All posts by May Hen

PhD student at University of Cambridge.

Unjust enrichment in the case of Sempra Metals Ltd v IRC, the UK House of Lords – By Long Pham

Topic: In Sempra Metals Ltd v IRC, the UK House of Lords held that, as a matter of the law of unjust enrichment, a taxpayer is entitled to recover compound interest on tax levied in breach of EU law. However, in July of this year, the UK Supreme Court in Prudential Assurance Co Ltd v HMRC overruled Sempra Metals. Long will discuss the Prudential Assurance decision and its implications.
Biography: Long Pham is reading for the LL.M. at the University of Cambridge. His primary interest lies in private law and, in particular, contract, equity and unjust enrichment. Before arriving in Cambridge, Long was an associate at Herbert Smith Freehills in Australia and Hong Kong where he practised in commercial litigation and international arbitration. He can be reached at


Unjust enrichment in the case of Sempra Metals Ltd v IRC, the UK House of Lords

In Sempra Metals v IRC, the House of Lords held that, as a matter of the law of unjust enrichment, a taxpayer could recover compound interest on taxes prematurely levied in breach of EU law. However, in July of this year, the Supreme Court in Prudential Assurance v HMRCoverruled Sempra Metals.

This post looks at the Supreme Court’s decision and what it means.

What is unjust enrichment?

The law of unjust enrichment concerns the reversal of normatively defective transfers of value.  For example, if I mistakenly pay you £50, the law of unjust enrichment says that you have to give it back to me.

Under English law, a claimant will have an unjust enrichment claim where

(1)   the defendant was enriched,

(2)   the enrichment was at the claimant’s expense,

(3)   the enrichment was unjust and

(4)   the defendant has no defences.

Where the above conditions are satisfied, the claimant has a right to restitution of the enrichment.

Sempra Metals

In 2001, the ECJ held that the ICTA infringed EU law insofar as it permitted corporate groups wholly resident in the UK to defer payment of corporations tax on intragroup dividends without extending the same advantage to corporate groups containing parents resident elsewhere in the EU.

The remedial consequences under English law of the ECJ’s ruling were examined in Sempra Metals.  The House of Lords held, by majority, that the claimant-taxpayer had a claim in unjust enrichment to recover compound interest on the prematurely levied tax.  The essential reasoning was that – in receiving the tax – the Revenue had been enriched not only by the money itself but also the opportunity to use the money ahead of time.  The value of the latter enrichment (use of the money) was the saving of the compound interest which the Revenue would have had to pay to borrow an equivalent amount. In circumstances where this enrichment had been unjust – because the taxpayer had paid the tax under a mistake of law as to its ability to defer payment – the Revenue had to give it back.

Prudential Assurance

But all this has changed thanks to Prudential Assurance.

There – following an ECJ ruling that the ICTA breached EU law in providing for differential tax treatment of UK-sourced dividends and foreign-sourced dividends – the claimant-taxpayer sought compound interest on taxes unlawfully levied on dividends received from foreign subsidiaries.  Overruling Sempra Metals, the Supreme Court held that the taxpayer was confined to simple statutory interest and could not recover compound interest (save in respect of one class of amounts where the Revenue conceded – incorrectly it turned out – that compound interest should be awarded).

In reaching this conclusion, the Supreme Court pointed out that, since Sempra Metals, there had been various developments in the law of unjust enrichment including as to the requirement that the enrichment be at the claimant’s expense.  In particular, that requirement had been interpreted as requiring a direct transfer of value from the claimant to the defendant.  This was said to call into question the reasoning in Sempra Metalsthat, where the tax was prematurely paid, there was an additional and simultaneous transfer of value comprising the opportunity to use the money.  The opportunity to use the money – the Supreme Court said – was a consequence of the transfer of the money but could not itself be regarded as an additional transfer of value capable of grounding an unjust enrichment claim.

With respect, this is difficult to accept.  If I steal your bike, can it really be said that the opportunity to ride the bike has not been transferred from you to me?  In this example, my gain in being able to ride the bike corresponds to your loss in no longer being able to ride the bike.  There is a direct transfer of value.  The same must surely be true of cases involving the opportunity to use money. The Supreme Court’s reasoning appears to have confused the opportunity to use money with the use to which the money is actually put.

