The Tax Code and its Administration - L2 Flashcards
Lecture 2
What does Article 4 of the Bill of Rights (1689) state about tax?
There can be no taxation except under the authority of an Act of Parliament.
Which cases confirm that tax must be authorised by statute?
Bowles v Bank of England [1913], Woolwich Equitable Building Society v IRC [1993].
Why is tax law called a statutory subject?
All tax rules are found in legislation.
What is the Tax Law Rewrite?
A 1996 programme to simplify tax law by rewriting income and corporation tax codes without changing the rules.
What is the Office of Tax Simplification?
A 2010 body created to propose simplifications, shut down in 2023.
What case established purposive interpretation of tax statutes?
Pepper v Hart [1993].
What limitation on purposive interpretation was stated in Gray’s Timber Products Ltd v R&C Comrs [2010]?
Taxpayer should not be taxed unless wording is clear.
What does Lee argue about purposive interpretation in tax?
It is hard to apply due to ambiguous rules.
Who is responsible for UK tax administration?
HMRC (His Majesty’s Revenue and Customs), created by CRCA 2005.
What powers does HMRC have under CRCA 2005 (commissioners for revenues and customs act 2005)?
They can do anything necessary or conducive to their tax functions (s. 9).
What is HMRC’s primary duty according to Vestey v IRC [1980]?
To collect tax, but with administrative common sense (e.g. not collecting tax that costs more to collect).
How can taxpayers usually challenge a tax bill?
Through the statutory appeals process.
When can judicial review be used instead of appeal?
If relying on HMRC’s incorrect advice would make tax collection an abuse of power (Re Preston [1985]).
What cases show HMRC is bound by public advice and possibly private advice?
R v IRC, ex p MFK Underwriting Agents Ltd [1990]; Matrix-Securities Ltd [1994].
What case shows HMRC conduct can create a binding belief?
R v IRC, ex p Unilever plc (1996).
What condition did the Supreme Court set for HMRC advice to be binding?
It must be clear (R (Davies) v R&C Comrs [2011]).
What is the rule about withdrawing HMRC guidance?
Must be done with reasonable notice and equivalent publicity (R (Cameron) v R&C Comrs [2012]).
What are Extra-Statutory Concessions (ESCs)?
Public HMRC announcements not to collect full tax in some situations.
Why are ESCs controversial?
They may go beyond HMRC’s powers and challenge the Rule of Law (Williams, Wilkinson case).
How did the Finance Act 2008 address ESC concerns?
Allowed statutory authority for ESCs under s. 160.
What is a back-tax agreement?
A contractual agreement to settle past tax liability without full investigation (IRC v Nuttall [1996]).
What is a forward-tax agreement and is it lawful?
No, it’s unlawful (ultra vires) – Fayed v Advocate General for Scotland (2004).
Can taxpayers sue HMRC for tort?
Generally no – HMRC has no tort liability for ordinary administrative errors (Neil Martin Ltd v HMRC [2007]).
What concern did Goldberg raise in his article?
HMRC may bully taxpayers using purposive interpretation; calls for an informal tribunal to review fairness.
What does Schwarz propose to protect taxpayers?
A taxpayer’s bill of rights and independent review of HMRC powers.
What does O’Sullivan argue about HMRC tort immunity?
It leaves taxpayers vulnerable and should be changed by law.
Why should cases and HMRC practice be mentioned after statutes?
They are interpretations or applications, not the primary source of law.
How should a taxpayer begin a tax law explanation?
By identifying the relevant statute first.
What does Article 4 of the Bill of Rights (1689) state regarding taxation?
There can be no taxation except under the authority of an Act of Parliament
Interpreted in cases like Bowles v Bank of England [1913] and Woolwich Equitable Building Society v IRC [1993]
What is the primary subject of tax law?
Tax law is a statutory subject
All rules are found in the legislative tax code
What is the significance of the complexity of the UK’s tax code?
The UK has the longest tax code in the world, which has been criticized for its complexity
Monroe warned in the 1970s that the impenetrability of the tax code had reached crisis point
What was the purpose of the Tax Law Rewrite program established in 1996?
To simplify the income tax and corporation tax codes
The program ended in 2010, but the rules remained basically the same
What is HMRC?
His Majesty’s Revenue and Customs, the tax administration body
Established by the Commissioners for Revenue and Customs Act 2005
What is HMRC’s primary statutory duty?
Collecting tax
This duty is qualified by a discretion to exercise ‘administrative common sense’
True or False: HMRC can be sued for ordinary administrative errors.
False
HMRC has no tort liability for ordinary administrative errors
What is the modern approach to interpreting tax statutes according to Pepper v Hart?
Purpose prevails over literal meaning
Courts aim to find the purpose behind the legislation
What are extra-statutory concessions (ESCs)?
Public announcements by HMRC that they will not collect the full amount of tax in specified circumstances
Criticized for potentially violating the Rule of Law
What did the Supreme Court emphasize in R (Davies) v R&C Comrs regarding HMRC advice?
HMRC advice must be clear before it can bind them
This emphasizes the need for clarity in HMRC’s guidance
Fill in the blank: The government closed the Office of Tax Simplification in _______.
2023
What is the role of judicial review in the context of HMRC actions?
Allows taxpayers to challenge HMRC actions if they are deemed to be an abuse of power
Used when a taxpayer relies on HMRC advice that later proves incorrect
What is a back-tax agreement?
A contractual agreement to accept a sum in lieu of the taxpayer’s actual past tax liability
Only for good administrative reasons
What did the case Fayed v Advocate General for Scotland establish regarding forward tax agreements?
It is ultra vires for HMRC to make a forward tax agreement
This means accepting payment of an estimated sum for future tax liabilities is unlawful
According to Goldberg, what is a proposed solution to protect taxpayers from HMRC?
A new informal tribunal to investigate claims of unacceptable HMRC behavior
This tribunal would include both lay and legal membership
What does the term ‘judicial review’ imply in relation to HMRC?
A process by which taxpayers can challenge HMRC’s decisions in court
This typically occurs when other appeal processes are unavailable
What is the outcome of the R v IRC, ex parte MFK Underwriting Agents Ltd case regarding taxpayer reliance on HMRC advice?
Taxpayers can seek judicial review if they relied on HMRC advice that later turned out to be incorrect
This is especially relevant if the tax bill is considered an abuse of power
What did the Finance Act 2008 s 160 allow regarding extra-statutory concessions?
Allowed for them to be given statutory authority
This was in response to doubts about the lawfulness of some ESCs
What are the limits of HMRC’s power to grant extra-statutory concessions?
They are limited by the primary duty to collect tax
This was emphasized in the R (Wilkinson) v IRC case
