© 2024 by Michael Firth KC, Gray's Inn Tax Chambers
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N2-2. Presumptions
Parliament assumed to legislate in knowledge of general law
"[13] In the first place, the relevant background to section 1 is the common law position, as I have summarised it. Parliament is taken to have known what the law was prior to the enactment. It must therefore be taken to have known about the decisions in Jameel (Yousef) and Thornton and the basic principles on which general damages were awarded for defamation actionable per se..." (Lachaux v. Independent Print Ltd [2019] UKSC 27​)
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"[44] Parliament is presumed to legislate in the knowledge of the current state of the law when it is doing so. In 1969, the law had been clearly laid down in Groves v Lord Wimborne [1898] 2 QB 402, approved by the House of Lords in Butler (or Black) v Fife Coal Co Ltd [1912] AC 149, and again in Cutler v Wandsworth Stadium Ltd [1949] AC 398. Statutory duties imposed upon employers for the benefit of employees who suffer injury as a result of their breach give rise to civil as well as criminal liability, absent a clear statutory intent to the contrary. That is still the law. Parliament understood this when it passed the Health and Safety at Work etc Act 1974, section 47 of which made clear which breaches did not give rise to civil liability, and amended it in 2013, further to restrict the extent of civil liability." (Campbell v. Peter Gordon Joiners Ltd [2016] UKSC 38, Lady Hale)
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"[72]...He argues that there should be no general presumption one way or the other that a statute aimed at prohibiting the conduct of one person should or should not import vicarious liability if that conduct is committed in the course of employment. However, Parliament must be assumed to legislate in the knowledge of the general law, which includes the law of vicarious liability, so that one must look for indications that Parliament did not intend it to apply to the particular duties or prohibitions it was imposing.
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[74] As we are not policy-makers and legislators, but judges construing the language used by Parliament, in the context of the general law of vicarious liability of which Parliament must be presumed to have been aware, I am driven to conclude, in agreement with my noble and learned friends, Lord Nicholls and Lord Hope, that this appeal should be dismissed." (Majrowski v. Guy's and St Thomas NHS Trust [2006] UKHL 34, Baroness Hale)
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- Not applicable to case law on meaning of similar phrases in other statutory contexts
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"[93] We do not see how this authority is relevant to the matter we have to determine. The levying of excise duty on gaming of any sort has never been a question of common law. It is uncontroversial that the state may only tax by reference to statutory provisions considered and passed by Parliament. The cases to which each of the parties referred us (other than Aspinalls and Broadway) did not concern the taxation of gaming and cannot therefore represent any view on even the common law meaning of prize and/or win for taxing purposes. For the reasons stated in paragraph 89 we consider the view we have reached to be consistent with the approach adopted in Aspinalls albeit that we have reached a different conclusion regarding what might, on first impressions, appear to be similar payments (we consider Broadway in paragraph 99 below)." (L&L Europe Limited v. HMRC [2024] UKFTT 144 (TC), Judge Brown KC)
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Judicial interpretations of the same wording
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- Parliament presumed to intend well established meaning of concept used (e.g. capital expenditure)
"[52] First, when the capital expenditure exclusion was first introduced in 2004 (by section 38 of the Finance Act 2004, see para 18 above), the concept of expenditure of a capital nature was already well-established in the tax code. It had a long history and had been the subject of authoritative judicial interpretation in the case law. I shall return to some of that case law below. The principle established in Barras v Aberdeen Steam Trawling and Fishing Co Ltd [1933] AC 402 and re-affirmed in R (N) v Lewisham London Borough Council [2014] UKSC 62, [2015] AC 1259 applies, and as Lord Hodge JSC explained at para 53:
"... where Parliament re-enacts a statutory provision which has been the subject of authoritative judicial interpretation, the court will readily infer that Parliament intended the re-enacted provision to bear the meaning that case law had already established ..."