It is clear from the judgment that the Supreme Court’s decision to overrule Sempra Metalswas also based on considerations sitting outside the law of unjust enrichment.  For example, the Supreme Court noted that later decisions had revealed the severe disruption to public finances that Sempra Metalscould cause.  Thus, in one case concerning VAT unlawfully levied between 1973 and 2004, the difference between awarding compound interest and simple interest equated to £17 billion.  The Supreme Court also observed that Sempra Metalshad caused problems in light of limitation rules which provided that an unjust enrichment claim based on mistake could be brought within six years of the mistake being discovered irrespective of how long ago the payment was made.  While Parliament had tried to address these problems using retroactive legislation, those attempts had themselves fallen foul of EU law.

The immediate effect of the Supreme Court’s decision in Prudential Assuranceis that a taxpayer can no longer rely on unjust enrichment to recover compound interest on unlawfully levied tax.  But the decision’s effects travel beyond this. This is because the Supreme Court’s reasoning was not limited to the tax cases; instead, it applies to all cases where a claimant seeks the restitution of money on the basis of unjust enrichment. In these cases, going forward, a successful claimant will be able to get back the money’s face value (plus simple interest) but not the money’s use value.  While there are sound policy reasons for not awarding compound interest in cases of unlawfully levied taxes (including, as the Supreme Court noted, the disturbance to public finances), such reasons are absent in the private contexts in which unjust enrichment law more typically operates.  Not awarding compound interest in those contexts runs the risk of denying full restitution to a successful claimant.


The Separation of Powers – Dream or Reality? – By Ewa Plesnar

It was a beautiful, autumn afternoon on the 25th of October when our “tax tax tax dot tax” group (as we call it) discussed my current working paper, entitled “The Separation of Powers (SOP) – Dream or Reality?” As always, the meeting involved a paper presentation followed by a discussion.

My current topic of interest seeks to resolve the question regarding the applicability of the separation of powers (SOP) in the European governmental systems; both in theory and practice, with the UK as a central point of analysis. I also explore other theories which claim the SOP and the rule of law (ROL) are outdated concepts and becoming misapplied in the modern world. This opens a way for some academics to look for other, in their opinion, beneficial ways for society to structure states.

The presentation started with a short introduction to the history of Parliament in the UK. The aim of that was to understand a long tradition of the SOP and the ROL in the UK. That point was followed by the explanation of the rule of law, which is very strongly connected with the SOP. Both create a very important political background in the UK. In basic terms, the role of the ROL is to restrain the sovereign from the arbitrary power; nowadays ROL is considered as reflected in a form of the separation of powers within the state. We examined the historical evolution of ROL from an English perspective with a particular focus on the Magna Carta 1215, the Bill of Rights 1689 and the Parliament Act 1911.

In terms of definition we spoke about the theory presented by Dicey, who is considered in the UK as being a “father” of the ROL. His concept of the rule of law contains the absolute supremacy of a regular law as opposed to the influence of arbitrary power as well as the equality before the law. Prof Loughlin understands that the UK has a long tradition of the ROL that is not necessarily applicable in the other parts of Europe where the legal system is based on the civil law (as opposed to common law).

I then presented the theory proposed by M. Oakeshott, one of the most interesting (in my view) political philosophers. For Oakeshott, the concept of ROL must envisage humans joined in a relationship specifiable in terms of certain exclusive conditions, namely laws. He proposes two kinds of concepts of society that, he says, are always in conflict with one another, namely: universitas (or transactional association, where members are focused on achieving a particular aim) and societas (or moral association, where the society members are joined not to seek a common substantive satisfaction but to explore the conditions and relationships between them). In each of those associations law plays a different part.

In order to see how SOP works in practice, we explored the legislative process in the UK beginning with the bill (i.e. the draft of the legislation) which is received and discussed by the Parliament. It is then discussed by the Parliamentary Committees and then voted by both Houses (where the final decision is made by the Commons, as they were elected). We identified the following problems: the bill is almost always proposed by the government and it is not analysed thoroughly by the Parliament (reason being a lack of time or lack of expertise). That leaves us with the question as to the factual applicability of SOP in the UK legislative system and the real possibility of that application in practice.

