QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL
B e f o r e :
| NIGEL ROWE, ALEC DAVID WORRALL & OTHERS
|- and -
|THE COMMISSIONERS FOR HM REVENUE & CUSTOMS
Mr James Eadie QC, Mr Sam Grodzinski QC and Mr David Yates (instructed by HMRC Solicitors Office) for the Defendant
Hearing dates: 14,15,16,17 July 2015
Crown Copyright ©
MRS JUSTICE SIMLER:
(a) They were issued in breach of the principles of natural justice because they were never afforded the opportunity to make representations as to why in all the circumstances, they should not have been issued. In particular, they had no opportunity to explain why the sums demanded under the notices are not due and owing; and that it was not reasonable to require payment prior to resolution of the parallel appeals on the underlying substantive tax dispute.
(b) The notices are ultra vires because Condition B is not satisfied. The amounts claimed do not result from the chosen arrangements since they do not result directly from an increase or reduction of an item in the partnership return. Further, absent legitimate enquiries, no tax will ever become "due and payable" within the meaning of FA 2014.
(c) The notices were given in breach of the claimants' legitimate expectation that they would not have to pay any tax in dispute until after the 'First-tier Tax Tribunal ("FTT") had decided all relevant issues, HMRC having not exercised the right to postpone repayment.
(d) The decision to give notices was unreasonable/irrational in all the circumstances of their cases.
(e) The exercise of powers under the legislation involves an unlawful interference with property rights under 'Article 1 of the First Protocol (the right to protection of property) ("A1P1") and in breach of Article 6 of the Convention for the Protection of Human Rights' involving the retrospective imposition of a payment obligation the claimants could not have predicted when they joined the partnerships referred to below.
(a) In the tax year 2004/2005 Mr Rowe contributed £750,000 to IFP (made up of a cash sum of £270,000 and a full recourse loan of £480,000).
(b) He made a claim for relief for tax in respect of his share of partnership losses for 2004/2005 (£675,370) on a carry back basis to set off against income and gains in the year ending 5 April 2002.
(c) HMRC did not open an enquiry into that claim and in June 2005 HMRC made a tax repayment of £270,148 to Mr Rowe. Thereafter, Mr Rowe was aware of discussions between HMRC and the Ingenious partnerships about the trade losses, but had no direct discussions himself. He says his expectation was that the relief agreed was final.
(d) By letter dated 17 October 2014, HMRC gave Mr Rowe advance warning that they would be issuing a PPN in respect of his IFP loss claim in the following 2 to 4 weeks (referred to below as a "precursor letter"). The letter explained the effect of the PPN and identified the tax avoidance scheme the partnership had used by reference to its scheme reference number. Under a heading "Problems Paying" it invited Mr Rowe to contact HMRC straightaway if he thought he might have problems paying. The letter also invited him to let HMRC know if there was anything in his health or personal circumstances that might make it difficult for him to deal with the matter. He did not respond to that offer.
(e) By letter dated 14 November 2014, HMRC enclosed a PPN in the sum of £270,147.60 together with a computation explaining how that amount had been calculated. The letter stated that payment was due on 17 February 2015, unless representations under FA 2014 Schedule 32, paragraph 5 were received before that date, in which case (unless withdrawn) the sum would become payable 30 days after the date on which HMRC notified their decision in respect of such representations.
(f) Mr Rowe states that payment of the PPN will cause him hardship because he "did not plan [his] finances on the basis that HMRC could require the whole sum upfront and retrospectively, several years later. Instead, I had an expectation that HMRC could only recover any disputed tax loss following a decision in their favour on all the relevant issues from an independent court or tribunal. In particular I have had to sell shares … and keep the cash available in case it is needed to pay the PPN … The sum in question is enormous as my gross income is in the region of £125,000 which ….does not allow me to save the sort of sum demanded by the PPN."
(a) In 2005/2006 he contributed £267,638 to IFP2 and IGames: IFP2 with a cash sum of £48,750 and £86,666 by way of full recourse loan; IGames with £47,600 cash and £84,622 full recourse loan.
