Paul Lasok QC and Anneliese Blackwood act for HMRC in landmark win in the Supreme Court against £100m UBS and DB ‘bankers’ bonus’ tax scheme appeal

Paul Lasok QC and Anneliese Blackwood in Supreme Court Win

The Supreme Court has allowed HMRC’s appeals against UBS AG (“UBS”) and DB Group Services (UK) Ltd (“DB”) in relation to detailed schemes designed to avoid the payment of tax on bankers’ bonuses. The determinations and decisions which UBS and DB appealed against required the payment to HMRC of nearly £100 million. In each case, the scheme used by UBS and DB respectively was intended to take advantage of Chapter 2 of Part 7 of the Income Tax (Earnings and Pensions) Act 2003 (“ITEPA”), as amended by Schedule 22 to the Finance Act 2003. The judgement of the Supreme Court was given by Lord Reed, with whom Lord Neuberger, Lord Mance, Lord Carnwath and Lord Hodge agreed.

Lord Reed noted that there were two key factors identified in Barclays Mercantile [2004] UKHL 51, at para 34. First, “tax is generally imposed by reference to economic activities or transactions which exist, as Lord Wilberforce said, ‘in the real world’”. Secondly, tax avoidance schemes commonly include “elements which have been inserted without any business or commercial purpose but are intended to have the effect of removing the transaction from the scope of the charge”. He went on to note that Carnwath LJ said in the Court of Appeal in Barclays Mercantile, [2002] EWCA Civ 1853, at para 66, that taxing statutes generally “draw their life-blood from real world transactions with real world economic effects”. Lord Reed stated that where an enactment is of that character, and a transaction, or an element of a composite transaction, has no purpose other than tax avoidance, it can usually be said, in the words of Carnwath LJ, that “to allow tax treatment to be governed by transactions which have no real world purpose of any kind is inconsistent with that fundamental characteristic.” He concluded that, as Ribeiro PJ said in Collector of Stamp Revenue v Arrowtown Assets Ltd [2003] HKCFA 46, at para 35, where schemes involve intermediate transactions inserted for the sole purpose of tax avoidance, it is quite likely that a purposive interpretation will result in such steps being disregarded for fiscal purposes although not always. Some enactments, properly construed, confer relief from taxation even where the transaction in question forms part of a wider arrangement undertaken solely for the purpose of obtaining the relief.  He concluded that the position was ultimately summarised by Ribeiro PJ in Arrowtown Assets, at para 35: “The ultimate question is whether the relevant statutory provisions, construed purposively, were intended to apply to the transaction, viewed realistically”.

Lord Reed considered that section 423 of ITEPA, when construed purposively, was not intended to apply to the schemes in question. He found that the reference in section 423(1) to “any contract, agreement, arrangement or condition which makes provision to which any of subsections (2) to (4) applies” was to be construed as being limited to provision having a business or commercial purpose, and not to commercially irrelevant conditions whose only purpose is the obtaining of the exemption. On the facts he found that the restrictions on the shares in the UBS and DB schemes respectively were commercially irrelevant conditions whose only purpose was the obtaining of the exemption. As a consequence he concluded that the schemes involved the provision of unrestricted shares and as such fell outside the tax exemption provided for in Chapter 2 of Part 7 of ITEPA.

Paul Lasok QC and Anneliese Blackwood appeared on behalf of HMRC.

To view the full judgment, please click here.

 

Levy Control Framework trumps “certainty” of Renewables Obligation closure date

The Court of Appeal this week upheld the Secretary of State’s decision to close the Renewables Obligation to new large-scale solar photovoltaic (PV) projects two years early, despite previous statements by the Government (made in the interests of providing “certainty” to investors) that the RO would remain open until 31 March 2017, in a decision which is likely to have significant implications for the future of similar renewable energy subsidies.

