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In a judgment which represents a victory for common sense, the Court of Appeal has upheld the taxpayer's appeal relating to the interpretation of the UK-Canada double tax treaty. The Court held that certain receipts fell within the scope of the "business profits" article of the treaty, rather than the "immovable property" article, and were therefore exclusively taxable in Canada. HMRC contended that the payments were income from immovable property on the basis that they were consideration for the right to work oil deposits in the North Sea. This was implausible because, as the Court recognised, the taxpayer had never had any right to work the relevant deposits, and instead had a right to receive payments calculated by reference to the value of oil extracted. Read more
In Cider of Sweden v HMRC, the Tax Tribunal has issued a significant, but narrow decision regarding the circumstances in which a third party can obtain copies of the parties' pleadings in a tax appeal. Read more
Investors in a series of film finance tax schemes sued the tax QC who had produced written opinions for the scheme promoter, which were then shared with prospective investors. The Court rejected the investors' claims, on the basis that the QC owed them no duty of care in preparing the opinions, and that even if he had owed them a duty, the views he expressed in the opinions were consistent with those of a reasonable QC. Read more
In Zipvit Ltd v HMRC, the CJEU has held that, where a contract for services provides for VAT to be charged in addition, a taxable person cannot claim to deduct an amount of VAT for which it has not been charged and which it has therefore not passed on to the final consumer. Read more
In Embiricos v HMRC the Court of Appeal has provided clear guidance on the circumstances in which a partial closure notice can be issued by HMRC to bring finality to a discrete aspect of an enquiry. Although the decision was concerned with a dispute regarding domicile status, it has broad application and is therefore essential reading for those tasked with handling an HMRC enquiry. Read more
In Tinkler v HMRC [2021] UKSC 39, HMRC had not validly served a notice of enquiry on the taxpayer. However, the Supreme Court held that the taxpayer was prevented from relying on this fact (in order to dispose of a tax dispute) as a result of the operation of the doctrine of estoppel by convention. This was principally because the taxpayer and his advisers had, for a long period of time, corresponded with HMRC on the assumption that the notice of enquiry had been validly issued. Read more
The Court of Appeal has considered HMRC's, and the Tribunal's, usual practice of hearing applications for the pre-approval of compulsory information notices in private, and without the participation of the intended recipient of the notice (or, where different, the relevant taxpayer). Unfortunately for those on the receiving end of such notices, the Court has determined that this practice should continue. Read more
In R (Haworth) v HMRC, the Supreme Court has provided welcome guidance in relation to the follower notice regime, confirming that a notice may be issued only where HMRC believes that there is "no scope for a reasonable person to disagree that the earlier ruling denies the taxpayer the [relevant tax] advantage". It presents HMRC with a high bar, but one that is justified given the draconian nature of the regime. Read more
In a decision restoring common sense, the Supreme Court in HMRC v Tooth has determined that for conduct to be culpable as deliberate there must (generally) be an "intention to mislead". Less encouragingly (though not determinative in the case) the Court was not persuaded that a discovery could become stale, thereby preventing an otherwise "in time" discovery assessment from being made, for the purposes of the statutory framework relating to such assessments. Read more