(b) He made claims for relief of tax using his share of partnership losses for 2005/2006 partly on a carry back basis to 2004/05 (IFP2, £122,000) and partly on a sideways loss relief current year basis (IGames, £119,017).
(c) HMRC did not open an enquiry into the carry back claim. As with Mr Rowe, HMRC repaid the carry back claim, making a tax repayment of £48,800 (i.e. £122,000 x 40%) on 26 April 2007. On the current year claim he received immediate relief of £47,606.80.
(d) Mr Worrall received a precursor letter dated 3 October 2014, followed by a PPN dated 17 October 2014 in respect of the IFP2 loss claim.
(e) On 21 November 2014 he received a further pre-cursor letter relating to the IGames loss claim, followed by a PPN dated 5 December 2014.
(f) Mr Worrall sets out the financial impact of the PPNs in his case at paragraphs 26 to 29 of his witness statement (both for him and his wife). He says that he believed that he could use the money represented by the PPNs subject only to the possibility that the FTT could determine some potential liability. He says that he was entitled to and did make financial plans on that basis, investing his tax repayments in his business. It would cause him economic loss and hardship to have to raise £96,406 at short notice.
BACKGROUND TO FA 2014
"s. 306…any arrangements which –
(a) fall within any description prescribed by the Treasury by regulations,
(b) enable, or might be expected to enable, any person to obtain an advantage in relation to any tax that is so prescribed in relation to arrangements of that description, and
(c) are such that the main benefit, or one of the main benefits, that might be expected to arise from the arrangements is the obtaining of that advantage."
"For many tax avoidance schemes one of the key attractions of the scheme is not necessarily the actual tax saving, but the opportunity to retain the tax saving during the course of the investigation and any subsequent legal challenge. In order to bear down on this advantage and to demonstrate our continued commitment to fight tax avoidance we are consulting on how users of avoidance schemes can be made to pay the tax in dispute upfront."
"This will apply in relation both to existing cases which have not yet been settled and to new cases. The same principle is relevant to both old and new cases: at present, users of avoidance schemes can delay their tax bills no matter how tenuous the likelihood of their ultimate success. It is this economic enticement to use avoidance schemes that the Government wants to remove.
Linking the Payment Notices to users of DOTAS arrangements appears to the Government to be the right step because:
(a) most structures that are notified under DOTAS have characteristics or 'hallmarks' of avoidance; and
(b) DOTAS provides a clear and objective criterion for this policy which can be readily operated by taxpayers and their advisers. "
"2.1 The Government has made clear that it will take a robust approach to tackling tax avoidance.
2.2 To this end, the Government has taken a number of major steps, including the introduction of the General Anti-Abuse Rule (GAAR), new rules to tackle 'disguised remuneration' and closing down a number of loopholes. All of this is expected to bring in several billion pounds worth of revenue to the Exchequer that might otherwise have been lost to tax avoidance.
2.3 However, as this consultation and the consultation 'Raising the stakes on tax avoidance' show, there is more to do; particularly to tackle behaviours involving marketed avoidance schemes. Promoters devise schemes, often complex and contrived, that attempt to exploit certain features of the tax system – for example by trying to generate a claim for tax relief for far more than the expenditure incurred – and, at their most extreme and abusive, look for loopholes to no other purpose than to avoid paying the tax that should be due.
2.4 The high level of complexity and contrivance inevitably means that these schemes are difficult to analyse and challenge, but despite this HMRC has a very successful record. Around 80% of cases that have been decided by the tax tribunals and courts in recent years have been won by HMRC, and many others settle without litigation, but this often follows several years of enquiry, investigation and litigation, during which time the majority of the taxpayers involved have been able to enjoy the use of the tax that they were trying to avoid.
2.5 The Government's view is that this position is unacceptable. The current system of self assessment, enquiries and appeals, and the ability to apply for postponement of tax while an appeal is resolved, was not designed to assist those who contrive complex arrangements with the purpose of avoiding tax, retaining the cash advantage in the meantime.
