St Matthews (West) Ltd & Ors, R (on the application of) v HM Treasury & Anor
2014
ADMINISTRATIVE COURT
UK
CORAM
- MRS JUSTICE ANDREWS DBE
Areas of Law
- Tax Law
- Civil Procedure
- Human Rights Law
2014
ADMINISTRATIVE COURT
UK
CORAM
AI Generated Summary
The Claimants challenged the retrospective application of amendments to the Finance Act 2003 enacted by the Finance Act 2013, arguing that it infringed on their rights under Article 1 of Protocol 1 (A1P1) and Article 6 of the European Convention on Human Rights (ECHR). The court held that the retrospective application was lawful and proportionate, and did not infringe A1P1 as the claim to SDLT relief lacked a sufficient basis in national law to be considered a 'possession.' Furthermore, it was concluded that Article 6 was not engaged in tax disputes, affirming the wide margin of appreciation states enjoy in taxation matters.
Judgment
Mrs Justice Andrews:
Benjamin Franklin famously identified tax as one of life’s two certainties. However, the aphorism must be subject to some qualification; for as long as taxes have existed, people have been devising ways to avoid paying them without breaking the law.
The Claimants were participants in a tax avoidance scheme structured by advisers named Blackfriars Tax Solutions LLP (“Blackfriars”) which was designed to minimise their exposure to Stamp Duty Land Tax (“SDLT”). I shall refer to the scheme as “the Blackfriars scheme”, although HM Revenue and Customs (“HMRC”) identified other promoters who were selling or intending to sell it.
The Claimants seek to challenge by way of judicial review the provisions of s.194(1)(a) and s.194(2) of the Finance Act 2013 which, by amending s.45 of the Finance Act 2003 , with retrospective effect from 21 March 2012, made it plain that SDLT is chargeable in full on transactions structured in accordance with the Blackfriars Scheme. HMRC contends that the scheme was always ineffective, and the legislation merely confirms this; the Claimants contend that it was effective, and that the retrospective legislation has deprived them of the chance of establishing this before the First Tier Tribunal (Tax Chamber) (hereafter “FTT”).
The claim was initially based upon alleged infringement of Article 1 of Protocol 1 (“A1P1”) and Article 14 of the European Convention of Human Rights (“ECHR”). However, in recognition of the fact that on the present state of the law a claim based on Article 14 is bound to fail, Mr Woolf did not pursue his arguments on that aspect of the case, whilst expressly reserving the position in case this matter should ever reach the Supreme Court. Instead, the Claimants have belatedly raised the further argument that the retrospective changes to the legislation were contrary to Article 6 ECHR. Since the challenge is to primary legislation, the only permissible relief would be a declaration of incompatibility.
On 15 October 2013 Lang J ordered that the permission application be decided at a “rolled-up” hearing.
Although the Claimants’ case was put in a number of ways, the essence of their argument is that the amount of tax lost to the Exchequer by the use of the Blackfriars scheme (on the evidence, in the order of £7 million) was too small to justify the use of retrospective legislation to close it down. However attractively that submission has been dressed up by Counsel, my conclusion that i