Comment on UTT Thread by John Clark.
My apologies to Lord Doherty for spelling his name with a ‘c’. Must have had a wee auld neebour o’ ma mither’s in mind, whom wee ca’d ‘wee mrs doc fae upstairs’
John Clark Also Commented
Continuation of proceedings at the Upper Tier Tax Tribunal, Friday 7th March 2014.
Counsel for HMRC, Mr Roderick Thomson QC began his reply at about 12.30 pm or perhaps a shade earlier.
[ I should remark that Mr Thomson’s style of presentation was very different from Mr Thornhill’s. It was, it seemed to me, more fragmented, more condensed -in bullet form, rather than continuous narrative. My account, therefore, although as nearly ‘verbatim’ as I could manage, requires some speculation here and there as to make out what I thought he was saying. I’ll try to separate that speculation from the words I attribute to him.]
“ My Lord, my learned friend has raised issues which I had not anticipated. But I have prepared written answers, to pass up. ( He passed up some document to his Lordship, with an apologetic comment about the text not having been proof-read to any extent).
What I’ll do is simply deal with today’s points first, and then turn to the document.
First, reference to part 17 of the grounds of appeal ( my complaint that the Majority had not had regard to my submissions) because they would need to be on Edwards-Baistrow.
Large tranches of evidence being ignored, e.g, internal records of the Group.
These are not Edwards-Baistrow points and don’t NEED to be.
Second, next point relates to SDM’s evidence of how bonus he got should be treated, one of the key issues (which tribunal failed to look at?), a flavour is given by SDM, your Lordship appreciates that the agreement was that what was agreed WAS a bonus payment. That is an issue that was not addressed, bonus, bonus, bonus.
These are part of the issues not addressed BECAUSE of the view that the Tribunal took of the law. They did not the ‘composite transaction’ as being the payment.
In relation to Mr [Liar], the onus is on the MG and they failed to discharge it. Why was documentary evidence, if required, not produced earlier. The acceptance, reliance on SDM [ and two other directors, and Mister Liar] evidence that the undertakings with players were separate contracts, was part of their decision for not lodging with SFA/SPL, if the tribunal accepted the same,one has to question the reliance on the key features of..
There was never a concession that it was one contract.
And on the Ford-McHugh: double taxation point point by Mr Thornhill, technical point: would the loan be the same benefit, it ‘would be wouldn’t be’.
( Mr Thomson apologised for losing his train of thought for a moment)
[Lord D: ( solicitously) do you want to move on?]
I will my, my Lord. In relation to ‘Eclipse’ and ‘Jones’, I am not making any point on that at the moment. Not seeking to rely on them at the moment.
[ lord D: they only become relevant if you are asking me to consider evidence]
The reference to ‘net’ in the documentation is a reference to ‘ no liability to tax’ but I saw no evidence to that effect. On the contrary, all of the evidence is that it was all against the player wanting to ACHIEVE a ‘net’ position. There is a lot of evidence in connection with side-letters that these were ‘net’ figures …….. ( not grossed up)
If MG make decisions decisions without documenting them, the MG bear the onus.
The ‘indemnities’ are evidence of ‘net’.
In the matter of disposal, if there were to be a remit to the First Tier as existing, directions would need to include full and wide-ranging findings of fact.
In the McBride case, the circumstances are very different. But I accept the test.
As to the time the majority took, it is only speculation about the time the Majority actually spent ( ? on actually considering the evidence?? as opposed to getting round to producing their decision??)
I appreciate the polite references (?to my submissions??) by the Tribunal , but the proof doesn’t come from kind words, but from the case.
On the ‘tone’ of the Majority’s decision, my point was that my arguments were considered to be irrelevant, because of the view they took of the law. There is frequent use of inverted commas on my phrases, shown up by the fact that the phrases in inverted commas were used by witnesses…
My points were NOT subject to decision at all. Paras 223, 225, 231, and 232, are where ‘unreserved disposal’ is treated as ‘absolute title’ and everything I say does not matter.
Turning to the document I have just handed to your Lordship,
Aberdeen Assets: the ‘protector’
The Majority did not consider the vast amount of evidence that there WAS ‘absolute legal title’
non-centrality of ‘absolute title’ ( ?? in the view of the Majority???)
No attempt to view the ‘unity’.
In relation to Para 147 I was arguing that in PRACTICAL terms the loans would never be called back.
The Trustees understood understood their role. Mr – thought employees were told that the Trustees always granted payments.
These are NOT matters that I have to satisfy on the Edwards-Baistrow basis. Aberdeen Assets shows my learned friend is not correct.
[Lord D: Do you have time to do complete statement?]
If your Lordship wishes to adjourn for lunch now)
Adjourned for lunch.
After lunch, Mr T continued on the ‘double taxation’ point.