2.6 The Government's proposals therefore have the simple objective of changing the presumption of where the tax sits, so that anyone who enters into an avoidance scheme will have to pay over the tax in dispute. This already happens where the taxpayer claims a repayment – HMRC can under current legislation deny some or all of a claimed repayment while a dispute is resolved. The new proposals put all taxpayers involved in tax avoidance on the same footing."
"The Government does not agree that the proposals are retrospective. They do not change the underlying tax liability. Where an accelerated payment is made and the taxpayer subsequently wins their dispute the tax will be repaid with interest – no different to the situation where, currently, a repayment is denied whilst the dispute is resolved. Application of the proposals to existing disputes will ensure that all taxpayers in an avoidance dispute after Royal Assent will be in the same position, irrespective of when their dispute began." (See also paragraphs 3.50 and 4.7).
(a) that DOTAS was designed to gather information, not to lead to resolution of cases;
(b) that DOTAS was broad and covered unobjectionable arrangements, which were not differentiated from objectionable arrangements; and
(c) that the measures were retrospective and would adversely impact on taxpayers who had disclosed and used certain types of arrangement in good faith: (paragraph 4.3).
The Government rejected these objections, stating that "DOTAS provides an objective criterion to apply the measure and, in the majority of cases, is an indicator of avoidance activity. There are no other legislative criteria that could provide the same level of certainty and objectivity. " (paragraph 4.4)
"Whilst it imposes a new obligation on certain taxpayers that they did not expect when they entered into these schemes, the government is not changing the legislation that determines whether the scheme used is effective": paragraph 4.7.
The Government rejected the charge that the measures were retrospective: there was no change to or determination of the final tax liability, and all that was altered was the interim obligation to pay on account, albeit by reference to arrangements entered into in the past.
"… 90 days is an ample period in which taxpayers… can raise any issues about the quantum of the payment and consider its financial impact upon them. Prudent taxpayers should have considered the risks associated with entering an avoidance scheme and made financial provision. For those who have not done so, the 90 days period is an opportunity to consider how payment will be made and, if necessary, commence discussions with HMRC debt management staff." paragraph 4.15
THE ACCELERATED PAYMENT LEGISLATION
(a) Where an LLP "carries on a trade, profession or business with a view to profit" (s.863(1) ITTOIA 2005) the LLP is treated as "transparent" for income tax purposes, and its activities are treated as carried on in partnership by its members, the individual partners. The profits or losses of the LLP are allocated between the partners and treated as their profits or losses for tax purposes. The LLP has no income tax liability in these circumstances.
(b) Both the LLP (by a nominated partner) and each partner must file a self-assessment return (under s.12AA Taxes Management Act 1970 ("TMA") and s.8(1) TMA respectively). Every return under s.8 TMA must include a self-assessment of the amount of income and capital gains tax payable after taking account (among other things) of any relief, or allowance claimed in the return: s.9(1) TMA.
(c) The LLP's return must include a "partnership statement" stating the amount of income or loss sustained by the LLP for the period covered by the return and the amount of income or loss attributable to each partner: s.12AB(1). The individual partner must also include in the return any amount of profit or loss allocated as his or her share in the partnership statement for a period which includes (or includes part of) the year of assessment to which the return relates: ss.8(1B) and 8(1C) TMA.
(d) HMRC can enquire into an individual return under s.9A; and a partnership return under s.12AC.
(e) An enquiry under s.9A is brought to an end by a closure notice which must state whether or not any amendment to the return is required. There is a right of appeal under s.31 (1)(b) TMA against "any conclusion stated or amendment made" by a closure notice. The appeal lies to the FTT which can increase or reduce a self-assessment or other assessment and allow or disallow a claim or election (see generally s.50 TMA).
(f) Any enquiry into the LLP's return and partnership statement under s.12AC TMA is deemed to constitute an enquiry into each individual partner's return under s.9A: see s.12AC (6) TMA. An enquiry under s.12AC is brought to an end by a closure notice under s.28B and if an amendment is made to entries in the return that have consequential effect for each individual partner, HMRC is required to make consequential amendments to each partner's return so as to give effect to the amendments made to the LLP's return: s.28B(4) TMA. The same rights of appeal under s.31(1)(b) TMA apply to the partnership closure notice, with similar effects.
