This is an important decision taking forward the abuse of law principle, certainly within UK law. The scheme used and within the terms of UK law at the time worked, …
Court of Appeal (Civil Division) Lord Justice Lewison and Lord Justice David Richards Judgment given on 12 May 2016
This is an important decision taking forward the abuse of law principle, certainly within UK law. The scheme used and within the terms of UK law at the time worked, because the parties involved were not connected parties. Only later following the decision in Halifax was the abuse of law principle introduced. Here it has been applied twenty years after the initial transactions to correct them (in the eyes of the Tribunal and HMRC).
This might mean that any taxpayer looking to manage or mitigate their VAT exposure must not only have regard to the legislation, but must also apply the abuse tests within Halifax. Given that most taxpayers across the EU won’t have heard of Halifax, let alone the abuse principles, this could make the procedure very difficult.
Steve Botham
Covertax Chartered Tax Advisers