If we go back to section 64 of ITEPA, to clarify: the hurdle is not a hurdle because inevitably the thing that one starts with is important the ‘complete transaction’ If it is on earnings basis the loan is in itself is not a benefit. And so in Section 64 because the loan is not a benefit it doesn’t come into play: so the section stops at 62.
My Lord, will I withdraw the document I submitted? I will address the court on the thrust of the Document?
[ Mr Thornhill: My Lord, I’m conscious of time. (And I think it was here that Mr Thornhill made it clear that in his view, Mr T might run out of time in his oral reply) or I can reply (in writing, he meant) to the document.
[Lord D: Mr Thornhill ought to get some time to reply in writing. 7 days?] ( This was noted)
Mr T for HMRC continued:
On the scope of the Appeal, my learned friend cannot be right. If the Majority took the view that the case turned on one factor alone, then in the MG submission that every other aspect of evidence held to be irrelevant would have to be (???) ( I lost the point here, I’m afraid)
It can only be the case where there has been an error if law ( where evidence has not been considered) it MUST be considered, and the P…. ? case, and London Clubs case are NOT relevant to to the present case. Because I say there is an error in law which led the majority to NOT consider a whole lot of evidence, or the WEIGHT of evidence.
On any fair reading, it’s not ‘weight’ but ‘irrrelevance’ they argue (and they say so).Now, remit back , (ref Rule 34) my friend agrees. But Rule 34 is not applicable. What we have is a First Tier decision, 28 days to appeal, and there is nothing in the rules to suggest that I have the possibility of asking ( the Tribunal) for further findings of fact. In any event, even if so, it would have been inappropriate for me to ask.
Georgiou, Brander are all cases where there are no ‘ex facie’ errors of law, so they are not useful.
The Letham-Grange case: ‘once an error in law has been established which affects the way evidence ( has been handled???), it is for the Court ..
If the tribunal had no obligation to make fidings of fact on HMRC material, I suggest it ony underlines the proposition that encumbering the paries to to prove every point on Edwards-Baistrow grounds is Unjust. It is wrong to suggest the door is closed to anything other than Edwards-Baistrow proof.
The ‘directed payment’ argument is not different, as my learned friend suggests.
The argument was there and NOT considered. There was a reference to ‘Ramsay-plus’ as being a description of my argument and that was all. And Heaton-Bell illustrates the point because my argument was on the Primary ground, and the Majority does not address that ground in Heaton- Bell.
Even if, my lord, it were to be concluded that the tribunal had considered, the decision does not give any clear idea of why they made the decision they made. (And that’s my secondary position, if the Court was somehow persuaded by my learned friend).
And the difference between the Minority’s study of the evidence calls into question how, if the decision had been made on that evidence, the M ajority arrived at their decision.
The ‘convertibility’ argument; my learned friend made reference to Heaton but no attention was given to the primary ground.: namely one looks at the nature of the agreement and if it is ‘earnings’, that’s it.
My learned friend argued that ‘salary’ and ‘bonus’ are separate. Both of these are merely ASSERTIONS and need a proper examination of facts and evidence, which was not carried out- because the Majority was diverted on ‘ unreserved disposal’.
And the example of the £50,000 to me and £20,000 to the mother. This depends on the agreement. My learned friend is wrong to make that assumption: in reality it is £75,000 salary, as per Heaton and Bell. And because it is ‘directed payment’ there does NOT need to be ‘unreserved disposal, or ANY disposal.
Now in Sempra it does appear that the Special Commissioners erred in law in looking at ‘purposive’. BRENNAN case recorded that the employees were entitled to remuneration and chose the trust
It may be that the Commissioners fell into the same error because of the same arguments of my learned friend.
“Emoluments” do not have a narrow meaning. None of the authorities support the view of ‘narrow meaning’, in the matters we are dealing with.
In relation to Garforth: my learned friend had question in (?2 and B??) on ‘fetter’ in the context of payments into the directors’ account of company, meaning that legal pressures were barriers to ‘unreserved disposal’.
I say, the issue of fetter is not something separate from ‘unreserved disposal’. The ‘fetter’ is not something separate: it is part of whether there is a fetter.
The point of the ‘fetter being disregarded’ is where the ‘fetter’ is commercially real as well as legally. And therefore my learned friend’s point is unfounded.
Loan legislation and benefit code: and what my learned friend said about design. HMRC is entitled to take the view that it is ‘composite transaction’, and NOT obliged to take the same view where facts are different.
My learned friend asserted there was no error because the Majority read the legislation as a whole.
The criticism was thatthat the majority was influenced by the existence of .loan legislation.Did not apply to general charging. My learned friend was wrong when he talked of Dr Poons’s ‘soft’ and ‘hard’ loans.
But she said that ‘composite transaction’ applied where the loan is not a ‘soft’ loan ( ??which is NOT from the loan’s conception.??)
There is nothing inmy friend’s criticism of Dr Poon’s statement, and in any case the discussion is not (meaningful).
Turning to UBS, the essence of his point is illustrated by his reference to ‘salary sacrifice’, when there is a consensual change to take less salary and something else instead.