Finally, we moved to speak about the modernisation of the state. According to some theorists, the modern state becomes an administrative state where in the name of security, prosperity and liberty modern governments have greatly expanded their executive powers. Although, the theory applies mainly to the continental Europe, the practical influence of that in the UK is also visible. The question is whether, in the rise of administrative powers, we can continue speaking of SOP’s applicability.

Special event: documentary film screening April 26th

Spidersweb-poster-HighRes300dpi_03The Jesus College Graduate Society (MCR) and Jesus College Intellectual Forum are co-hosting a special documentary film screening of “The Spider’s Web: An investigation into the world of Britain’s secrecy jurisdictions and the City of London”. A discussion and wine reception will follow special with guest speakers: producer John Christensen and Michael Oswald, as well as professor Jason Sharman. Chairing the event will be professor Barry Rider, an established expert on economic crime. Event is free and open to members of the University. For additional information please contact May at




DATE/TIME:     THURSDAY APRIL 26, 2018 at 17:30 – 20:00

LOCATION:     JESUS COLLEGE BREWERY ROOM (below Roost Café/Bar in West Court)

MORE INFO:   or e-mail

 The Spiders Web: Britains Second Empire, is a documentary film that shows how Britain transformed from a colonial power into a global financial power. At the demise of empire, City of London financial interests created a web of offshore secrecy jurisdictions that captured wealth from across the globe and hid it behind obscure financial structures in a web of offshore islands. Today, up to half of global offshore wealth may be hidden in British offshore jurisdictions and Britain and its offshore jurisdictions are the largest global players in the world of international finance. How did this come about, and what impact does it have on the world today? This is what the Spiders Web sets out to investigate.

With contributions from leading experts, academics, former insiders and campaigners for social justice, the use of stylized broll and archive footage, the Spiders Web reveals how in the world of international finance, corruption and secrecy have prevailed over regulation and transparency, and the UK is right at the heart of this.


May Hen, PhD Student, University of Cambridge


Barry Rider – PROFESSORIAL FELLOW, CENTRE OF DEVELOPMENT STUDIES – In addition to teaching law at the University of Cambridge since 1976 Barry has also held numerous public service appointments including Head of the Commonwealth Commercial Crime Unit and Assistant Director (Legal) in the Commonwealth Secretariat. He has also worked for the IMF, as counsel and has been a consultant to the World Bank, Asian Development Bank, Islamic Financial Services Board, European Union and various UN and regional organisations. He has also practiced law as a barrister, government lawyer (in various jurisdictions) and with the City law firm Beachcroft LLP and the US international law firm Bryan Cave LLP. In recent years his principal clients have been the Kuwait Investment Authority and the People’s Bank of China. He also is the Co-Chairman of the Cambridge International Symposium on Economic Crime.


John ChristensenPRODUCER, INVESTIGATIVE ECONOMIST AND ACTIVIST is the co-founder and executive director of the Tax Justice Network. His investigations into the role of tax havens in the globalised economy started in 1978, and have included fourteen years working on the tax haven of Jersey. He is a vocal critic of tax havens and is today described as Jersey’s most prominent dissident.

Michael OswaldDIRECTOR AND PRODUCER – is an independent documentary filmmaker based in London UK. He uses narrative storytelling to produce investigative and observational films. He aims to discover, understand and communicate ideas that are given less attention than they deserve. Previous films include 97% Owned: How is Money Created and Princes of the Yen: Central Banks and the Transformation of the Economy.

Jason SharmanPROFESSOR OF INTERNATIONAL RELATIONSis the Sir Patrick Sheehy Professor of International Relations in the Department of Politics and International Studies at Cambridge. Sharman’s research interests range from the study of international corruption, money laundering and tax havens, to the global politics of the early modern world.