[53] Parliament can be taken to have been aware of the established capital/revenue case law in 2004 and in these circumstances, it would be surprising if the exclusion for expenditure of a capital nature introduced by section 38 of the Finance Act 2004 was intended to have a special narrower meaning without anything to signal that this was so. While it is true that the code for taxation of trading companies is different to the regime that applies to companies with investment business, the words used, first in new section 75(3) and subsequently re-enacted in almost identical terms in section 1219(3)(a) simply do not admit of the construction proposed by COHL. Rather, it can readily be inferred that in using the phrase "expenses of a capital nature" the legislative intention was that this phrase should be interpreted in accordance with the meaning established by case law relating to the materially similar phrase used in other parts of the tax code." (Centrica Overseas Holdings Ltd v. HMRC [2024] UKSC 25, Lady Simler)
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- Apply previous case law if same wording is re-enacted
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"[64] Fourthly, the concept of "items of a capital nature" has a very long history in the case law going back for almost a century. I will return to that case law later. It can reasonably be presumed therefore that, in enacting a similar provision in 2004, the intention of Parliament was to adopt the meaning which had been given to that concept in the case law.
[65] In R (N) v Lewisham London Borough Council [2014] UKSC 62; [2015] AC 1259, the Supreme Court re-affirmed the well known principle in Barras v Aberdeen Steam Trawling and Fishing Co Ltd [1933] AC 402. At para. 53, Lord Hodge JSC said that:
"… where Parliament re-enacts a statutory provision which has been the subject of authoritative judicial interpretation, the court will readily infer that Parliament intended the re-enacted provision to bear the meaning that case law had already established …"
[66] In my view, what Parliament did in 2004 is analogous. This indicates that Parliament intended that the phrase "expenses of a capital nature" should be interpreted in accordance with the meaning which it had acquired in the case law on what is materially the same phrase in other parts of the tax code." (HMRC v. Centrica Overseas Holdings Limited [2022] EWCA Civ 1520, Singh, Newey, Henderson LJJJ)
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"[26] There is another principle of statutory interpretation (usually referred to as the Barras principle). This principle is that where words in an Act of Parliament have been given a clear and authoritative judicial interpretation, and Parliament uses the same words in a subsequent Act in a similar context, those words will be taken to have been used in the same way as the courts had previously interpreted them: Barras v Aberdeen Steam Trawling and Fishing Co Ltd [1933] AC 402. But since we are concerned with guidance given by HMRC rather than with court rulings, that principle is not in play." (Hyman v. HMRC [2022] EWCA Civ 185, Lewison, Simler, Snowden LJJJ)
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De minimis principle
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- Unless the contrary intention appears, the law is not concerned with very small things
"[43] The de minimis principle is expressed more fully in the Latin phrase “de minimis non curat lex”, the usual English translation of which is “the law is not concerned with very small things”. Bennion on Statutory Interpretation: A Code (6th ed, 2013) at section 343 states that:
“Unless the contrary intention appears, an enactment by implication imports the principle of the maxim de minimis non curat lex (the law does not concern itself with trifling matters).”
As Bennion acknowledges, the contrary intention may be ascertained from the words of the legislation or, by implication, from the purpose of the legislation." (Boxmoor Construction Limited v. HMRC [2016] UKUT 91 (TCC), Judges Sinfield and Powell)
- Something of real substance is not de minimis
"[49]...Bennion at page 990 states that “What is relatively small within the context of the matter in question will not be dismissed as de minimis if it nevertheless has some real substance.” What is de minimis in a particular case depends on the circumstances of that case and the nature of the statutory provision." (Boxmoor Construction Limited v. HMRC [2016] UKUT 91 (TCC), Judges Sinfield and Powell)
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- Consider the quality and quantity of the departure from the strict condition
"[66] It seems to us that the question of whether or not retained elements are trifling is to be judged, as Miss Shaw submits, in the context of the building as a whole, but also by reference to their significance and not only by reference to the area or volume occupied by them. 67. In the context of the building as a whole, the retention of the original marble lined grand entrance and staircase and the passage therefrom to the formal garden at the rear were 3 significant features of the building after and before the reconstruction, and even in the context of a building with 86 flats would not be regarded as trifling. On this ground we would find that the de minimis exemption did not apply." (Richmond Hill Developments (Jersey) Ltd v. HMRC [2021] UKFTT 290 (TC), Judge Hellier)
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- Applies to whether a building has been completely demolished
"[48] In our view, there is nothing in the language of Note 18(a) “Demolished completely to ground level” to indicate that the de minimis principle is excluded. To take a hypothetical example, if the entire structure of a building were removed down to ground level save for a single brick that remained above the foundations, it could not reasonably be said that the building had not been completely demolished to ground level. What remains above ground level is not a building or part of one; it is a brick. In the context of Note 18 as a whole, it is clear that the retention of a façade cannot be regarded as de minimis otherwise there would be no need for the specific exemption in Note 18(b) where such retention is a condition or requirement of the planning consent or similar permission. In our view, however, Note 18(b) does not show that something much smaller than a façade, such as a single brick, cannot be considered to be de minimis." (Boxmoor Construction Limited v. HMRC [2016] UKUT 91 (TCC), Judges Sinfield and Powell)
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- Applies to whether what is retained is no more than external walls
"[48]...The Note 4 requirements are more generous to listed buildings and indicative of the continuation of some of the social policy of protecting heritage albeit in weaker form. But there is the same stringency of language in what may be incorporated: “no more than”. That suggests to us that the same stringency as to what remains inside the walls (and other external features) is to be read into Note 4 and that Parliament did not intend the “external walls” to extend to things which were not walls but were structurally necessary for the retention of the walls.