(g) The statutory machinery that governs the making of claims for loss relief (etc) permitted by the Taxes Acts is found in s.42 and Schedules 1A and 1B to the TMA.
Accelerated payment notices
"(1) HMRC may give a notice (an "accelerated payment notice") to a person ("P") if conditions A to C are met.
(2) Condition A is that –
(a) a tax enquiry is in progress into a return or claim made by P in relation to a relevant tax, or
(b) P has made a tax appeal (by notifying HMRC or otherwise) in relation to a relevant tax but that appeal has not yet been –
(i) determined by the tribunal or court to which it is addressed, or
(ii) abandoned or otherwise disposed of.
(3) Condition B is that the return or claim or, as the case may be, appeal is made on the basis that a particular tax advantage ("the asserted advantage") results from particular arrangements ("the chosen arrangements").
(4) Condition C is that one or more of the following requirements are met –
(a) HMRC has given (or, at the same time as giving the accelerated payment notice, give) P a follower notice under Chapter 2 –
(i) in relation to the same return or claim or, as the case may be, appeal, and
(ii) by reason of the same tax advantage and the chosen arrangements;
(b) the chosen arrangements are DOTAS arrangements;
(c) a GAAR counteraction notice has been given in relation to the asserted advantage or part of it and the chosen arrangements (or is so given at the same time as the accelerated payment notice) in a case where the stated opinion of at least two of the members of the sub-panel of the GAAR Advisory Panel which considered the matter under paragraph 10 of Schedule 43 to FA 2013 was as set out in paragraph 11(3)(b) of that schedule (entering into tax arrangements not reasonable course of action etc.).
(5) "DOTAS arrangements" means –
(a) notifiable arrangements to which HMRC has allocated a reference number under section 311 of FA 2004
(b) notifiable arrangements implementing a notifiable proposal where HMRC has allocated a reference number under that section to the proposed notifiable arrangements, or
(c) arrangements in respect of which the promoter must provide prescribed information under section 312(2) of that Act by reason of the arrangements being substantially the same as notifiable arrangements within paragraph (a) or (b).
(6) But the notifiable arrangements within subsection (5) do not include arrangements in relation to which HMRC has given notice under section 312(6) of FA 2004 (notice that promoters not under duty imposed to notify client of reference number).
(7) "GAAR counteraction notice" means a notice under paragraph 12 of Schedule 43 to FA 2013 (notice of final decision to counteract under the general anti-abuse rule)."
"so much of the asserted advantage as is not a tax advantage which results from the chosen arrangements or otherwise" (s.220(5)(b)).
"(3) an amount equal to the amount which a designated HMRC officer determines, to the best of that officer's information and belief, as the understated tax.
(4) 'the understated tax' means the additional amount that would be due and payable in respect of tax if…
(b) in the case of a notice given by virtue of section 219(4)(b) (cases where the DOTAS requirements are met), such adjustments were made as are required to counteract what the designated HMRC officer determines, to the best of that officer's information and belief, as the denied advantage; .."
(a) which part of Condition C in s.219(4) applies: (a), (b) or (c);
(b) the payment amount required and due date of payment, as set out in s.223;
(c) the ability to make representations under s.222 and their effect;
(d) the effect of the removal of any ability to postpone pursuant to s.55 TMA in the case of a pending appeal under s.224; and
(e) the effect of the penalty provisions in s.226.
"(a) objecting to the notice on the grounds that Conditions A, B or C in section 219 was not met,
(b) objecting to the amount specified in the notice…"
HMRC must consider any representations made in accordance with s.222(2) and having done so, must determine whether to confirm or withdraw the notice, and/or determine whether a different amount (or no amount) ought to have been specified, and then confirm, vary or withdraw the notice: s.222(4).
"the accelerated payment is to be treated as a payment on account of the understated tax:" s.223(3).
It must be made before the end of the 'payment period'. Where no representations are made under s.222, the payment period is 90 days beginning with the day on which the notice was given. Where representations are made, the payment period is extended to the period of 30 days beginning with the day on which HMRC's determination of the representations are notified, if that is later than the 90 day period: s.223(5).