Dismissing Solar Century Holdings Ltd’s appeal from the judgment of Green J, the Court held that the existence of Government’s Levy Control Framework, which caps the cost of levy-funded spending for energy and  climate change goals, prevented any legitimate expectation arising to the effect that the RO would not be closed before that date if deployment of solar PV exceeded forecasts.

Floyd LJ held that the Government was entitled to formulate and re-formulate policy when rational grounds existed for doing so, unless to do so would amount to an abuse of power. Statements in the Levy Control Framework that the Government was committed to “maintaining support levels” for “existing investments” did not include investments which were in the pipeline but which had not yet been accredited under the RO scheme.

Further, the adoption of a “grace period” of an extra year for certain pipeline projects to accredit did not offend against any principle against retrospectivity and was not unfair in the public law sense, despite the fact that the relevant date by which projects would have to meet the criteria to qualify for the grace period had already passed when the closure order was made. The Secretary of State had set the date of the publication of his consultation proposals, to prevent a “gold rush” of projects seeking to qualify for accreditation in time. It it was lawful to close the scheme in its entirety to new entrants with effect from 1 April 2015, it was difficult to see how it could be unlawful to soften that blow by extending the scheme for a further year to those who had reached a particular stage of investment.

To view the full judgment, please click here.

Robert Palmer appeared for the Secretary of State.

Court of Justice hears challenge to EU’s Russian Sanctions

Case C-72/15 OJSC Rosneft Oil Company v. HM Treasury; the Secretary of State for Business, Innovation, and Skills; the Financial Conduct Authority

On 23 February 2016 the Grand Chamber of the Court of Justice of the EU heard Case C-72/15 Rosneft, concerning that company’s challenge to the sanctions imposed by the EU on the Russian Federation, and in particular on the Russian oil sector, in response to Russia’s actions in Ukraine.

The case was referred by the High Court in February 2015 ([2015] EWHC 248 (Admin)) and raises questions both as to the legality of the EU’s sanctions against Russia, and important constitutional issues concerning the jurisdiction of the EU Court of Justice to rule on the validity of decisions adopted under the EU Common Foreign and Security Policy.

The debate at the oral hearing focused on the interpretation of Article 275 TFEU, which limits the CJEU’s jurisdiction in relation to foreign and security policy matters, on the scope of Article 215(2) TFEU, which concerns restrictive measures adopted against natural or legal persons and groups or non-State entities, and on the role of the national courts in protecting fundamental rights affected by EU foreign policy decisions.

The judgment is likely to contain important findings by the CJEU as to the proportionality of sectorally-targeted sanctions, such as those targeting the Russian oil industry, and the jurisdiction of both national courts and the CJEU itself to consider challenges to the validity of EU foreign policy decisions. The Court is, in particular, considering whether EU law recognises the concept of a non-justiciable acte de gouvernement.

Gerry Facenna QC appeared on behalf of the United Kingdom. The hearing was also attended by Rosneft, the UK Financial Conduct Authority, the Czech Republic, Estonia, France, Germany, the EU Council and the Commission. The Advocate General’s Opinion is due on 31 May 2016.

In the proceedings in the High Court, Tim Ward QC and Julianne Kerr Morrison also acted for HM Treasury and the Department for Business, Innovation and Skills.

Michael Bowsher QC advises UNITE on threat to the NHS from controversial transatlantic trade deal

UNITE, Britain’s biggest trade union, instructed Michael Bowsher QC to advise on the impact of The Transatlantic Trade and Investment Partnership (TTIP) on the NHS. The Union presented the legal advice to the government at a meeting with the department for Business, Innovation and Skills on Tuesday 23 February 2016 and is sending a copy to all UK MPs, MEPs, Scotland’s MSPs and Assembly Members from Wales and Northern Ireland.

