LexisNexis Confidential

The good, the bad, and the downright stupid

Mike Truman LLB CTA (Fellow) FCA

Editor, Taxation magazine

2

Fleming / Conde Nast facts

• Fleming managed to reclaim VAT on cars ten years later

• Conde Nast had a claim for staff entertainment backdated to 1973

• 3 year cap had been introduced by SI 1995/2518

• House of Lords asked to find that it had been incorrectly brought in and could not apply

3

Fleming and Conde Nast

• Three year time limits not valid

• Insufficient publicity had been given to the ‘administrative action’

• Business Briefs disseminate information but do not change the legal system

• Put in repayment claims for last 23 years…

4

Marks & Spencer

• The long running saga of the chocolate teacakes…

Chocolate biscuit base(standard rated)

=

Marshmallow (standard rated)

+

Chocolate (standard rated)

+

Chocolate covered teacake(zero rated)

And sold alongside the biscuits…

5

M&S snakes and ladders

VAT Tribunal

Court of Appeal

House of Lords

ECJ

High Court

Teacakes UE 1996

Cap & UE both 1999

Teacakes cap & vouchers both 1997

Cap & UE both 1998

Vouchers (part) cap only

Broad reply

Cap dropped, UE only

UE, for M&S

UE

6

Marks & Spencer

• If VAT has been applied at the standard rate incorrectly, fiscal neutrality means it must be repaid

• Cannot apply unjust enrichment to payment traders but not repayment traders

• Claims needed!

7

FA 2008 change

• Cap cannot apply to entitlements arising before:

• 4 December 1996 in respect of output tax overpaid and

• 1 May 1997 in respect of input tax incurred and under-recovered

• IF claim made by 1 April 2009

8

Drummond

• Bought five second-hand life policies for £1.96 million

• Surrender value only £1.75 million

• Surrendered them to get a life assurance gain of £1,300

• But then claims surrender value ‘taken into account’ in computing income charged to tax

• So should be excluded from CGT computation, and there is a £1.96m loss!

9

Two arguments

• Should surrender value be excluded, as argued?

• Should acquisition cost be excluded as not wholly or exclusively?

• Special Commissioner said yes to both, as scheme entirely pre-ordained

–which would have meant a GAIN of £1.75 million!

• High Court said yes to first, but no to second except for the excess over surrender value

10

Mr A

• Enquiry opened 9 August

• Agent tells Inspector 15 August that A is having surgery and chemotherapy

• HMRC say they will extend deadline–… to 2 October

–and they will very kindly drop round to pick the information up from Mr A’s house

• Further disputes, 19A notice issued 13 November

11

Notice set aside

• Set aside by the Special Commissioner, but said HMRC had acted reasonably

• Agent has been ‘busy’ when called–can we make the same complaint when calling HMRC?

• Had now undertaken not to call for interview until March 2008 at the earliest

• Documents would be collected from agent’s premises

12

Martin

• Originally told he could not have a CIS6 based on previous unincorporated turnover

• Not noticed that he had not signed his application

• Within the HMRC office it got turned into an application for a CIS4 net payment card

• Claimed damages initially under COP1

• But eventually as breach of a duty of care

13

Duty of care

• Statutory provision to issue a certificate did not suggest any damages

• Judge says that there is no indication parliament intended to provide one

• Common law duty of care would rarely be implied in the absence of a statutory one

• But there was a vicarious duty of care in respect of the forms being changed

14

Emms

• Rugby prop forward, has to maintain his fitness and bulk

• Claims cost of extra food plus supplements

• Not exclusively and necessarily, would not be required by all players, too much choice

• Why don’t they have ‘staff canteens’ and medical provision by the club doctors?

15

Pringles

• … are not crisps…!

• Have to be both made from potato–including flour, starch etc

• And similar to crisps

• Pringles made from 42% potato but 15% other flour as well

• And not similar in shape, packaging etc

16

Stackers v Pringles

Potato flour/starch

Other flours

Distinctive shape

Stackable

‘Melt in the mouth’

Stackers Pringles

? ?

17

Lee Barrett

• Claimed he had left for a year before 6 April 1998

• But even on his figures he had been in the UK some days

• However his bank records showed that he had been in the UK for more

–and had not left before 6 April as his ‘diary’ showed

• If you are going to become non-resident you’ve got to do it properly!

18

Lee Barrett map

Cash 6/4 Meal 6/4Groceries 7/4

Groucho 9/4

Cash 14/4Cash20/4

Car park 20/4

19

Distinct break

• Continued in employment, doing same work

• No permanent home or HQ abroad

• Family stayed in UK

• No overseas bank account(?), driving licence, doctor, etc

• Centre of interests still in UK

• No ticket stub or boarding pass

LexisNexis Confidential

Thank you for listening- safe journey home

Mike Truman LLB FCA CTA (Fellow)

Editor, Taxation magazine