Lost in a stream of words and phrases when reading up on BN66 and retrospective legislation? Hopefully this glossary will help...
Also known as
Budget Note 66, this was released in March 2008 to fight double
taxation treaty abuse, i.e. being taxed in a country with lower
taxes whilst living in and working in another country. The Treasury
had found that schemes existed whereby income generated by a UK
resident was diverted to a foreign partnership and then returned to
the UK resident without attracting the usual levels of UK
controversial because it seeked to "clarify, retrospectively,
legislation introduced in 1987" so "that it has effect as
Some argue that
this is retrospective legislation and therefore wrong. They argue
that the idea of something being "treated as having always had
effect" sets a dangerous precedent.
is the imposition of two or more taxes on the same income. In
todays modern world, it is not unusual for an individual to be
resident in one country yet create income in another. In some
cases, this person may find that they are obliged to pay tax on
this income both in their resident country and the country the
income was generated within.
countries exist to reduce this problem. In some cases the tax is
only payable in the resident country, in other cases the tax may be
payable in the country in which it was generated.
schemes exist that take advantage of these treaties, for example
stating that the income generated by a UK resident in the UK should
be taxed in a country with lower levels of tax.
When the Finance
Bill 2008 (see below) gained Royal Ascent in July 2008 it became
the Finance Act 2008. Measures to fight double taxation treaty
abuse were contained within section 58.
This was the Bill
that was debated in Parliament. Measures to fight double taxation
treaty abuse were contained within section 55.
A Judicial Review
is a procedure in English law whereby the courts can decide whether
the exercise of public power (for example, by the Treasury or HMRC)
on an individual is unlawful. If they decide it is they have the
power to compel the authority to stop acting illegally.
legislation refers to any law that is passed that is expected to be
treated as if it has always had effect. Therefore, stuff you did
legally before the legislation was passed is suddenly classed as
illegal, and you could get in trouble for it.
The use of
accounting measures to reduce the amount of tax you pay. This is
legal, and it's what you pay a good accountant to do for you.
Using schemes and
loopholes to avoid paying tax. The methods used are often illegal
and likely to be closed as soon as the Treasury or HMRC become
aware of them.