I have no problem with my friend’s proposition. The problem is whether the agreement is of that nature, or simply an arrangement to pay salary by different means.I suggest that this is the very issue that the Majority failed to to acknowledge or consider.
Contrary to what my learned friend said, the submissions of HMRc were not considered. My Lord, 207 is nothing more than the OBSERVATION made by the employees. That is what that is about. There is NO HINT of anything beyond that.
And in the reference to Heaton-Bell the majority are not addressing the right bit of Heaton and Bell, and do not have an argument in mind.
Relevance of Mr Liar’s dishonesty: my learned friend says that his dishonesty, the concealment of side-letters, is of no relevance.
In my view, the Majority HAD to decide what the true nature of these agreements was, who go to extraordinary length to conceal the truth for 5 years. It plainly did matter for a Tribunal.They could not address themselves to the issue without addressingthese issues properly.
And there is no evidence of Mr Liar’s pursuing a private vendetta- he was the MG’s representative.
The difference between ‘sham’ and ‘cypher’.
My learned friend did not distinguish properly.He addresses himself to the question of ‘sham’ only, where the Trustee consciously knows that something is other than ‘trust’. He contrasts that with what the Majority found. They stopped it there ‘ because it was not a sham’ “ these were effective trusts”. Yes the ‘loans’ are ‘real’. But the Majority does not address the issue of ‘Cypher’, or the likelihood of repayment against the wishes of the employees. “Mrs crimson was going through the motions of exercising discretion.” they say. So she was!And the Majority did not discuss the question.
In relation to Dextra and ‘absolute disposal’: the word ‘absolute’ arises from Brennan… they concluded there was no ‘fetter’. And they immedaitely cite Ramsay and follow it. Which is what the Majority should have done.
Analysis of the Majority’s decision: My learned friend did not address the ‘ ratio ‘of the decision, and did not acknowledge that the Majority related only to ‘unreserved disposal’ and ‘absolute entitlement’. I took your Lordship systematically through.
My learned friend broadened the usage of the words used by the Majority to cover the gap. The majority were only addressing the ‘validity’. One cannot pluck out odd phrases.
In my submission the central plank on which they decided this case (despite 147 listing of my points this doesn’t mean they dealt with them) was ‘unreserved disposal’, which they equated with ‘absolute title’.
So, when my learned friend say the Majority considered Mrs Crimson as ‘sloppy’,it is because it did not give ‘absolute title’.( Not sure I understood that point, I have to say. I may have missed a sentence or two)
My learned friend says the Majority did look to see whether there was something ‘more’. Wel, where are these findings of fact?Dr Poon did not imagine those facts. And in the Sempra case the Commissioners made lots of findings in fact. Our Majority did not.
My learned friend used para 103 to cover the gap, by imbuing certain phrases. It cannot be right that he should point to a word in an uncontested fact to answer a question in contested facts. And other examples.
Aberdeen Asset case: It is plain that the Majority were not seeking to make any distinction, they made no findings of fact to allow them, and it’s plain they went to the decision ( para 224, where the majority refer to Aberdeen Management and Garforth) They must be referring to to the Upper decision, not the First tier decision.They were therefore relying on a decision which had been overturned by the Inner House.
Mayes: was plainly central for the Majority’s decision.It doesn’t matter whether a) or b)-both show whichever the reference, they were wrong. What is clear is that Mayes was central and my learned friend did not express that.
It is also true that certain things could not be changed without the ( consent of) the beneficiary. But he could who the beneficiaries were. ( for example, when players moved abroad).
There is no justification that there ‘commercial reality’ just because there was no ‘sham’.
In 231, reference to ‘commercially’ has just been dropped in.If the Majority had really considered they would have had to make findings. Their use of the phrase is simply lip-service, or casting their minds back to Garforth they have thought “ Ah, ‘commercial’ -put it in)
The reference to Astall, ‘not remote contingency’ finding.The Tribunal looked at various things. ‘remote contingency’ is simply a reference to the Scottish provident point, without properly addressing that point but simply on their approach that everything is related to ‘legal validity’ and absenc of ‘sham’. My repeating ‘orchestration’ in their view cannot change the legal ‘validity’.
And Stropp’s (??) wife: well, any Protector can unmake the beneficiary.
Wasn’t there an example of the protector changing his wife. No. There is Mrs – in the Minority decision. Mr -(her husband) appointed a new Protector who, he knew, would appoint him beneficiary- his wife!
He did not have a side-letter until he terminated his employment at Rangers. As part of his termination he gets that sum, goes abroad and is appointed beneficiary.
And also a daughter as protector., she appointed him a beneficiary.
So for ‘consent’ just appoint a new protector. This in effect is a key to the ‘cash-box’.
We don’t have to go that far.
Termination payments; It was for MG to show that assessments were wrong. In a great many cases,of £30, 000 cash, balance over ( ?through Trust) this has not been addressed by Tribunal.
