A Cardiff base care home (the taxpayer) and other taxpayers have lost their case at the Court of Appeal seeking to overturn a dismissal of its appeal by way of judicial review at the High Court.

The taxpayer held that the loan charge that had been brought in to counter disguised remuneration tax avoidance schemes was in contravention of the taxpayer’s human rights as it applied retroactively and interfered with their right to enjoy property.  The legislation initially sought impose a tax charge on loan balances that were outstanding at 5 April 2019 where the loans had been brought into existence after 6 April 1999, a look back period of 20 years.  This was the state of the legislation when the judicial review took place that found that retroactive tax legislation, as long as it was applied fairly, wasn’t in contravention of human rights especially when the retroactive legislation was to combat tax avoidance.

After the judicial review Parliament amended the legislation so the look back period was nine years, relevant only to loans that came into existence on or after 9 December 2010, along with an election to spread the charge over three years and not being applicable to loans made before 6 April 2016 where adequate disclosure of the tax avoidance had been made in a taxpayer’s tax return.  This was in response to an All Party Parliamentary Report prepared by Sir Amyas Morse that criticised the legislation.

The CoA found that arguing the appeal on some grounds was academic due the changes in the legislation and that where issues were now changing that an appellate court wasn’t the forum to hear new issues.  The CoA found that the judge at the High Court hadn’t erred when making her decision that retrospective tax legislation didn’t breach human rights, it is a question of fair balance and the Government of the day has a wide margin of appreciation.

The CoA rejected the taxpayer’s appeals both in relation to the substantive issues and a cost order.

The decision can be found at: Cartref Care Home Ltd & Ors, R (on the application of) v HM Revenue and Customs – Find case law (nationalarchives.gov.uk)

Please contact us if you have been requested to participate in a tax avoidance scheme.  We help determine whether the scheme is effective.  Many of the disguised remuneration schemes involving loans have been proven to be ineffective.