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Is BN66 retrospective?

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There are two camps in this argument: those that believe BN66 is retrospective, and those that don't.

As you can imagine, the scheme provider and those who used it believe that the changes enacted in the infamous BN66 are retrospective and therefore should not be introduced. However, it is not just them that are concerned, as other groups are concerned about the precedent that might be set by this case.

On the other side of the fence, the Government have their own arguments for why this is not, as claimed, retrospective.

We hope to quickly summarise some of the arguments for and against here.

The case for BN66 being retrospective

  1. The wording of BN66 explicitly stated that the changes introduced were "treated as having always had effect", and is therefore retrospective
  2. The idea of being able to "clarify, retrospectively, legislation" introduced years before sets a dangerous precedent. It could give HMRC free reign to 'clarify' other existing schemes
  3. The HMRC knew about such schemes for several years. Therefore they should have acted sooner. If they are that confident in the legislation, why clarify it at a later date so that it "has effect as intended"?

The case against BN66 being retrospective

  1. The legislation is not retrospective as it simply ensures that existing legislation is being correctly applied and seeks to ensure that the spirit of the law is upheld
  2. Action didn't happen sooner because details of the scheme only came to light in 2004 when new disclosure laws came into force
  3. The "loophole" that was being used never actually existed. Therefore there is no need to close it and apply legislation prospectively (i.e. from the date it is passed). The legislation is there and is just being applied correctly

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