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[61] If we are wrong in our conclusion that the floor slabs, the majority of the truss and the chimney stacks were not part of the external walls or other external features, the question arises as to whether the other retained features can be ignored as de minimis in determining whether Note 4 is satisfied.
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[64] It seems to us that the same reasoning applies to Group 6 and Note 4 and Mr Watkinson did not disagree. There is nothing to suggest that the retention of one internal brick should not be ignored." (Richmond Hill Developments (Jersey) Ltd v. HMRC [2021] UKFTT 290 (TC), Judge Hellier)
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- Does not apply to disregard preferential rights where legislation requires that there must not be "any"
"[39] In our view, the word “any” in section 173(2)(aa) is an indication of a contrary Parliamentary intention i.e. an intention to exclude the application of the de minimis rule.
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[44] In this case, the FTT concluded that, in the case of the “highly articulated” provisions of Part 5 ITA 2007, it was unlikely that Parliament would have intended to permit a small or insignificant preferential right to be ignored in applying section 173(2)(aa) without doing so expressly. We agree. In the context of the highly detailed provisions of Part 5 ITA 2007 and the use of the word “any” in section 173(2)(aa) it is impossible to ignore the preferential rights carried by the Ordinary Shares. To do so would, in Lord Hoffmann’s words, be to rectify the language of the statute rather than to construe it purposively." (Flix Innovations Limited v. HMRC [2016] UKUT 301 (TCC), Mann J and Judge Brannan)
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Ejusdem generis (general words following specific words apply to things of the same kind)
"[72] We do not agree that the Option can itself be an “other arrangement” and hence an employee benefit scheme within section 1291(2). The term “other arrangement” must be something akin to a trust or scheme and an option is not such an arrangement." (HMRC v. NCL Investments Ltd [2022] UKSC 9)
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"[71] In our view, there are other respects in which the wording of section 1291, construed in context, is inapt to describe the arrangements in this appeal. In isolation, the reference in the definition of "employee benefit scheme" in section 1291(2) to "a trust, scheme or other arrangement" might be wide enough to encompass the contractual arrangements in this appeal. However, construing sections 1290 and 1291 together in their entirety, we think it likely that the reference to "other arrangement" is to be construed sui generis to refer to something akin to a trust or similar arrangement. The latter construction finds support at NCL SC [72]." (A D Bly v. HMRC [2024] UKUT 104 (TCC), Judges Thomas Scott and Greenbank)
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Presumption that difference in language used to describe comparable concepts intended to reflect differences in meaning
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“In the ordinary course, there is a presumption that the same expression used in different provisions of a statute has the same meaning wherever it appears. There is also a presumption that differences in the language used to describe comparable concepts are intended to reflect differences in meaning. But the latter presumption is generally weaker than the former, because the use of the same expression is more likely to be deliberate. It will readily be displaced if there is another plausible explanation of the difference.” (Plevin v. Paragon Personal Finance Ltd [2017] UKSC 23, §22, Lord Sumption).