The payment is ‘on behalf of’ or ‘to the order of” . I don’t accept my learned friend’s ‘Bill of Change’ parallel.
If RFC insist on operating without documentation. There was supposed to be evidence of ‘compromise agreements’. Not one such was produced.
Designer: Trust was designed very wide, for a very good reason.
Composite transaction: I did ‘define’ it for tribunal. THEY needed todecide what it is.
It is plainly wrong to say that they defined ‘composite transaction’ in paras 103 and 231.
Scottish prov and Sempra: tribunal do not address themselves to looking at earnings as salary
( I have to say that by this time, Mr T was hurrying to get to his last few points in a very abbreviated manner which I could only capture as:
Edwards_Baistrow : No time to go into, and I don’t need to.
In relation to Georgiou: I have done what has been required of me.
The Majority’s comments: if they are findings of fact, they are material to the decision that must be made.
My challenge on Mr Liar are strongly made
Mr-‘s evidence that there WAS a choice , and that that was the generally held view, and SDM’s evidence.
I have discharged the onus upon me on the Edwards-Baistrow.
A number of points; Reliance on Mr-‘s evidence-no.
Indemnities- I have dealt with
Tribunal leaves all my ‘facts’ up in the air, with no findings.
Total failure to address the case for HMRC.
I fully recognise a fresh hearing, or asking your Lordship to make findings, is not palatable,.
I do have to say that the matter cannot, in my view, be remitted to the original tribunal : it must be either your Lordship, or a freshly constituted Tribunal. The former is open to your Lordship, and is not insuperable.
I move for the Appeal to be upheld.
[ Lord D: Mr Thornhill may write a note of any further points. It will of course take me some time to reach a decision. I am grateful to Counsel. ]
All stood, and made their obeisance.
Friday’s proceedings at UTTT , which takes Mr Thornhill to the end of his allotted time. He finished at about 12.30.
“UTTT hearing, continued. Friday 7th March 2014.
Mr Thornhill QC for the Murray Group picked up from where he left off on Thursday afternoon.
Yesterday, my Lord, I was going through the Edwards-Baistrow points. There are two remaining points.
The first concerns Mr-, the player who on sequestration had not declared the loan he had received. Of course the bare facts are accepted, and the Majority did accept the fact and put little weight on it.( my note: in 228 the Majority said ‘we are unaware as to the nature of any professional advice which he then received, and we are not prepared to speculate as to his understanding of the legal technicalities of the trust/loan arrangements’.)
One can hardly let it be a determining factor in the major issues. The Majority did not ignore it but considered it.This and the other point WAS taken into account, not disregarded.
My Lord, the we come to the last point, which is the observation on the part of the Majority that loans were almost invariably granted. The challenge is that they were not invariably granted (para 103) ‘ in (almost) all of these cases loans for the full amount…were granted’. NOT invariably.
Mr – ( this was a player whose name we were definitely told not to disclose!) never took a loan from his Trust fund and probably that’s what the majority are referring to there. The word ‘invariably’ comes later at para 231, line 17 ‘..almost invariably granted’
Where loans were SOUGHT, they were always granted.
[ Lord D: the language is infelicitous: it’s common ground that where an application was made, it was granted]
[Mr Thomson: probably true. My learned friend is conceding that it was true.]
Mr Thornhill: I concede that if someone applied they got the loan.
That does deal with the Edwards-Baistrow points, my Lord. Some points were run together, although technically different ( Equity, and ‘orchestration’), so I think all the points have been covered.
Before I leave Edwards-Baistrow as a subject, may I refer to Appendix A of the MG skeleton? The second paragraph of the excerpt from lord Justice Evans in ‘Georgiou’. This set out the proper procedure for an Edwards-Baistrow challenge:
second, to show the relation to the conclusion
identify the evidence
and show that a Tribunal arrived at the wrong decision
An Edwards-Baistrow challenge is to be seriously undertaken.
Many of my learned friend’s challenges are NOT significant to the conclusion.
The third step involves setting out the relevant evidence. That entails a marshalling of the evidence and then the fourth step to show the finding was one the tribunal was not entitled to make. In my submission, when it comes to the serious matter of orchestration, expectation, that process hasn’t begun to be carried out properly. And has not been carried out on many key factual findings.
Instead, my learned friend has selected a rag-bag of findings, most of which are not relevant, and with the others he has simply said are wrong. Exactly what he is not entitled to do.
One final point on the Ed-Baistrow, in para 17 of their submission HMRC has identified a number of factual points which he appears to be challenging on the grounds that Tribunal failed to take account of [them], but these were not included in Para 16 of the Ed-Baistrow challenge.
I now come to the remaining, residual points which the Majority identified in 211. Fortunately some common ground.
My learned friend made it clear that the assessments in the cases in 211 were sought to be upheld on some ‘exceptional’ basis. So that the decision in principle in the main appeal will govern those case.