"(3) .. so much of the amount of the charge to tax arising in consequence of –
(a) the amendment or assessment to tax appealed against, or
(b) where the appeal is against a conclusion stated by a closure notice, that conclusion,
as a designated HMRC officer determines, to the best of the officer's information and belief, as the amount required to ensure the counteraction of what that officer so determines as the denied advantage."
(a) no payment on account is created (since the assessment is payable under s.55(5), TMA 1970);
(b) s.226 penalties do not apply (since penalties for non-payment arise under legislation applying to amounts due under s.55); and
(c) the form of the APN is modified to take these two matters into account.
Partner Payment Notices
"the additional amount that would become due and payable by the relevant partner in respect of tax if:
"(b) in the case of a notice given by virtue of paragraph 3(5)(b) (cases where the DOTAS arrangements are met), such adjustments were made as are required to counteract so much of what the designated HMRC officer so determines as the denied advantage as is reflected in a return or claim of the relevant partner; …"
The 'denied advantage' is defined in para 4(4)(b) in the case of a DOTAS based notice as:
"so much of the asserted advantage as is not a tax advantage which results from the chosen arrangements or otherwise; …."
Provisions restricting circumstances in which payments of tax can be postponed pending appeal
"(3) ….. grounds for believing that the amendment or assessment overcharges the appellant to tax, or as a result of the conclusion stated in the closure notice the tax charged on the appellant is excessive"
HMRC could agree to the postponement sought; but if refused, the decision whether or not to order postponement was made by the tax tribunal: s.55(6). There was a right to postponement where "there are reasonable grounds for believing that the appellant is overcharged to tax".
"(8B) Subsections (8C) and (8D) apply where a person has been given an accelerated payment notice or partner payment notice under Chapter 3 of Part 4 of the Finance Act 2014 and that notice has not been withdrawn.
(8C) Nothing in this section enables the postponement of the payment of (as the case may be)-
(a) the understated tax to which the payment specified in the notice under section 220(2)(b) of that Act relates,
(b)the disputed tax specified in the notice under section 221(2)(b) of that Act, or
(c) the understated partner tax to which the payment specified in the notice under paragraph 4(1)(b) of Schedule 32 to that Act relates.
(8D) Accordingly, if the payment of an amount of tax within subsection (8C)(b) is postponed by virtue of this section immediately before the accelerated payment notice is given, it ceases to be so postponed with effect from the time that notice is given, and the tax is due and payable…[in accordance with the relevant time limits applicable to PPN/APNs]."
GROUND 1 – NATURAL JUSTICE
"(i) Where an Act of Parliament confers an administrative power there is a presumption that it will be exercised in a manner which is fair in all the circumstances.
(ii) The standards of fairness are not immutable. They may change with the passage of time, both in the general and in their application to decisions of a particular type.
(iii) The principles of fairness are not to be applied by rote identically in every situation. What fairness demands is dependent on the context of the decision, and this is to be taken into account in all its aspects.
(iv) An essential feature of the context is the statute which creates the discretion, as regards both its language and the shape of the legal and administrative system within which the decision is taken.
(v) Fairness will very often require that a person who may be adversely affected by the decision will have an opportunity to make representations on his own behalf either before the decision is taken with a view to producing a favourable result; or after it is taken, with a view to procuring its modification; or both.
(vi) Since the person affected usually cannot make worthwhile representations without knowing what factors may weigh against his interests fairness will very often require that he is informed of the gist of the case which he has to answer".
"The duty to give advance notice and an opportunity to be heard to a person against whom a draconian statutory power is to be exercised is one of the oldest principles of what would now be called public law. In Cooper v Board of Works for the Wandsworth District (1863) 14 CB (NS) 180, the Defendant local authority exercised without warning a statutory power to demolish any building erected without complying with certain preconditions laid down by the Act. "I apprehend", said Willes J at 190:
'that a tribunal which is by law invested with power to affect the property of one of Her Majesty's subjects is bound to give such subject an opportunity of being heard before it proceeds, and that rule is of universal application and founded upon the plainest principles of justice.'