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Otiose language/redundancy
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- Presumption against otiose/dead letter language
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"[31] In my view, if one has to choose between these two alternatives, it is clear that the latter must be favoured, unless it is impermissible as a matter of language, and I do not think that it is. The result favoured by the Trustees means that s 249(6) would be a dead letter in every case. Even where the Bonus Shares were to be treated as income in trust law, they would be converted into notional 'income' under s 249(6)(b) and such income would, on Mr Venables' argument, fall out with s 686(2)(a)." (Howell v. Trippier [2004 EWCA Civ 885, Neuberger LJ)
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“Every word of an enactment is presumed to have been put there for a purpose (see Bennion on Statutory Interpretation, 5th 5 . ed., at page 1157). On HMRC’s construction of section 123(1)(b)(ii), however, the word “substantially” would be otiose.” (HMRC v. Lloyds TSB Equipment Leasing (No.1) Ltd [2013] UKUT 368 (TCC), §44(c), Newey J and Judge Nowlan)
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- Presumption against pointless/circular interpretation
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"[37] If [the taxpayer's] interpretation of the meaning of "HMRC" were correct, sub-sections 103(1) and (3) would be practically meaningless. Section 103(1) would be read as if anything capable of being done by an officer of Revenue and Customs could be done by such an officer or the Commissioners. That is not the natural meaning of the words used and it would be surprising if the legislation were intended to have such a circular effect. Had it been intended to make clear that Commissioners could carry out certain functions, different language would have been used. Lord Sales makes clear in the PACCAR case that the court should avoid an interpretation which is futile or pointless. It seems to me that Mr Gordon's narrow construction verges on the pointless. It also blurs the distinction between "an officer of Revenue and Customs" and "HMRC" made in both sub-sections (1) and (3)." (Marano v. HMRC [2024] EWCA Civ 876, Asplin, Coulson, Nugee LJJJ)
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- Arguments from redundancy carry little weight/Parliament does legislate for the avoidance of doubt
“ My Lords, I seldom think that an argument from redundancy carries great weight, even in a Finance Act. It is not unusual for Parliament to say expressly what the courts would have inferred anyway.” (Walker v Centaur Clothes Group Ltd [2000] 1WLR 799 at 805 per Lord Hoffmann).
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"[54] I recognise that the consequence of this conclusion is that the words in paragraph 6(3) "Except as otherwise provided" had no substantive effect on enactment. The presumption that all words in a statutory provision should have substantive effect is a presumption that can be displaced. In any event Mr Thomas does not dispute that those words could have been intended to be forward looking only, to account for future amendments. While that may be regarded as an odd drafting technique since a future amendment could have inserted those words when a subsequent exception was introduced, I agree with the UT that the words are likely to have been included in Part 4 FA 2003 as a helpful aid to the reader, to point out for the future, that the generally applicable time limit might be countermanded elsewhere." (Candy v. HMRC [2022] EWCA Civ 1447, Simler, Arnold, Nugee LJJJ)
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“[Centaur Clothes Group Ltd] was concerned with an argument that one sub-section of a taxing statute would be redundant if another sub-section of the same section was interpreted in a particular way. The argument from redundancy carries even less weight when what is in issue is a different section and, moreover, one introduced by amendment. Mr Aaronson's warnings about the abuses that might result from the manipulation of intra-group debt support the inference drawn by the UT that section 171(2) (a) may well have been included for the avoidance of doubt. I agree, therefore, with both tribunals that this argument does not undermine the straightforward reading of section 171A.” (DMWSHNZ Limited v. HMRC [2015] EWCA Civ 1036, Lewison LJ)
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"[54] There is a presumption that every word in an Act is to be given meaning: see Densham v Charity Commission for England and Wales [2018] UKUT 402 at [61]. At [21.2] of the current edition of Bennion, Bailey and Norbury on Statutory Interpretation, the authors explain that “given the presumption that the legislature does nothing in vain, the court must endeavour to give significance to every word of an enactment ... this applies a fortiori to a longer passage, such as a subsection or section.”
[55] But this is no more than a presumption. And, even in a case where a longer passage such as a subsection in an Act has been before a court, it is not uncommon for the courts to arrive at the conclusion that the subsection was included for reasons other than producing a substantive effect." (HMRC v. Candy [2021] UKUT 170 (TCC), Mellor J and Judge Andrew Scott)
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- Specific tax charge does not militate against a broader charge applying
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"[15]...the tax code is not a seamless garment. As a result provisions imposing specific tax charges do not necessarily militate against the existence of a more general charge to tax which may have priority over and supersede or qualify the specific charge.