In that light, we look at the reference to SDM in the second sentence “ in view of his active control…he seemed able to decide his own bonus”.
The critical question is this: did SDM decide that he was to be ENTITLED to a bonus and did a time arrive WHEN he was entitled to it.
If he decided after that time, too late: taxability would have arisen.
Was that the state of affairs, or was it that before he ever became presently entitled he decided that it would go through the Trust mechanism?In that case, the money was not at his unreserved disposal. That is the question that has to be decided, and you have to look at the evidence.
These matters have to be decided if possible by THIS Tribunal. If not, remit would be the proper course.
However, looking at the evidence in the transcript ,139 (19) , this is the cross-examination of SDM
“ Who is it who decides…”
( and Mr Thornhill reads from the transcript)
And in a further passage ,148 line 16 , Mr Mure, chairman of the Tribunal starts the questioning,
( and Mr Thornhill reads some more)Then,
My Lord, with some directors the matter wasn’t pursued right through, the passage establishes that the decision on how bonus would be paid, was in advance of the amount-to-be-paid decision.
If that is correct, on the MG submission SDM was not taxable because he was never in the possession of an enforceable right to bonus. It was ‘.IF I get a bonus, use the Trust.’
The next issue is the question of the Trusts for SDM’s sons and their ‘competence’, in para 180.
( and the same point in Mr -‘anonymous Liar’s’ sub-trust). Because these were not in the class of entitled beneficiaries these were exceptional.Tribunal concluded that the loan arrangement in itself might preclude a consequent liability.
I take them to mean: if the funds put into these was notvalidly put in because the trusts were not competent, then the source of the funds could only have been the Principal trust, so the money came out of the main Trust fund. That doesn’t alter the question of principle: were the monies ‘unreservedly at the disposal’ of the sons or of Mr (Liar), or were they simply loans?
Then comes Mr – [Liar]: the third of the exceptional cases.
The exceptional circumstance is the fact that he expected some reward ( line 20, 21)and payments were made into his sub-trust. These were payments in recognition of the expectations, as to which MG say: so what?If footballers have their expectations met through the Trust, what does it matter in Mr Liar’s case?
I take you, my Lord, to the passage to which the Majority refer. Why was this a special situation?
( some apologies, wrong reference. A hunt for the reference..)
I do apologise, my Lord, I think I gave you a red herring.. My simple submission is, if Mr Liar had these payments made through the Trust, then the matter falls to be resolved in the MG way.
( Mr Thornhill referred to para 3( 7) of some evidence on 7th November relating to section 401 of ITEPA ( income tax earnings and pensions Act).
-‘Payments on termination but as a reward for services is taxable as income.’ I was submitting that it was not a termination payment, but payment for work. And the Majority misunderstood it.Simple mistake. ( And Mr Liar is not in fact taxable under the MG argument)
A further technical point: the assessment in respect of Mr Liar is made on MG Holdings. But Mr Liar stated which companies he was employed by, and none of those companies were “Holdings”, so technically the assessment was made on the wrong company. As to what Mr Liar said showed showed he was not employed in “Holdings”,
the witness statements which I think your Lordship has in a separate bundle? 25?
In para 5 a statement of Mr Liar “ I became …….. of ( such and such a company)” “ I joined the Board of Rangers as non executive director..”
That was the totality of the positions he held in the Group. Some questions were asked about his position. I will ask you, my Lord, to look at Vol 1 of the transcripts for 5/11/10. The passage starts at page 19(4). Now, this is the cross-examination of Mr Liar by my learned friend.
[Lord D: have I seen these papers before?]
No, my Lord.
There is a mention of ( the company name not to be mentioned in case it identifies Mr Liar), and other involvements. “ I was asked by SDM to become a non- exec..”.
Then, perhaps, I could just refer to bottom of page 22:
” Are you saying you would not be provided with any remuneration?
“So you didn’t have any responsibility until you joined ( not-to-be-named company) and Rangers?”
( there was no contract of employment with [ nameles company]
Nothing gives any notion that Mr liar was ever an employee of “Holdings”.
Our stance is that the wrong company has received the investment.
[Lord D: it matters not to either side..]
But this is a matter left open for decision, perhaps needing further evidence.
Putting it simply, it must be able to be established whether Mr Liar was employed by “Holdings” or not.If not clear, then some further evidence will need to be established.
[Lord D: Mr Thomson’s point is that the onus is on you]
We accept that, my Lord, but the onus in Edwards_baistrow will shift to my learned friend.Let him produce the evidence, and we can sort out by agreement, or by remitting.
But we submit, evidence has been given which throws the onus on HMRC.
My Lord, that deals, I hope, with Paragraph 211.
In conclusion, my Lord, I will propose to put three points on matters of law:
Smyth and Streatham: this underlines the re-formulated ‘directed payment’ argument of HMRC.