2017 in Review

While 2017 was quiet on the blog-front, it was very active for our weekly tax discussion group. In 2017 we held 31 meetings around the University of Cambridge during term-time. We also hosted a large number of visiting speakers ranging from King’s College London to the University of Zagreb, Croatia and the University of Bergen, Norway! Participants ranged from visiting professors, undergraduates, graduates and practitioners in law, economics, sociology and political science. Here are a few photos and highlights of the year:

In February 2017 we hosted a graduate formal dinner in Jesus College where we had an opportunity to socialize informally. Above are photos of some of our group at pre-drinks, dinner and in the Jesus College Middle Combination Room (MCR) or graduate lounge.

In July we had two major events. The first was our second annual garden party where we invited members of the University and larger tax community to join us in our weekly tax discussion followed by an outdoor garden party. There was plenty of talk, treats and of course a garden party staple, Pimms.

We also had the pleasure of hosting 20 tax students from Curtin Law School in Perth Western Australia led by Professor Annette Morgan on July 11th, 2017. As part of their 3rd International Tax Study Tour, taking in Singapore, London, Paris, New York and Washington DC, the undergraduate and graduate students majoring in taxation spent the day with us at the University of Cambridge learning about the UK and EU taxation systems, and current topical areas of taxation. They also had some time to hear about what some members of our tax group, PhD students in Cambridge, were researching in the area of taxation.

We began the morning with welcome introductions from the Jesus College Intellectual Forum who graciously provided the venue and facilities to host the students. We then followed with some background of some members of our tax group and the work we were individually doing. After that, we split into small groups so that students could experience what our weekly tax discussions were like. That week we involved them in reviewing Hans Gribnau’s (Eds.) new book “Building Trust in Taxation.” Each student had the opportunity to skim through a chapter, make comments on areas of interest, and linked it to current events or contemporary tax issues. We then spent the remainder of the day having a larger group discussion of the issues brought up in the book.

Between discussions, our members also travelled around the world presenting their work at conferences and even doing extended studies in other universities. PhD law student Matteo Mantovani spent a semester at Harvard Law School conducting advanced research on VAT. And PhD sociology student May Hen conducted fieldwork in the Cayman Islands. She also presented some of her research at the Department of Justice, Tax Division.

Photo of the venue (Jesus College, Cambridge) where our workshop on “Is tax avoidance more relevant than tax evasion?” took place for the 35th Cambridge Economic Crime Symposium. The week-long event drew 1,500 participants from over 120 countries. Our talk proceeded this panel.

Finally, our members Peter Allen and May Hen led a workshop panel at the 35th Cambridge Symposium on Economic Crime in September 2017 where panelists including HMRC debated the topic “Is tax avoidance more relevant now than tax evasion?”

2017-07-04 17.12.45Last but not least, founding Tax Discussion Group member Chris Jenkins successfully defended his PhD dissertation and has moved back (temporarily we hope) to New Zealand. Congratulations Chris and we look forward to seeing where the winds take you!

Our weekly meetings will begin again next week. As always, we will keep our “Meetings” page up-to-date as well as our events section. We look forward to 2018 and welcoming you to our weekly discussion groups. As always, they are open to anyone!

New year, new meetings!

We have a new term upon us. The Cambridge Tax Discussion Group is beginning it’s third year and we have an exciting line-up of speakers and events. This page will be updated shortly so do keep an eye out. Also, we keep our “Meetings” page updated regularly so do take a look there for our next meeting location/date/time! If you would like to be added to our weekly mailing list, please send an e-mail to May at



You are invited: Garden Party!

We are hosting our annual garden party in Jesus College July 5th from 13:00-15:00. We will have our weekly discussion group meeting in Jesus Roost Cafe at 12:00 followed by the garden party in Chapel Court. Both discussion group and garden party is open to all and we would encourage you to circulate this invitation to any one you think might be interested in meeting with our group in this informal and beautiful setting in Cambridge.

Please RSVP to May Hen at

Summary of “Offshore financial transactions” course in the Cayman Islands – By May Hen

Like a good sociologist, May Hen blends herself in with the Texas A&M law school cohort. (Photo credit: Thomas Sims of Texas A&M.)