[69] ...The specific provisions for the taxation of employment-related loans have the effect of deeming the benefit of the loans to be emoluments. But if, on a proper analysis, the sums paid into the Principal Trust are emoluments in the first place, these provisions cannot apply as otherwise the taxpayer would taxed twice on part of the same earnings." (RFC 2012 plc v. Advocate General for Scotland [2017] UKSC 45)
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- Except as otherwise provided does not imply the statute does contain an exception
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"[73] Whether or not a reference in this way to other provisions capable of countermanding a general proposition has a substantive legal effect is a question that can be decided only by reference to the particular provisions concerned. But it would, in our view, be an error to assume that they necessarily would." (HMRC v. Candy [2021] UKUT 170 (TCC), Mellor J and Judge Andrew Scott)
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No presumption that statutory power cannot be used to override statutory duty (depends on interpretation)
"[62] In my judgment, there is no such general principle of statutory construction. It will of course be relevant to the assessment of rival interpretations of a provision that, on one view, it would permit a direction to be given that has the effect of precluding the performance of what would otherwise be a statutory duty, but that is no more than one of the factors which will need to be considered in arriving at the proper construction of the provision. It is not a principle or presumption of the sort which applies when a court is asked to determine whether a statutory provision overrides fundamental rights or the rule of law, or confers on another body the power to do so. As Lord Hodge said in R (O) v Secretary of State for the Home Department at para 43:
“Where the court is not dealing with an interference by statute with a common law constitutional right or with a statutory provision which declares such a fundamental or constitutional right, the normal canons of statutory construction apply.”" (R (oao VIP Communications Ltd v. SoS for Home Dept [2023] UKSC 10)
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Principle against doubtful penalisation
"[58] While Mr Fitzpatrick denied that the principle against doubtful penalisation had any relevance in this case because, on his submission, the meaning of the statute was clear in permitting an RRO against a superior landlord, he did not dispute Mr Morris’ submission that an RRO is a relevant penalty for the purposes of the principle. And it has been held that the principle against doubtful penalisation extends to the imposition of civil liability linked to a crime (see Ess Production Ltd (in administration) v Sully [2005] EWCA Civ 554, [2005] 2 BCLC 547, para 78). In our view, although unnecessary to rely on it, the principle against doubtful penalisation is a further factor supporting the straightforward interpretation set out above." (Rakusen v. Jepsen [2023] UKSC 9)
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Act governing liability takes precedence over management act
"[36] Having taken such care to walk the taxpayer through the process of giving effect to his entitlement as part of his tax liability for the year specified by him, it would seem extraordinary for that to be taken away, without any direct reference or signpost, by a provision in a relatively obscure Schedule of another statute concerned principally, not with liability, but with management of the tax. Section 1020 makes no specific reference to Schedule 1B, and in any event refers only to “information” in general terms, rather than anything likely to affect the substance of liability. By contrast sections 60(2) and 128(7) are more than mere “signposts”, as the judges below characterised them. The words “subject to” are substantive in effect, imposing a qualification on the right otherwise conferred by those provisions. Applying ordinary principles of interpretation, the absence of similar words in section 132 would naturally be taken as indicating that this right is not subject to the same qualification.
[37] Turning to the TMA, it is true that words of Schedule 1B taken on their own would be apt to apply to a claim under sections 132-133. However, I do not regard that as enough to displace the clear provisions of the ITA in respect of liability. I do not see this as turning so much on whether one set of provisions is more specific than the other, but rather on the fact that the ITA is in principle the governing statute in respect of tax liability, and as such should take precedence in the absence of any indication to the contrary. Further, unlike the judges below, I see a significant inconsistency between the two sets of provisions: the first gives the taxpayer an unqualified right to claim a deduction in the previous year; the second in effect removes that right by treating it as relating to the current year." (R (oao Derry) v. HMRC [2019] UKSC 19)
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Parliament presumed not to intend double taxation
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"[25] My Lords, the presumption against double taxation is one facet of a wider common sense principle of the construction of statutes by which courts will often imply qualifications into the literal meaning of wide and general words in order to prevent them from having some unreasonable consequence which it is considered that Parliament could not have intended: see Stradling v Morgan (1560) 1 Pl 199 and, for a more recent example, R (Morgan Grenfell & Co Ltd) v Special Commissioner of Income Tax [2002] 2 WLR 1299. The strength of the presumption depends upon the degree to which the consequences are unreasonable, the general scheme of the legislation and the background against which it was enacted.