The point in this case is that it is fruitless for HMRC to rely on THAT case, given Mayes findings in fact. Para 205 is conclusive in the case of executives- they never had an enforceable claim.. If one never had an enforceable claim to bonus, then there is no way you can be said to agree to apply it in a particular way.
As far as the footballers are concerned, any…… of the decisions is ruled out by para 207, where the Majority accepted the evidence of of SDM, Mr- and Mr -, which was [ that] there were two quite separate compartments to the arrangement- salary part and remuneration trust part.
On that basis, it cannot be said that a salary was being applied by having a payment made through the RT, because it was simply salary agreed and NOTHING else.
It might be useful to buttress those observations by other paras besides 207 ( para 66 of Mr [nameless])
And para 33, dealing with Mr[ other nameless] evidence “the concluding offer was in two elements”.
Which was the evidence which was accepted. In my submission, it is not really possible to re-write the contract.
The second point: turns on a legal decision in Gordon, important because it points clearly to the restricted nature of the charge of tax on emoluments ( Para 10)
But there is a refernce (para 15) to HMRC’s stance before this Court.
Lord Hodge said that HMRC had to submit that the day earnings were made ……
[ Lord D: That is not what is being submitted here]
In this case, first of all payments go into EBT, then sub-trust, then lent. Later, payments come absolutely to beneficiary or loan could be released
[Lord D: What do you mean by ‘release of loan?]
Section 188 of ITEPA…
[Lord D: I’m still not sure what you mean.]
‘Release’ means ‘discharging the loan.’ The broad point is the possibility of taxability to
the employee when earnings
when the loan is paid
charged to tax on employee either when loan is discharged
My learned friend would say if this is right that there is a tax charge on the money going into the sub-trust when it is loanedout because the tax payer HAS the money, that’s the end of the matter.: a loan of his own money.
But suppose HMRC was to say although you had been assessed for tax,on loan or earnings,
[ Lord D: Surely the character…..]
In Ford and McHugh, Lord A’s point is that there was a charge on both occasions. This shows the difficulty my friend has, trying to turn .
[Lord D: That would have been in Aberdeen?]
[Lord D: Pab Holdings Ltd has not been referred to by either party? 2012 Tax Cases 582]
Adjourned for coffee break.
After coffee ( 50p out of the machine! Colombia), Tribunal resumed.
My Lord, I have refreshed my memory on PA Holdings. Not a useful case, because there is no dispute about whether cash was received. The issue was the source. Ours is quite different, no dispute about the source being employment. The finding was that the Trustees and Director had acted without regard to fiduciary responsibilities. The whole approach to what was happening, and the approach to Ramsay. I should have read it before.
The next point, my Lord. In Appendices A and B of skeleton there were set out relevant passages on jurisdiction. My learned friend raises Jones and the FTT. With the suggestion that the jurisdiction of this Tribunal is wider than questions of law.
But ‘Eclipse’ case appears to establish that in the context of tax appeals, the Jones case does not apply. ( This is a warning shot if my learned friend tries to rely on Jones)
An important question: that of ‘grossing up’.
The MG submission is in App J at p.67. We stand by that submission.
My learned friend says that the onus is on the MG… Some statutes, but they don’t apply here. In para 16 of the skeleton, reference to 697 of ITEPA ‘ payment is a payment after deduction of income tax.’
No one has paid any tax yet , so these do not apply.
So, it comes down to having to look at the terms of the relevant arrangements to see what the employee was entitled to. And this is where the dispute is very narrow. Because my learned friend says if you had an arrangement where £100 net was coming from the RT, that means net of income tax, you have to gross up to find the gross sums.
The MG say in reply, that is treating ‘net’ as after the deduction of income tax. That expression comes over and over again. But it means NOT after the deduction of income tax, it simply means that that sum is not liable to tax.It’s a promise to provide £100 not a promise to provide a sum which, after tax, comes to £100.
The surrounding circumstances show that must have been what the parties contended- that Rangers could only afford to pay through the RT. They were not committed to paying gross, but only £100. Put another way, promising to pay £100 on the basis that there is no tax is just a promise to pay £100.
That deals with the footballers. In the case of the executives, the situation is slightly different but essentially the same. If an executive was to get £100 through the RT, the true comparison is with £100 gross paid through the pay-roll with tax deducted. If an executive said ‘ I don’t want £100 through the Remuneration Trust, the evidence is that he would have got £100 less tax.
What governs the matter is what the parties agreed, not some artificially grossed-up sum.
One final matter: the fact that in some cases football players asked for and received indemnities. This is said to be of relevance to the grossing up question.
In fact, no. “ RFC will be responsible for any liability for Uk taxation for ny amount……..” (Bundle 9, statement 76), but this doe not mention amount of tax, or gross, or net.
If RFC did pay tax, that might trigger a limited grossing up, but unless and until that happens, it doesn’t apply.
Next question is is on disposal IF this appeal is allowed.
