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England and Wales High Court (Administrative Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Administrative Court) Decisions >> Le Roux Zeeman & Ors v HM Revenue and Customs  EWHC 794 (Admin) (03 April 2020)
Cite as:  STC 828,  EWHC 794 (Admin),  BTC 9
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QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL
B e f o r e :
| (1) PETRUS JACOBUS LE ROUX ZEEMAN
(2) DAVID MURPHY
|- and -
|THE COMMISSIONERS FOR HER MAJESTY'S REVENUE AND CUSTOMS
for the Claimants
Sir James Eadie QC and Sadiya Choudhury (instructed by General Counsel and Solicitor to HMRC) for the Defendants
Hearing dates: 11, 12 and 13 February 2020
Crown Copyright ©
Covid-19 Protocol: This judgment was handed down by the Judge remotely by circulation to the parties' representatives by email and release to BAILII. The date and time for hand-down is deemed to be 10am on Friday 3 April 2020.
Mrs Justice Andrews:
DISGUISED REMUNERATION SCHEMES
THE LOAN ARRANGEMENTS IN THIS CASE
THE SCHEDULE 11 LOAN CHARGE
i) a payment made by way of loan or otherwise to a relevant person or
ii) a transfer of assets to a relevant person.
The effect of this was that if an employer assigned his rights as the creditor under a loan made to the employee to the trustees of an EBT on or after 6 April 2017, the EBT would be regarded as taking a relevant step and the loan would become taxable.
THE SCHEDULE 12 LOAN CHARGE
"The profits of a trade must be calculated in accordance with generally accepted accounting practice, subject to any adjustment required or authorised by law in calculating profits for income tax purposes."
THE CLAIMS FOR JUDICIAL REVIEW
"Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.
The preceding provision shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties."
IS THERE A POSSESSION?
"Of course, the money is a possession in one sense, but it is a possession impressed with an arguable claim by HMRC, which prevents it being properly regarded as a possession for A1P1 purposes."
"a disputed amount is not in the taxpayer's possession if there is an arguable claim by HMRC to it, or if the taxpayer has an arguable claim to it … the prior question of whether the taxpayer has a right to the money must be decided before the taxpayer can claim to have been deprived by the legislative changes of a possession under A1P1."
Consequently, he decided that the legislative changes did not interfere with any of the appellants' possessions, because by the time the legislative changes were made, the money that the appellants might have used to pay the tax was already the subject of an unresolved argument or claim by HMRC. All that the legislation did was remove the appellants' argument that HMRC was not entitled to the money.
"clear binding authority that legislation can remove without any interference with possessions, a taxpayer's argument that had existed previously (that HMRC was not entitled to the money), with the result that tax is payable and the money in the taxpayer's hands must fund it."
He only expressed some doubt as to the final sentence of that paragraph, in which Simler J had suggested that that analysis would extend to a situation in which a sum may be required to be paid upfront on account of tax, where it may not be known whether HMRC had a claim to it at all. Ultimately, though, the CA in Rowe found it unnecessary to decide that issue.
THE A1P1 CHALLENGE