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[28] I do not think that it advances the argument to debate whether this is really a case of double taxation or not. The question is whether the Act authorised what actually happened, whatever you choose to call it. The inevitable consequence of the valuation regime created by the ESI Order was to make the sale of the power stations irrelevant to PowerGen's rate liability in the 1999-2000 rating year but to allow the rating authority to claim rates from Edison for the period of its occupation. As the latter is conceded to be lawful, the question is whether a valuation regime which takes no account of the disposal of hereditaments to a rateable occupier in a rating year is so unreasonable, viewed against the scheme of the 1988 Act and the background to its enactment, that Parliament cannot be supposed to have intended paragraph 3(2) of Schedule 6 to authorise it." (R (Edison First Power Limited) v. Central Valuation Officer [2003] UKHL 20)
"[107] If HMRC’s argument were right, the result in F S Securities would have been different. The dividends that were in dispute in that case derived from income of the three companies in which the taxpayer had bought shares (one of which appears to have been a wool merchant). Those three companies earned that income presumably in the course of a myriad of transactions with third parties. It fed into the calculation of their profit which was then taxed in their hands and the franked dividends were then paid to the taxpayer. The payment of the dividends was a completely different transaction between different parties from the transactions by which the income had been earned but the House of Lords still held that the no double taxation principle applied and the dividends were not taxable as income in the hands of the taxpayer shareholder.
[108] I would therefore dismiss HMRC’s appeal in relation to Garrard and allow the Appellants’ appeal to that extent. There is no basis for remitting the Garrard transactions to the FTT. The outcome of these proceedings so far as the tax treatment of Garrard is concerned is that the no double taxation principle applies to exclude from the computation of the income of the Appellants’ solo financial trades the amount of the profit that is already taxed in their 114(2) trades." (Investec Asset Finance Plc v. HMRC [2020] EWCA Civ 579, Rose LJ)
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"[53] In determining Parliament’s purpose, there is a general presumption that Parliament does not intend to legislate in a way that produces an unfair or unreasonable outcome. In R (on the application of Edison First Power Ltd) v Central Valuation Officer and another [2003] 4 All ER 209, a case alleged to constitute double taxation, Lord Millett put matters in the following terms at [116] and [117]:
“[The presumption against double taxation] is … a species of a wider genus, viz. the presumption that Parliament intends to act reasonably … The courts will presume that Parliament did not intend a statute to have consequences which are objectionable or undesirable; or absurd; or unworkable or impracticable; or merely inconvenient; or anomalous or illogical; or futile or pointless. But the strength of these presumptions depends on the degree to which a particular construction produces an unreasonable result. The more unreasonable a result, the less likely it is that Parliament intended it. … I do not, therefore, find it profitable to discuss whether the effect of the [Order] amounts to “double taxation”… I would prefer to go straight to the real question: whether the scheme established by the [Order] is so oppressive, objectionable or unfair that it could only be authorised by Parliament by express words or necessary implication.”" (HMRC v. Candy [2021] UKUT 170 (TCC), Mellor J and Judge Andrew Scott)
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“While s 385 appears to contemplate that more than one person could be subject to tax on the same dividend (for instance, where one person received it but another person was entitled to receive it), a better reading is that only one person is liable to tax on the same dividend. Any other reading gives rise to double taxation.” (Vowles v. HMRC [2017] UKFTT 704 (TC), §78, Judge Mosedale).