Hi all, May Hen here. I am a PhD student in Sociology at Cambridge and currently in the Cayman Islands conducting fieldwork on the economic sociology of offshore and economic history of Cayman. I had the pleasure of taking part in one of the most interesting courses I have ever come across on offshore financial centres co-organized by Texas A&M University School of Law and The University of Alabama Law School. Led by Andrew Morris, Dean of Law at Texas A&M, this course has been well established. It is in it’s 13th year in Cayman with a new course being rolled out in Jersey this year; I have also been informed that a similar course is also being offered in Vermont (home to the largest number of captive insurance domiciles). This course provided students with little to no understanding of how an offshore financial centre functions with a full immersion week of interaction with the Cayman Islands financial industry and its individual sectors. For those of you interested in some academic reading on offshore, Morriss’ “Creating Cayman as an Offshore Financial Centre: Structure & Strategy Since 1960” on Cayman will help preface the intent of the course which was to shed light on the actual day-to-day activities of the financial industry in Cayman.

All of the presenters were industry leaders in their area in Cayman and each presentation came with a series of expert slides from different sectors of each major area of the financial industry including asset securitization, captive insurance, hedge funds, trusts, insurance linked securities and private equity. The speakers did an excellent job in explaining their industry to us and how their industry would benefit American law firms. What I found most compelling was the extent to which Cayman provides a support role to the overall financial system, particularly in the U.S with hedge funds and captive insurance. What was also most interesting to me was the sheer number of different agents that are required in a financial large transaction, sometimes up to 20 intermediaries from start to finish. Having the transaction explained from the Cayman perspective provided an invaluable and unique understanding of something we may normally understand from an onshore jurisdiction like the U.S..  It has also been interesting to get feedback from the students who had little to no knowledge of Cayman before they arrived. Hopefully those interested in the Cayman Islands will sign up for this course offered annually by Texas A&M next spring. Also kudos to Americans and their ability to merchandise things, you would not see a course providing beer coozies in the U.K.!

“The Appeal of Tax!” – By May Hen

In September 2016, members of the Cambridge Tax Discussion Group participated in a plenary at the 34th Annual Cambridge Economic Crime Symposium held at Jesus College. During our weekly meetings leading up to the conference, a topic was chosen by interested participants in the group and “The criminalization of tax avoidance” was proposed to stimulate debate. We decided to produce a series of working papers in response to Richard Gordon and Andrew Morriss’ article “Moving Money: International Financial Flows, Taxes, & Money Laundering” (Hastings International and Comparative Law Review, 2013, Vol. 37, No. 1) and invited the co-authors to Cambridge to take part in the debate. The result was an interesting mix of responses from panelists from the OECD, U.S. Department of Justice,  Department of Sociology, Faculty of Law, and Department of Economics from Cambridge.

A resulting editorial commentary by myself, May Hen, was published in the Journal of Money Laundering Control and a larger series is being put together by participants to be published as a special issue this year. It is hoped that this forthcoming issue will serve as a central stimulant for further debate at the 35th Annual Cambridge Economic Crime Symposium surrounding current tax issues. If you are interested in taking part this year in either the special issue or Economic Crime Symposium, please contact me at

“Tax Avoidance: An Oxymoron” by Dr. Alexis Brassey

This week, Cambridge Tax Discussion Group member, Dr. Alexis Brassey contributes a discussion piece on tax avoidance. Dr. Brassey is a PhD student reading Law at the University of Cambridge.

Disclaimer: Any opinions expressed are solely by the author and is not representative of the opinions of individual members of the Cambridge Tax Discussion Group. The Group is a diverse network of scholars and professionals who gather weekly to discuss broad topics related to tax.

Tax Avoidance: An Oxymoron

Dr. Alexis Brassey

The expression tax avoidance elicits strong emotions from journalists and politicians. This interest, which has spawned thousands of articles and frequent legislative proposals, arises as a result of a belief that “something untoward” has happened. Some clever company or “ultra high net worth” has managed to outfox the great British public and therefore something must be done about it.

The question, “what exactly is tax avoidance?” barely gets a mention, other than the possible tacit acknowledgement that its “legal”, but somehow “wrong”.