The proper course is that unless your Lordship can re-make a decision is to remit with clear directions to the First Tier tribunal. If my learned friend opposes that, he has to meet a high threshold, which we say has not been met.
239 Sinclair – Temperley: In this discussion, at para 45, sets out a number of relevant considerations.It may be helpful to emphasise 46.4 “… totally flawed.”
(and Mr Thornhill reads)
The second authority is the Ranke case ( 287 in my volume of Authorities)
Justice Norrey “ I remit….. differently constituted …”
specialist tribunal etc .
Third authority McBride v Employment Appeals tribunal: ( decision of the Emp.Appeal Tribunal on appeal to the Inner House of the Court of Session)
at para 34: the EAT had remitted to the same tribunal. Should it have been to a differently constituted tribunal? NO. ( need to consider the needs of case-management, the cost and time involved in hearing evidence from the beginning..)
perhaps if there was bias in the original tribunal or collusion. But the professionalism of Tribunals can be relied upon “
My Lord, many of the relevant factors arise here. 17 days of evidence If remitted to a differently constituted tribunal, a great deal of the evidence would have to be revisited. This is a major factor in remitting back to the same Tribunal.
A second factor is surely that the members[of the original tribunal] set out their differences in intense discussion and consideration. The members were anxious to arrive at the right answer.
My learned friend has wanted to paint the decision as a flawed one. But one of the main features is that the tribunal did not have regard to his submissions. But I can say it is perfectly clear that they did.(para 232).
So here was a tribunal clearly aware of the law, dealt with my learned friend’s points, if there was an error in law it was arrived at honestly by experts in the law.
Para 49 [ my gloss: of the skeleton, I think] there is a severe criticism by my learned friend that we do not accept that the tone of the Majority’s responses lends no trust that the original Tribunal would be fair.
We dissociate ourselves from such a suggestion. Para 235 expresses their thanks to my learned friend for his great assistance.
In my submission the threshold isn’t reached, but IF it is, the case has to go back to the original Tribunal.
It would be unfair on your Lordship to have to go through the transcripts, without seeing any witnesses.
If there is error, it must be remitted to the First Tier. But we say there is not an error of law. The Majority grasped the scheme was not overly complicated, grasped the legal issues, made important findings in fact which led to their conclusions
and that can only be undone if HMRC can undo those facts.
The onus placed on an attacker of findings is a heavy one, and needs to be discharged with care and due attention.
And in my submission my learned friend has NOT attacked several.
I invite dismissal of the appeal.
And here ended Mrt Thornhill’s case, at about 12.30.
Mr Thomson began his rebuttal.
But that can wait.
I will try to continue tomorrow, which ought to begin with Friday morning’s proceedings ,some important bits of which have already been reported by my fellow-TSFM reporters. Mr Thornhill finishing at about 12. 30 or so, and Mr T of HMRC began reply.
Recent Comments by John Clark
It Is Better To Offer No Excuse Than A Bad One
My brother and I, auld men now that we are, meet occasionally for a pint or three.
We tend to pay homage to our late dad by visiting one of the pubs he used as a young man afore the war ( he lived in digs near Partick Cross) , or one of the pubs he used when we were kids during his working life at what used to be Glasgow Corporation Tramways Parkhead depot, or the pub he used in Tollcross in his retirement days.
So I feel for the patrons of what had been Annie Miller’s pub in Ropework lane.
If and when the new owners of the premises tart it up gaily as a feeder bar for their adjoining sauna, I expect that it will no longer be a ‘Rangers’ pub,a place of shared enjoyment of football memories and celebration of former days of glory.
Like the historic Rangers Football Club, Annie Miller’s is dead. Ceased trading in 2016. No longer exists as a ‘Rangers’ pub, any more than the Rangers Football Club of 1872 exists as a professional football club entitled to a place in Scottish Football.
That’s the reality.
There isn’t even a ‘Scottish Football Pubs Association’ prepared to create and propagate a lie that ‘Annie Miller’s’ lives on, there have been no white or green knights/knaves rushing in to found ‘continuity Annie Miller’s’, no running-dog SMSM types betraying their avocation by propagating untruths……and.no convicted criminals begging, borrowing and making false promises about good times to come if only other folk will produce the readies…
Annie Miller’s is dead and gone.
Only a lie sustains TRFC Ltd.
And those who drank in Annie Miller’s know that.
And the evil men of the SMSM and the SFA know it, too.
May 2018 see them confounded, and their untruths exposed.
It Is Better To Offer No Excuse Than A Bad One
FinlochDecember 30, 2017 at 20:42
‘…Craig took a Corinthian and undisciplined club going nowhere fast, rooted it into a previously ignored community and has achieved some incredible health and social goals deep into that community using football as glue.’
Beautifully expressed, Finloch.