(See to similar effect, Lord Neuberger at ).
(a) The statutory scheme identifies carefully defined pre-conditions that must be satisfied before a PPN can be given: conditions A to C, Schedule 32 para 3(2) to (5). These conditions are in broad terms, objective conditions.
(b) There must be a tax enquiry in progress in relation to the partnership return, or an appeal in relation to that return (Condition A). The partnership return (or appeal) must be made on the basis that a particular tax advantage results from particular arrangements, here DOTAS arrangements. In the case of a partnership return, that will only be so if the partnership return is made on the basis that profits or losses result from the tax arrangements and the same profit or losses result in the same tax advantage for the relevant partner (Schedule 31 para 3(3)(a) and (b)). Arrangements will only be tax arrangements if "having regard to all the circumstances it would be reasonable to conclude that the obtaining of a tax advantage was [at least] one of the main purposes, of the arrangements" (s.201(3)).
(c) The PPN itself must specify which statutory basis is relied on to show Condition C is satisfied (para 4(1)(a)) and the payment that is required to be made (para 4(1)(b)). It must also explain the effect of Schedule 32 paras 5 and 6, which deal with the right to make representations and the obligation to make payment within specified dates; and the effect of ss.224 and 225 which deal with restrictions on postponing tax pending appeals.
(d) The payment required to be made is determined by a designated HMRC officer to the best of the officer's information and belief: Schedule 32 para 4(2). In a DOTAS arrangements case, the officer must determine what the "denied advantage" is by determining how much of the relief, repayment etc. as is claimed by the partner to result from the tax planning, does not result from the tax planning (para 4(4)(b)). The officer determines the additional amount that would become due and payable by the relevant partner if such adjustments are made as would counteract the denied advantage reflected in the return or claim of the relevant partner. This is the "understated partner tax" that must be paid.
(e) The right to make representations in Schedule 32 para 5 is a right to object on the basis that the statutory requirements for the lawful issue of a PPN have not been met (i.e. Conditions A to C are not satisfied), and also enable the recipient of the PPN to object to the amount specified in the PPN.
(f) Although a PPN requires payment 90 days after it is given, that time limit is suspended automatically if written representations are made to HMRC following receipt of the PPN. The obligation to pay only arises again after HMRC have responded to those written representations.
GROUND 2 – CONDITION B
"(3) Condition B is that the return or, as the case may be; appeal is made on the basis that a particular tax advantage ("the asserted advantage") results from particular arrangements ("the chosen arrangements")."
"(4) Paragraph 3(3) of Schedule 31 applies for the purposes of sub-paragraph (3) as it applies for the purposes of Condition B in section 204(3)."
Paragraph 3(3) of Schedule 31 adapts the legislation in the main body of FA 2014 concerning follower notices (as opposed to APNs/PPNs) and provides:
"For the purposes of Condition B in section 204 a partnership return, or appeal in respect of a partnership return, is made on the basis that a particular tax advantage results from particular tax arrangements if –
(a) it is made on the basis that an increase or reduction in one or more of the amounts mentioned in section 12AB(1) of TMA 1970 (amounts in the partnership statement in a partnership return) results from those tax arrangements, and
(b) that increase or reduction results in that tax advantage for one or more of the relevant partners."
"(3)… that would become due and payable by the relevant partner if…
(c) in the case of a notice given by virtue of paragraph 3(5)(b) (cases where the DOTAS arrangements are met), such adjustments were made as are required to counteract so much of what the designated HMRC officer so determines as the denied advantage as is reflected in a return or a claim of the relevant partner."
Mr Southern contends that no tax could ever become 'due and payable' on carry back claims where HMRC has not opened enquiries because HMRC is not able to assess to recover the repaid tax, whatever the outcome of the Ingenious appeals. This is because the only correct mode of enquiry (leaving aside discovery assessments) into carry back claims made outside a return (as the majority of these claims were) was an enquiry into the claim under Schedule 1A TMA, and no such enquiries were opened in these cases. He submits that this approach is supported by the decision of the Supreme Court in HMRC v Cotter  UKSC 69, STC 2480 (SC).
