United Kingdom, but an individual so resident who has sought to avoid liability to income tax by means of such transfers of assets as are mentioned in the preamble.”
“I find in the section, if directed at transferors, and benefits taken by them, an ample and powerful anti-avoidance instrument and I feel not only no need, but a great reluctance, in view of the wording used, to extend it against any beneficiary, child, or grandchild, or descendant.”
“it was reasonably apprehended that to read the section as excluding a case where an individual did not himself transfer assets but procured their transfer by another would be to ignore the substance of the legislature’s intention”
“if there has been such a transfer as is mentioned in the introductory words, and if an individual has by means of such transfer (either alone or in conjunction with associated operations) acquired the rights referred to in the section, then the prescribed consequences follow” 16 and described this at p. 1192 as the “true ratio decidendi” of both courts in Congreve. So did Viscount Dilhorne at p.1182G. Lord Keith said at p.1197F: “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.”
“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….”
“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. 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. My Lords, I am content for my part to adopt these propositions as a generally helpful approach to the elusive concept of “tax avoidance,” the more so since they owe much to the speeches of Lord Templeman and Lord Goff of 32 Chieveley in Ensign Tankers (Leasing) Ltd v Stokes [1992] 1 A.C. 655, 675C-676F, 681B-E. One of the traditional functions of the tax system is to promote socially desirable objectives by providing a favourable tax regime for those who pursue them. Individuals who make provision for their retirement or for greater financial security are a familiar example of those who have received such fiscal encouragement in various forms over the years. This, no doubt, is why the holders of qualifying policies, even those issued by non-resident companies, were granted exemption from tax on the benefits received. In a broad colloquial sense tax avoidance might be said to have been one of the main purposes of those who took out such policies, because plainly freedom from tax was one of the main attractions. But it would be absurd in the context of section 741 to describe as tax avoidance the acceptance of an offer of freedom from tax which Parliament has deliberately made. Tax avoidance within the meaning of section 741 is a course of action designed to conflict with or defeat the evident intention of Parliament.”
“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 6 The decision of the High Court in Victor Chandler, declaring teletext advertising lawful, was handed down on16 July 1999 , the hearing having taken place on8 July 1999 . 7 As the FTT recorded at [59], “[w]hen the branch started taking UK bets, there was a significant change. The branch went from having six members of staff to having about 22-24.” 8 Whilst the possibility of such a transfer was clearly in contemplation from August 1999, it was only on10 January 2000 that a decision was taken to effect it (see [76] - [77]). Bets were being taken by SJA’s Gibraltar branch entirely independent of this decision. 9 Mr Baker contended that freedom of establishment was the primary freedom affected, but that this did not mean that free movement of capital was not also involved, citingCase C-628/15 Trustees of the BT Pension Scheme v Revenue and Customs Commissioners[2018] Ch 230 at [38] – [42]. However, as the FTT decision was based on freedom of establishment and Mr Baker concentrated his submissions on that freedom, we propose to do likewise. 36 another Member State shall be prohibited.”
“the exercise of freedom of establishment or free movement of capital by British Nationals between the United Kingdom and Gibraltar constitutes, as a matter of EU law, a situation confined in all respects within a single Member State.” [Emphasis added.]
“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 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 48 competent body of the State concerned to remove that legal uncertainty in so far as it might affect rights deriving from Community rules.”
“.. 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 s 29(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.”
“(1) The appellants were arguing that the s741 motive defence was applicable to any s739 income. (2) Stephen Fisher and Anne Fisher continued to be owners of SJG shares (because this is mentioned in year end 2006 accounts and the year end 2007 accounts12 were attributed to the hypothetical officer on the basis their existence and relevance could reasonably be inferred). (3) SJG had income in 2006-07 (similarly by attribution of the 2006 and 2007 accounts).”
“If we were to imagine the position were the reverse so that there were nine months worth of losses, (but it later transpired there was an annual profit giving rise to a tax insufficiency) the corollary of the above approach would be that it would not be clear that there was a loss for the tax year until the possibility that there could thereafter be three months of huge profit reversing the previous losses had been ruled out. HMRC’s approach would mean the officer would be taken to be aware of a tax insufficiency and a subsequent discovery assessment to recover loss of tax in respect of the annual profit would be invalid because, despite information that there were nine months of losses, it could not be ruled out that an annual profit could have been made as a result of large profits in the remaining three months. That cannot be a result which is intended by the legislation.”
“(1) The appellants were arguing that the s741 motive defence was applicable to any s739 income. (2) Stephen Fisher and Anne Fisher were owners of SJG shares and had power to enjoy. (3) SJG had income.”
“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.””
“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.”
“I agree with Chadwick LJ, for the reasons he gives, that the inspector could not be reasonably be expected to be aware that the valuation if it existed would disclose a valuation other than£100,000 or that it did not support that figure. However Chadwick LJ additionally expresses the view that the inspector could reasonably be expected to be aware of what he would have discovered if he had called for the information as to the value of the asset. On the facts of this case, the attribution of that knowledge does not produce any different results for the reasons that Chadwick LJ then gives. However this formulation is different from that set out in the first sentence of this paragraph. As I see it, section 29(6)(d)(i) does not attribute to the inspector information which is not reasonably to be inferred from information within s 29(6)(a) to (c). The matters set out in those paragraphs are all categories of information actually supplied by the taxpayer. The valuation was not so produced. Moreover, 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 section 29(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.”
“… awareness of an insufficiency does not require resolution of any potential dispute… Awareness is a matter of perception and of understanding, not of conclusion.”
“The decision in Lansdowne confirmed that the officer was not required to resolve (or even be able to assess) every question of law (particularly in complex cases) but that where, as Moses LJ expressed it, the points were not complex or difficult he was required to apply his knowledge of the law to the facts disclosed and to form a view as to whether an insufficiency existed. That is a matter of judgment rather than the application of any particular standard of proof.”