The advice written by Michael Bowsher, assisted by Azeem Suterwalla, recommends that the government takes concrete action to protect the UK’s health service. The advice contradicts the government’s position that there is no risk and warns that the TTIP, might limit the ability of the future governments to bring services back into the NHS once they were let to the private sector and create a ratchet effect in the direction of privatisation. It concludes there is “a real and serious risk” that key decisions about the NHS would be constrained by the trade deal. The solution, proposed by Michael Bowsher, was “for the NHS to be excluded from the agreement, by way of a blanket exception contained within the main text of TTIP”.

Read full press release issued by UNITE here

Download a copy of the advice from the UNITE website here

Read the following reports in the media: The Guardian; The Independent; Mirror

Presumption of innocence not breached by contemporaneous parliamentary inquiry and criminal proceedings

The European Court in Rywin v. Poland (read here) has found by a 4-3 majority  that the presumption of innocence under Article 6(2) of the European Convention on Human Rights was not breached by the contemporaneous  carrying out of criminal proceedings and a parliamentary commission of inquiry into a corruption scandal which concerned a well-known film producer. The work of the commission of inquiry had given rise to extensive media comment and the lower house of Parliament had approved the commission’s report in which five high-ranking State officials were alleged to have been guilty of corruption in connection with the legislative procedure for the amendment of the Broadcasting Act and the film producer was mentioned as being the “agent” of those officials. The film producer was subsequently convicted of attempted fraud. The Court considered that the presumption of innocence had not been breached by the wording of the resolution setting up the parliamentary commission of inquiry and the findings of the commission’s report. The Court also found that there had been no violation of the right to a fair trial under Article 6(1) or of the prohibition on inhuman and degrading treatment under Article 3. It considered that the reasoning of the judgments delivered by the criminal courts did not reveal anything to suggest that the judges had been influenced by the statements of the members of the commission or by the findings in its report and that the authorities had been attentive to the producer’s state of health during his imprisonment and that the general conditions of his detention could not be criticised.

Jeremy McBride acted for Mr Rywin.

Monckton team successfully defends Google against abuse of dominance claim

High Court dismisses claim against Google, holding that, where a pro-competitive innovation by a dominant company is alleged to have harmed competition on a related market, the effect on competition in that market must be serious or appreciable in order to constitute an abuse of dominance.

In a judgment handed down today, the High Court dismissed a claim for abuse of dominance brought against Google by online map provider Streetmap.

Streetmap alleged that, by displaying a clickable image of a map, taken from Google Maps, at the top of its search engine results page in response to certain search queries, Google gave Google Maps an unfair advantage over other online map providers, and thereby abused its (assumed) dominant position in the market for online search.

In an important judgment on the application of competition law (The prohibition on abuse of dominance is contained in Article 102 of the Treaty on the Functioning of the European Union and Chapter II of the Competition Act 1998) in rapidly developing online markets, Mr Justice Roth rejected Streetmap’s case, holding that:

  • since the introduction of a clickable map image on its search page was a pro-competitive measure on the market where Google was dominant, for its conduct to be abusive, it had to be reasonably likely to have a serious or appreciable effect on competition in the related market for online maps;
  • on all the evidence, the introduction of the clickable map image on Google’s search page had not taken custom away from Streetmap.  Therefore, it was not reasonably likely to gives rise to anti-competitive foreclosure;
  • in any event, Google’s conduct was objectively justified.  Since the alternative technical solutions proposed by Streetmap would have entailed significant practical problems, or imposed a substantial additional burden on Google, it had not been required to implement them by any obligation of proportionality.

Google was represented by Jon Turner QC, Josh Holmes and Ben Lask.

To view the full judgment, please click here.

A full case note will be issued shortly.

European Law specialist, Professor Panos Koutrakos has joined Monckton Chambers

The members of Monckton Chambers welcome Panos Koutrakos, Professor of European Union Law and Jean Monnet Professor of European Law at City University, who has joined as a door tenant. The set and its members, many of whom are already widely recognised as leading authorities in the field of European law, proved a natural choice for the established academic as he develops a practice at the English Bar.

