Reproduced from PLC Tax with the permission of the publishers. For further information visit www.practicallaw.com or call 020 7202 1200.

2011 was an exciting year for Monckton Chambers’ public law and human rights team. This newsletter brings together some of the wide ranging cases Members of Chambers have recently been involved in that may be of interest.

Part 7A ITEPA (“Part 7A“) was introduced by Schedule 2 to the Finance Act 2011. The essential aim of Part 7A is to tackle “arrangements used for the purpose of disguising remuneration in order to avoid or defer income tax or national insurance contributions”1. The Exchequer Secretary to the Treasury, David Gauke MP, in Committee debates on Part 7A said:

The most prominent recent developments in UK merger control are the protracted News Corp/BSkyB saga and the Ryanair v. OFT litigation at the CAT. The former has been analysed exhaustively and the latter will be illuminated by the forthcoming judgment of the CAT. This update therefore leaves these cases to one side and instead discusses three other topical merger control issues: the counterfactual; the “timeliness” test for new entry; and the use of hypothetical questions in merger surveys.

The disguised remuneration rules to be introduced under the Finance Act 2011 are acknowledged by the Government to be complex.  The legislation is deliberately drafted to catch more than the Government intended, namely EBTs and EFURBs considered to be abusive.   Although numerous exclusions seek to allow normal business activity to continue unhindered, businesses will need to check they are not caught by the new rules.   The rules are expected to produce some inequitable results.  The attached note seeks to provide a guide to the new rules, with some analysis.  The note is based on the draft rules as amended at the Committee stage.  Once the Finance Bill becomes law later this summer, the note will be updated.

The ECJ’s decision in joined German cases concerning Mr Manfred Bog and others has generated much debate over the United Kingdom’s VAT treatment of hot takeaway food. HMRC’s declared view in Revenue & Customs Brief 19/11 that the ECJ’s judgement has no implications for the UK treatment of supplies of hot food is unlikely to put the matter to rest. The German courts’ reasons for referring the cases to the ECJ, and the ECJ’s reasoning in its decision.

Reproduced from PLC Tax with the permission of the publishers. For further information visit www.practicallaw.com or call 020 7202 1200.

Legitimate expectation is shorthand for the public law principles that will, in some circumstances, place limitations on a public authority’s ability to act inconsistently with a person’s expectation as to how the authority would exercise its powers in a particular situation or case, where the expectation is reasonably based on a representation by, or consistent past practice of, the authority.

Reproduced from De Voil Indirect Tax Intelligence with the permission of the publishers. For further information visit www.lexisnexis.org.uk or call 084 5370 1234

Deduction of input tax – Article 17(3)(a) of the Sixth VAT Directive – cross-border leasing transactions in principle taxable – but no output tax in fact accounted for in other Member State involved – permissibility of exploitation of differences in implementation of VAT in different Member States – fiscal neutrality – abuse of rights

First published in the Tax Journal, 13 January 2011

On 22 December the European Court of Justice delivered its long-awaited judgment
in the Weald Leasing case concerning the interpretation of the concept of an
‘abusive practice’ as referred to in Case C 255/02 Halifax, Case C-425/06 Part
Service and Case C-162/07 Ampliscientifica.

On 28 October 2010, the European Court (ECJ) issued its preliminary ruling on the reference made by the Court of Appeal in AXA (C-175/09).  In an outcome reminiscent of the ruling in Case C-452/03 RAL [2005] STC 1025, the ECJ determined the reference on a basis which had not even arisen in the judgments of the domestic courts.