APNs: Another politician has been naughty!

This week we look at the recent application for Judicial Review in the case of Walapu v Revenue and Customs Commissioners, which was heard on 23 March 2016. However, before I approach our main topic, I can’t help but comment on the overshadowing drama this week of our very own Mr Cameron.

Under UK Law, there is a principle of innocent until proven guilty although the media seem to be hanging the PM quite nicely before anyone has worked out if there was indeed any tax avoidance or even evasion. This is highly worrying given the important Brexit decision and the potential doomed economy (in my opinion) should people vote out.

So had DC evaded taxes? We can’t say for sure but it does look like that Blairmore was a genuine offshore investment trust (not a private trust as some media seems to suggest). Given that specific legislation applies to such structures to tax the “gain” as income when realised, there doesn’t appear to be any harm in someone investing into this structure. Many UK residents do invest into legitimate offshore structures such as offshore insurance bonds, roll up funds and discounted gift trusts. It might be that most don’t actually realise they are based offshore!

The thought that someone is guilty until proven innocent is how many taxpayers feel about Accelerated Payment Notices (APNs); so maybe David Cameron should feel the pain for a while at least or maybe Lin Homer or David Guake.

In the case of Walapu v Revenue and Customs Commissioners (23 March 2016) the taxpayer applied for Judicial Review submitting that:

• The rules in Chapter 3 of the Finance Act 2014 failed to confer a lawful right of representation, since the APN had been issued before any right of representation had been granted
• The APN frustrated his legitimate expectations and operated in an unlawfully retrospective manner
• Chapter 3 of the Finance Act 2014 violated Article 6 of the European Convention on Human Rights
• The money being demanded was an asset belonging to him and the APN deprived him of that money, contrary to Article 1 of the First Protocol to the Convention, and the APN was disproportionate
• The APN issued to the taxpayer had been ultra vires, as the scheme had not been notifiable

The point regarding whether notifiable turned on another case where the Special Commissioner had held had not been notifiable and flowed from an exemption from the duty to notify.

Each submission was considered and rejected resulting in the application being dismissed. This is a further blow to those seeking to challenge APNs, although it is important to consider whether representations against an APN ought to be made. It is likely that representation should be made although consideration needs to be given to the commercial likelihood that tax liabilities may need to be settled at some point.

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