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- Taxing company and individual onward recipient from company not double taxation
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"[128]There is a presumption that Parliament does not intend to tax the same person on the same income twice unless it clearly and expressly legislates to the contrary. This is the principle of double taxation and Lord Macmillan explained the principle in Canadian Eagle Oil Company Limited v R (1945) 27 TC 205 (which was concerned with the rules for taxing foreign companies on income with a UK source) at 257: “The result of these considerations is to satisfy me that for the purposes of Income Tax, the income of a foreign company and the income received from it in dividends by its British shareholders are not to any extent or effect one and the same income, but are two distinct incomes. The fact that the foreign company’s total income is in part composed of British dividends which have borne tax by deduction is entirely irrelevant to the question of the tax to be paid by a British shareholder on the dividends received by him from the foreign company. There is no such identification of the British shareholder with the foreign company as there is between a British shareholder and a British company, and the attempted analogy is only misleading. The income of the foreign company and the income received in dividends from it by its British shareholder are in our revenue law the incomes of two different persons, and there can thus be no room for any invocation of the rule against double taxation, which applies only against taxing twice the same income of the same person.”
[129] In our judgment, the FTT’s conclusion that the present case did not involve double taxation (in the sense described by Lord Macmillan in Canadian Oil) was correct. The Corporate Partner and the IP Appellants were not the same person and they were not taxed on the same income. They were being taxed on income from separate sources. The Corporate Partner has been taxed on its profit allocation and the IP Appellants were chargeable to tax under Case VI on the receipts derived from the final PIP Awards based on the decisions made by the Corporate Partner. For these reasons we dismiss the IP Appellants’ appeal on the Miscellaneous Income Issue." (HMRC v. Bluecrest Capital Management LP [2022] UKUT 200 (TCC), Leech J and Judge Herrington)
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Presumption that more specific charging provision has priority
"[201] There is one further matter, however, which we should mention. As we have explained, it was part of HMRC's case before the UT that any charge to tax on Mr Hoey under the TOAA legislation would take priority over any liability to tax under the employment income provisions of ITEPA. The UT accepted this submission, and held that the FTT had erred in holding that it was not obliged to go on to consider the alternative assessments to tax under the TOAA provisions once it had held that Mr Hoey was liable under the income tax provisions. It was not at all clear to us on what basis HMRC contended that the TOAA charge to tax would take priority, and it would in our view be an extraordinary position to reach if it were indeed the case that the highly complex and potentially penal provisions of the TOAA code had logically to be considered first in any case involving employment income where they might potentially be engaged. Furthermore, such an approach would in all probability raise the unwelcome spectre of economic double taxation, potentially giving rise to concurrent liabilities arising out of the same transactions.
[202] While HMRC must of course form their own view on the matter, and it is not for the courts to be prescriptive on questions of policy, we respectfully suggest that it would generally be in accordance with the intentions of Parliament that the TOAA provisions should be kept in reserve for deployment in cases of tax avoidance which cannot effectively be countered in any other way. If, as in the present case, the transactions in question give rise to a straightforward liability to tax on employment income, that should normally be the end of the matter. It is fortunately unnecessary for us to say any more on the subject, however, because HMRC wisely conceded, at the beginning of the fourth day of the hearing, that the TOAA provisions do not have priority over the charge to tax on employment income under ITEPA, although they do have a role to play as a fallback head of charge. Ms Nathan also explicitly undertook on behalf of HMRC that they would seek not to impose a double charge to tax, in the event that both sets of provisions applied. She informed us that the precise mechanism to avoid the possibility of a double charge in such circumstances was a question of some complexity, which required the input of numerous stakeholders, but as we understood it the undertaking which she offered on behalf of her clients was in substance unqualified. The only question was precisely how it should be given effect.
[203] Beyond saying that we welcome this clarification and commend the willingness of HMRC to take appropriate steps to avoid the possibility of economic double taxation in cases of the present type, we are content to say no more on this aspect of the appeal." (Hoey v. HMRC [2022] EWCA Civ 656, Simler, Phillips, Henderson LJJ)
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"[53] The question, put shortly, is whether s 743(5) is a charging provision in substitution for or in addition to that contained in s 739(2). I prefer the first alternative. It is true that it is unusual to find a charging provision in the final subsection of a section entitled: 'Supplemental provisions'. But as it deals specifically with the consequences of the actual receipt of benefit in my view it should be regarded as superseding the more general charging provision contained in s 739(2) unless there are clear words to the contrary. There are no such words. Moreover even in a penal section to tax a man on more than he actually received in cases where there is no power to enjoy apart from that actual receipt goes well beyond what Parliament is likely to have considered to be necessary for deterrent purposes. At least it would require even clearer words than are to be found in this legislation to make it plain that that is what Parliament did intend. The point does not arise for decision and I need say no more about it." (IRC v. Botnar [1999] STC 711, Morritt LJ)
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No domestic law principle that exceptions to be construed strictly
"[36] Mr Goudie sought to rely on a principle in the interpretation of EU legislation, according to which exceptions to a general rule laid down in the legislation are to be strictly construed: see Expert Witness Institute v Customs and Excise Comrs [2001] EWCA Civ 1882, [2002] 1 WLR 1674, paras 16-17. He submitted that section 43(6) was an exception to the general rule that occupied non-residential hereditaments are subject to rates and should therefore be given a strict construction to limit the extent of that exception.