GROUND 3 – LEGITIMATE EXPECTATION
GROUND 4 – IRRATIONALITY
"it is for the decision-maker and not the court to conclude what is relevant subject only to Wednesbury review. …it is for the decision-maker and not the court, subject again to Wednesbury review, to decide upon the manner and intensity of enquiry to be undertaken into any relevant factor accepted or demonstrated as such."
"Following the prioritisation exercise I have described above each scheme identified was subject to a detailed review by the technical lead, with input from other officers, for example those responsible for the particular specialist issues raised by the challenge to a scheme. The purpose of that review was to identify any reasons why notices should not be issued to users of an identified scheme. No such reasons were identified for the Ingenious schemes. I note that the Claimant suggests that the notices ought not to have been issued because the hearing of the Ingenious tax appeals was imminent. Consistently with the decision of the Steering Group to which I have referred above, HMRC decided that this was not a reason to delay issuing notices. "
GROUND 5 – BREACH OF CONVENTION RIGHTS
Interferences with rights guaranteed by A1P1
"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 provisions 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."
"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."
Both sides claim to be entitled to the money but nobody yet knows to whom it properly belongs, and the mere fact that it is held for the time being by the taxpayer does not make a difference.
"Whether or not the claimant has complied with all the conditions for claiming input tax is the substantive issue between the claimant and the Commissioners. Until that issue is resolved it is difficult to see how the claimant can have a legitimate interest which could amount to a property right."
"The 'claim' to tax relief under the DTA is one which has neither been accepted by HMRC nor has it been made out in any tribunal or court. All that has been established is the existence of a genuine dispute about whether the scheme based on the claim for tax relief under the DTA worked."
Prescribed by law
"However, in determining whether this requirement has been met, it is recognised that a contracting state, not least when framing and implementing policies in the area of taxation, enjoys a wide margin of appreciation, and the court will respect the legislature's assessment in such matters unless it is devoid of reasonable foundation"
"In the light of these principles the hurdle for those alleging infringement of A1P1, particularly in the context of taxation provisions, has understandably been described as 'very high' (see, for example, paragraph 60 of the recent judgment of Mrs Justice Andrews in R(on the application of St. Matthews (West) Ltd and others) v HM Treasury and HMRC  EWHC 1848 (Admin). Tax measures are seen as entitled to particular deference in the light of the second paragraph of A1P1 itself".
Article 6 of the Convention
"In the tax field, developments which might have occurred in democratic societies do not, however, affect the fundamental nature of the obligation on individuals or companies to pay tax. In comparison with the position when the convention was adopted, those developments have not entailed a further intervention by the state into the 'civil' sphere of the individual's life. The court considers that tax matters still form part of the hard core of public authority prerogatives, with the public nature of the relationship between the taxpayer and the tax authority remaining predominant. Bearing in mind that the convention and its protocols must be interpreted as a whole, the court also observes that art 1 of Protocol 1, which concerns the protection of property, reserves the right of states to enact such laws as they deem necessary for the purpose of securing the payment of taxes (see, mutatis mutandis, Gasus Dosier-und Főrdertechnik GmbH v Netherlands (1995) 20 EHRR 403 at 434, paragraph 60). Although the court does not attach decisive importance to that factor, it does take it into account. It considers that tax disputes fall outside the scope of civil rights and obligations, despite the pecuniary effects which they necessarily produce for the taxpayer."
(i) the PPNs were lawfully issued and the principles of natural justice have been adhered to by the statutory scheme and by HMRC in exercise of the discretion conferred by FA 2014.
(ii) Condition B is satisfied.
(iii) There has been no breach of the claimants' procedural or substantive legitimate expectations.
(iv) The decision to give PPNs was neither unreasonable nor irrational. It represented a lawful exercise of the statutory discretion conferred by FA 2014.
(v) There has been no unlawful interference with the claimants' possessions by the giving of PPNs in this case. Article 6 of the Convention does not apply but in any event, the claimants have had access to an independent and impartial tribunal on judicial review.