Football as a glue of ‘community’
Of community trust,
of basic honesty,
of the Corinthian spirit,
of sporting integrity….
and of all the virtues that the SFA has so spectacularly abandoned, in its determination to insist that Charles Green’s Sevcoscotland is entitled to call itself the Rangers of 1872
That such an incredibly monstrous perversion of truth of any kind, never mind sporting truth, is being, and has been for 5 years, propagated by our Football Governance body and supported by the SMSM is stark evidence of a deep, deep corruption at the heart of our sport, and, worse, at the very essence of our ‘free’ Press.
in this little country of ours.
It Is Better To Offer No Excuse Than A Bad One
And since I’m talking to myself while all you guys and gals are snoring your heads off, can I just mention that in the local newspaper this morning there was a piece about school sports.
It seemed to be about the ‘pick’ of the best players.
I didn’t have time today to read the whole thing ( and it’s too late to disturb the household to go looking for the paper!) but it seemed to be related to the use by ‘soccer’ teams of the American Football concept of who gets to pick the best player in the ‘draft’.
I have only the haziest understanding of that concept.
But in so far as it might relate to attempts to create genuine ‘sporting’ , on-field, equality of talent, it must have something to recommend it.
Even the Americans realise that in order to make money out of sport,there has to be some concept of genuine ‘sporting competition’
Auldheid reminded us, quite movingly, of the joyous nature of our game as we all experienced it.
We all knew instinctively what was fair, and what wasn’t.
Remember how our street game teams were picked?
The two ‘captains’ tossed for first choice.Whichever won the toss would pick the ‘best’ player. The other guy would pick ‘the second best’ and so on.
And, if it appeared that there was an imbalance ,or if there was an odd number of players, then it would be agreed that a ‘John Clark’ would play the first half for one side to give them the extra man, and the second half for the other side, to try to be fair in the use of that useless lump!
( who, I may say, was actually quite good at lifting the wee ba’ from the street up onto the pavement, one hand on the lamp-post outside the Thomson’s house on Cuthelton Street, and bringing it to the goal at the lorry entrance to the Domestos depot ( formerly Donald Clarke’s steel kind of place, which in 1947 sirened One o’Clock,with the siren they used ‘during the war!’)
And it is these kinds of memories that fuel my contempt
contempt for the cheating bast.rd of a knight of the realm who killed the RFC of my day
contempt for the SFA who, like some referees,not only did not ‘see’ that cheating but went further and assisted in that cheating
And who continue to propagate the lie that the football club that cheated its way to death by Liquidation is somehow the same club as a five year old creation that they themselves have lied into existence.
And as for the the whole lot of the successive boards of either Sevco 5088, Sevcoscotland, The rangers football Club Ltd, RIFC plc how can they be described otherwise than as scavengers of carrion? Feeding as they do on the dead flesh of a once proud football club?
It gars me greet…
Quietly and solemnly, into my glass of “Goose IPA, 5.9%, made from hops from Idaho” ( And actually quite surprisingly pleasant, reminiscent of McEwan’s pale ale.
It Is Better To Offer No Excuse Than A Bad One
It’s 11.43 pm in Scranton,PA, and we have just come back from being wined and dined in tremendously good company in a friends-of-the-son’s home.
I am therefore in a cheerful frame of mind. (Mind you, sitting in the back seat of the car I had one of those A9 moments of absolute fear, when the driver overtook another car on a blind bend, before I realised we were still on a dual carriageway!)….
For one reason or another, it suddenly strikes me that I don’t actually know ( or remember) when it was that the concept of ‘transfer windows’ was introduced, or why it was introduced.
On the face of it, it’s as much of a restriction of ‘trade’ on ’employers’, as the pre-Bosman situation was on freedom of employment was on ‘workers'(players).
Is there a decently worked out rationale for the concept?
It Is Better To Offer No Excuse Than A Bad One
easyJamboDecember 27, 2017 at 17:49
‘..I think that the document will only be a restatement of the resolutions that were approved at the AGM (Resolutions 10 & 11).’
You’re perfectly right, of course, eJ: it was only the official recording of the AGM resolutions.
I think I for one (in my general ignorance) tend to think that any plc of which a director has been taken to the Courts( in an unprecedented action by the Takeover Panel) would have every form or document that it submitted to Companies House rigorously examined, cross-checked, double-checked, treble checked ,even, in a way that ,for example, the SFA does not do with documents submitted to it by its trustworthy gentlemen members.
The Takeover Panel has a lot riding on how the Law stands in its approach to the Panel’s need for support in their regulation of rogues in the market-place.
So I tend to look at anything touching on RIFC plc that seems even a wee bit different as something worth exploring.
Largely tongue-in-cheek, of course: -we’re not likely ever to be told anything confidential by CH! But if they say something will appear, and then it doesn’t appear when promised, then it allows one to ask why. Keeps them on their toes!
And we know that when even the gentlemen of our free Press are not above behaving with less than complete honesty when it comes to TRFC Ltd/RIFC plc there may (God forbid!) exist a ‘protective of companies’ mindset in CH, rather than a ‘get the baddies’ approach.