[37] We do not accept this, for two reasons. First, there is no directly equivalent principle of interpretation of domestic legislation. The ordinary rules of statutory interpretation apply. Sometimes the main policy of a statute might be so clearly stated that it may be relevant to interpret any departure from it in a strict way, but much will depend on the particular features of the specific legislation in issue and there is no automatic or rigid rule to that effect.
[38] Secondly, in this case it is not possible to say that the principle of the taxation of occupied non-residential hereditaments is governing or dominant in this sense so as to justify such an approach. In fact, there is no exception to the principle of taxation of occupied non-residential hereditaments, but a carefully calibrated relief provision first in section 11 of the 1961 Act and now in section 43(6) (the extent of the relief having been adjusted over time) to fulfil a distinct policy objective as identified in the Pritchard Report." (London Borough of Merton Council v. Nuffield Health [2023] UKSC 18)
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- However, possibly err on the side of less expansive interpretation
"[74] Here, the statutory scheme is one whereby agreements entered into between the tax authority and the taxpayer are given statutory force as an exception to the statutory provisions that would otherwise apply. As a starting observation that might well suggest erring on the side of an interpretation that is less expansive rather than more. While the statutory scheme sets some parameters around the subject matter that the agreement can cover (i.e. the matters referred to in s218 TIOPA), and that it can apply to one or more chargeable periods, it leaves open the precise scope. That is entirely to be expected given that the point of having a framework which gives effect to agreements with individual taxpayers is to reflect the particular circumstances of the taxpayer." (R (oao Refinitiv Limited) v. HMRC [2023] UKUT 257 (TCC), Green J and Judge Raghavan)
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Presumption that the law in place at the time of the material events applies
"[66] In our judgment the Court of Appeal in Lipton fell into error in holding that it was the amended version which governs the Liptons' claim. This is contrary to a basic principle of the rule of law which Parliament must be taken to respect, according to which it is the law in place at the time the material events occur which applies, rather than some different version introduced at a later date. To analyse the position as the Court of Appeal did would produce strange results and would undermine the important value of finality in litigation. It would mean that the relevant law applicable to two identical cases which occurred on the same date might be different, depending on the time at which the relevant claims were brought and the vicissitudes of listing hearings in the respective courts in which the proceedings were commenced. It might also encourage parties to continue litigation even if the court at first instance had been completely correct in understanding the law which it was its task to apply to the case and had committed no legal error." (Lipton v. BA Cityflyer Ltd [2024] UKSC 24)
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Statutory power may be exercised retrospectively in the absence of express wording
"[52] Looking just at the narrow question before us,
(1) There is no limit in the language of section 165(3) on the circumstances in which HMRC can agree to a non-standard accounting period.
(2) Hoey indicates that there is no need for a provision such as section 165(3) to state expressly that an agreement under it can operate retrospectively before that is permitted.
(3) Section 165(3) allows HMRC and a bookmaker to agree a non-standard accounting period. Except for circumstances where HMRC's refusal to agree a non-standard accounting period could be subject to a successful challenge on public law grounds, such as those outlined in the quotation from Beehive Stores set out in [4] above, the provision does not allow one party to force a non-standard accounting period on the other. That is the safeguard of fairness for both parties.
[53] On this basis, we can see no reason not to give the words of the statute their plain and ordinary meaning. This is sufficient for us to conclude that HMRC have power under section 165(3) FA 2014 to agree to a non-standard accounting period with retrospective application." (Betindex Limited v. HMRC [2024] UKFTT 222 (TC), Judge Baldwin)
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