The most eloquent and succinct definition of tax avoidance was proposed by Lord Hoffman in 2005:

“…tax avoidance in the sense of a series of transactions successfully structured to avoid a tax which Parliament intended to impose should be a contradiction in terms. The only way in which Parliament can express an intention to impose a tax is by a statute that means that such a tax is to be imposed. If that is what Parliament means, the courts should be trusted to give effect to its intention.”[1]

If Lord Hoffman was correct, however, the idea that so much could be said and done about tax avoidance would be very odd indeed. At the heart of the avoidance debate and every avoidance case, one finds the executive[2] branch of government, HMRC, unable to convince the judiciary that they are able to impose a tax. The frustration of the executive branch then manifests itself in their assertion that whilst, grudgingly the tax payer has legally avoided being taxed, they ought not to have done. Something unfair, in the eyes of the executive branch of government, has taken place.

In the context of our constitutional doctrine, built on the principle of a separation of powers, how concerned ought we to be when the executive branch loses its case in a court of law? The answer, in ordinary circumstances, is that the mediation of executive power by the courts ensures our freedom. This freedom is underwritten by an overarching set of principles that constrain executive power by the judicial branch, which itself operates within a rule of law doctrine. The British legal tradition has a proud history of constraining its executive to ensure the liberty of its subjects with doctrines such as ultra vires and judicial review. Surely, so called tax avoidance is merely a by-product of a system of law working well.

In light of this analysis, what then is tax avoidance? HMRC bring a case to impose a tax. The courts consider the case and there can only be one of two outcomes. Either the courts decide HMRC are correct, in which case no tax has been avoided. Alternatively the courts can decide that no tax is due, in which case no tax has been avoided. The existence of tax avoidance, therefore, resides only in the minds of those who either misunderstand the judicial process or harbour the belief that law is something that ought to take place outside the courtroom.

Tax academics have written widely on tax avoidance[3], most struggle to articulate a coherent definition, all fail to overcome the problem that they are doing nothing more than discussing the executive’s frustration at losing in court.

There have been attempts[4] to distinguish between what is legally effective and what ought to be legally effective in the literature. These attempts, however, do little more than articulate the normative perspective of the authors in respect to the outcome.

“Tax avoidance or aggressive tax planning involves bending the rules of the tax system to gain a tax advantage that Parliament never intended. It often involves contrived, artificial transactions that serve little or no purpose other than to produce a tax advantage. It involves operating within the letter – but not the spirit – of the law. In arriving at a view as to whether the transaction is contrary to the intentions of Parliament, HMRC will consider a purposive construction of the legislation, and will also consider whether Parliament can realistically have intended to give the proposed result in circumstances that are very different from those that prevailed at the time (e.g. re loopholes being used to arrive at an unexpected result).”[9]

On this definition, HMRC believe themselves to be the arbiters of the law as opposed to the court. Under the current constitutional settlement, the only criteria the taxpayer needs to fulfil is to be able to demonstrate to a court of law that their transaction is not subject to tax. Of course, HMRC may take a different view, but that is part and parcel of our system of law. Unless and until ALL parties recognise that it is for the courts to decide the law and only the courts, we are doomed to spend time on listening to subjective moral or political positions of various parties who have failed to understand our constitution.

The introduction of a General Anti Abuse Rule[10] in 2013 has opened up the spectre of increased political positioning in the field of tax law. It is now possible for HMRC to advance their position in court as somehow arbiters of “reasonableness”[11]. The Finance Act 2013 now requires courts to have regard to HMRCs GAAR panel[12].

The GAAR can be considered as either being ineffective or a mechanism to circumvent the rule of law for the following reasons. If the GAARs application is limited to allowing courts to impose tax on the basis of a purposive jurisprudential construction[13] then it is not adding anything to the current legal corpus. If GAARs application is designed to allow courts to ignore or exceed purposive jurisprudence on the basis of an unspecified notion of “double reasonableness”[14] then we are indeed in a pre Magna Carta[15] or pre-Bill of Rights[16] era where arbitrariness is allowed to reign in determining tax on an ex-post basis.

