HMRC use four Montpelier users as 'test cases' and investigate.
New disclosure rules introduced
The Government announce new tax disclosure rules for certain tax schemes and arrangements
Budget Note 66 is produced, stating that it will retrospectively clarify existing 1987 legislation so that it had "the effect it intended", and secondly to prevent tax avoidance through the misuse of double taxation treaties by UK residents.
The latter measure was to be introduced from 12 March 2008, however the former measure was to be treated as if it always had effect and therefore would be retrospective. BN66 stated that these would be cemented in the upcoming Finance Bill, where it appeared as clause 55.
Friday 16th May 2008
Amendment tabled by Liberal Democrats
Some Liberal Democrats table an amendment to clause 55.
Thursday 22nd May 2008
Two amendments tabled by Conservatives
Conservative MPs also table two amendments, stating the wish to "leave out 'are treated as always having had effect' and insert 'shall have effect from 6th April 2008'" in order to remove the retrospective element.
Professional body of Chartered Tax Advisors cite concerns
In a memorandum to the House of Lords Finance Bill Sub-Committee the Chartered Institute of Taxation (CIOT) cite concerns on clause 55, stating that "we can see no justification for the introduction of such legislation with such extreme retrospective effect".
They also warn about the precedent this might set, claiming that "this sort of move gives rise to significant concerns about not only the proportionality of the measure but whether the UK tax system has any certainty and whether the UK is a stable place in which to invest."
23rd May 2008
The Houses of Commons votes to pass Section 55 as drafted. It becomes Section 58 of the Finance Act when the Bill gets Royal Ascent in July 2008
Chartered Accountants also cite concerns
The Institute of Chartered Accountants in England and Wales (ICAEW) state that they "believe that the measure contravenes the EU law principle of preservation of legitimate expectations" and "would breach the free movement of capital of the EC treaty, including in third country situations i.e. where the relevant treaty is with a non-EU country."
The body also ask whether a consultation will occur between HMRC, the Treasury and Representative Bodies to agree on how and when retroactive legislation will be operated.
Finance Bill gets Royal Ascent and becomes the Finance Act
Contractors begin to receive communications informing them to expect closure notices to demand payment.
Professional Contractors' Group view
The Managing Director of the PCG, John Brazier says that "PCG has always clearly advised that, where tax is concerned, if something seems too good to be true it usually is, and that aggressive schemes like this are best avoided. We are not surprised that the Government has turned its attention to them, and given that they flout the spirit of the law so blatantly we feel the Government is right to do so."
However, he does state that "We do not like the retrospection of this measure, however: the Government claims to be "clarifying" legislation passed in 1987 so that it works as intended. But if this is necessary, it cannot have worked like that up to now: so in reality they are introducing a new item of law with retrospective effect." Furthermore, he calls it a "dangerous principle" and a "reckless principle."
Montpelier ask for judicial review
The scheme provider Montpelier asks for a judicial review as part of the process of challenging the Finance Act.
31st January 2009
Application for Judicial Review turned down
The initial application for a Judicial Review is refused, however an appeal against this decision is lodged.
9th June 2009
Joint Committee on Human Rights write to Treasury
The Joint Committee on Human Rights (JCHR) is asked to consider scrutinising the impact of section 58 of the Finance Act 2008 by some of those affected. The Committee decide to write to the treasury requesting information on section 58's compatibility with the UK's human rights obligations.
16th June 2009
Oral hearing for Judicial Review, judicial review granted
At the appeal against the refusal to grant a Judicial Review, Montpelier win the right for the review to take place.
9th July 2009
Joint Committee on Human Rights cites Human Right concerns
The JCHR states that in their current view the changes enacted by section 58 of the Finance Act 2008 breach the human right to peaceful enjoyment of possessions in Article 1 of Protocol No. 1 of the European Convention on Human Rights. They ask the Treasury to prove that they considered the impact the changes would have on those affected.