A graduate of the Universities of Athens and London and an Advocate of the Athens Bar (call 1996), Professor Koutrakos completed a stage at the European Commission in Brussels and holds a PhD from the University of Birmingham. Professor Koutrakos has also taught at the Universities of Bristol (Professor of EU Law: 2006-2012), Durham (Professor of Law: 2004-2006; Lecturer in Law: 1999-2002) and Birmingham (Reader in EU law: 2002-2004). In September 2007, he was awarded a Jean Monnet Chair in EU Law by the European Commission. He has held visiting posts at the Universities of Melbourne (2009, 2013), Sydney (2008, 2010), New South Wales (2013), Iowa (2000, 2002), Michigan (2005), and Antwerp (since 2008).

Professor Koutrakos’s interests cover a wide spectrum of EU law, including external relations, public law, and internal market. Professor Koutrakos is a leading authority on matters where EU and international law meet and has published, amongst others, EU International Relations Law 2nd edition (2015). He is Joint Editor of European Law Review.

See full profile.

Monckton Chambers supports the fifth annual Sir Jeremy Lever Lecture at Oxford University

The fifth annual Sir Jeremy Lever lecture was held on Friday 5th February by the Oxford University Law Faculty in combination with All Souls College. The lecture series celebrates the career of Sir Jeremy Lever KCMG, QC, a pioneer of both the practice and academic study of competition law in Europe.

The lecture titled “Personal Data Protection: The Contribution of the European Court of Human Rights” was given by Dean Spielmann, Former President of the European Court of Human Rights and chaired by The Rt Hon Sir Stephen Richards.

The event was followed by a celebratory dinner at All Souls College.

Anneli Howard listed in The Lawyer’s Hot 100 for 2016

Chambers is pleased to announce that Anneli Howard has been selected as one of only ten barristers named in this year’s The Lawyer’s Hot 100. The 100 lawyers on the list have been chosen for their “impact not just on the performance of their firms, companies or chambers, but also the wider business community”. The Lawyer Editor Catrin Griffiths describes the 100 as “ambassadors for the profession” and “champions of champions.”

The Lawyer writes about Anneli as follows:

“Anneli Howard has a string of top-name clients including Visa Europe, BT, Orange Telecom, Ryanair and the London Stock Exchange. She is also standing counsel to the Civil Aviation Authority.

In her field of competition law she is fast becoming the go-to junior at the bar, having earned a reputation for being a collaborative team player who gets the job done.

In the past year Howard successfully acted for Visa in its bid for a Commercial Court summary judgment in the ongoing interchange fees litigation. In doing so she persuaded the court to strike out more than 30 years’ potential damages sought by a group of 12 retailers, totalling over £500m. She will appear for Visa again later this year in a six-month trial on liability.

Howard thrives on managing cases, applying practical methods of cutting court procedures to help clients achieve their goals in a timely and cost-efficient manner.”

The annual supplement identifies members of the legal profession who have excelled in their chosen fields during the past year.

To view the full list please click here.

Monckton Chambers’ barristers feature in The Lawyer Top 20 cases for 2016

The Lawyer has published the Top 20 Cases due to be heard in 2016 and members of Monckton Chambers appear five times in this year’s list.  The highlighted barristers are involved in the “raft of litigation brought by numerous high-street retailers in the UK and Europe” and the allegations that Visa and MasterCard charged anti-competitive credit card fees.
Monckton Chambers’ members are involved as follows:
Daniel Beard QC and Ligia Osepciu are instructed by Stewarts Law partner Mo Bhaskaran for the second claimant, M&S.
Tim Ward QC and Rob Williams are instructed by Humphries Kerstetter partner Mark Humphries for the third claimant, Tesco.
Anneli Howard is part of the team, instructed by Linklaters partner Michael Sanders, for the first and second defendants, Visa UK and Europe.

Please click here to view the full article.