R (APVCO 19 Limited and others) v (1) HMT (2) HMRC

The Court of Appeal has handed down judgment, dismissing the Appellants’ appeal, in a case concerning the lawfulness of retrospective legislative changes designed to counter aggressive tax avoidance schemes. The Appellants argued that the schemes enabled them to escape the payment of Stamp Duty Land Tax.

Before the Court, the Appellants contended that it was at least arguable that their tax avoidance schemes worked. It was therefore common ground that the legislative changes put beyond doubt what was previously not beyond doubt, namely that the Appellants’ schemes did not work.

Dealing first with a challenge based on article 1 of protocol 1 (“A1P1”) of the ECHR, the Court held that A1P1 was not engaged in circumstances where the Appellants only had an argument that the schemes were effective. The Court then went on to consider whether, if they were wrong and A1P1 was engaged, any interference breached the ECHR. The Court held unanimously that any interference would have been both lawful and proportionate.

Next, the Court considered the Appellants’ argument that their Article 6 rights were breached because the legislation deprived them of a hearing to determine the effectiveness of the schemes before the First-tier Tribunal. The Court held that the determination of tax disputes is not a determination of civil rights and obligations for the purposes of the ECHR and therefore Article 6 was not engaged. In any event, the Court held that even if Article 6 was engaged the interference would have been justified.

In addition, the Court dealt with the Appellants’ appeal against the first instance judge’s refusal to allow cross-examination and the Appellants fresh application for cross-examination. Having reminded itself that cross-examination in judicial review proceedings is exceptional and cross-examination in the Court of Appeal is even more exceptional, the Court refused the Appellants’ appeal and fresh application.

Kieron Beal QC and Simon Pritchard represented the Respondents