Lord Diplock suggested that requiring citizens to do anything other than understand the words in the Statute was tantamount to a confidence trick:

“If the meaning of those words is clear and unambiguous and does not lead to a result that is manifestly absurd or unreasonable, it would be a confidence trick by Parliament and destructive of all legal certainty if the private citizen could not rely upon that meaning but was required to search through all that had happened before and in the course of the legislative process in order to see whether there was anything to be found from which it could be inferred that Parliament’s real intention had not been accurately expressed by the actual words that Parliament had adopted to communicate it to those affected by the legislation.”[17]

Graham Aaronson, the author of the GAAR along with Judith Freedman et al, however, were relaxed about giving consent to both the executive and the judiciary to go beyond purposive analysis and traditional rules of judicial interpretation:

“The advantage is that the GAAR can use concepts which could not be developed by applying conventional interpretation to the tax rules. A significant example of this is to define “an arrangement” in the sensible terms which were rejected by the majority of the House of Lords in Craven v White[18] because in their opinion those terms went beyond the scope of permissible judicial interpretation.”[19]

This author rejects the possibility of an interpretation of law that is beyond the scope of permissible judicial interpretation (on a pre-GAAR basis), given that judicial interpretation is law. So, where does this leave the definition of tax avoidance now courts and the executive have the capacity to determine the law on an uber-purposive analysis? The answer will be difficult to know until we have seen what happens when, and indeed if, the courts overturn Magna Carta by applying the GAAR contrary to a purposive interpretation. The result, whilst eliminating “tax avoidance” as defined by a losing executive, will be the circumvention of the rule of law and the separation of powers doctrine with all that entails. Let us all hope sanity and good sense means liberty requires GAAR to be entirely ignored by the judiciary. In the meantime, it would be helpful to view tax avoidance as nothing more than the by-product of a liberty protecting constitutional democratic system based on the rule of law.

[1] Hoffman, L “Tax Avoidance” in British Tax Review No. 197 (2005) pp197-206, p203

[2] Some would prefer to separate out the executive from the administrative branches of government, but for the sake of brevity I have used “executive branch” here as pointing to HMRC

[3] Tax Avoision, IEA readings 22 (Institute of Economic Affairs, 1979); Cooper, GS (ed) Tax Avoidance & the Rule of Law (1997)

[4] Freedman, J (2008), “Is Tax Avoidance Fair” in Wales, C “Fair Tax, Towards a Modern Tax System”, The Smith Institute

[7] Mayes v HMRC [2011] EWCA Civ 407

[8] It is possible for a scheme to be ineffective for tax purposes but still have legal consequences, but I would not characterise those schemes as tax avoidance, given they have failed to avoid tax.

[9] HMRC, Consultation Document, “Improving Large Business Tax Compliance”, 22nd July 2015, Annex C

[10] Ss206-215 Finance Act 2013

[11] Through the mechanism of a dubiously independent, albeit HMRC appointed GAAR panel

[12] S211 (2) (b), FA, 2013

[13] W. T. Ramsay Ltd. v IRC, Eilbeck (Inspector of Taxes) v. Rawling [1982] A.C.; Barclays Mercantile v Mawson [2004] UKHL 51 , IRC v. Scottish Provident Institution[ (2003)] CA, [2003] STC 1035, MacNiven v. Westmoreland Investments Ltd HC [2001], 73 TC

[14] S207 (2) FA, 2013

[15] Clauses 12 and 14 of the 1215 Charter state that to levy or assess an aid or scutage the King will accept the “common counsel of our realm” indicating that only Parliament as opposed to the Monarch could levy a tax charge.

[16] Bill of Rights 1688: Chapter 2 1 Will and Mar Sess 2 An Act declareing the Rights and Liberties of the Subject and Setleing the Succession of the Crowne Passed on 16th December 1689

[17] Fothergill v Monarch Airlines Ltd – HL, [1981] AC 251

[18] Craven v White [1988] 62 TC 1

[19] G. Aaronson (2011) “GAAR Study, A Study to consider whether a general anti-avoidance rule should be introduced into the UK tax system” para 5.6