The disguised remuneration rules to be introduced under the Finance Act 2011 are acknowledged by the Government to be complex.  The legislation is deliberately drafted to catch more than the Government intended, namely EBTs and EFURBs considered to be abusive.   Although numerous exclusions seek to allow normal business activity to continue unhindered, businesses will need to check they are not caught by the new rules.   The rules are expected to produce some inequitable results.  The attached note seeks to provide a guide to the new rules, with some analysis.  The note is based on the draft rules as amended at the Committee stage.  Once the Finance Bill becomes law later this summer, the note will be updated.

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Tarlochan Lall

Paul Harris QC, after successfully arguing in the High Court last December that the striking-off order relating to Steph Brennan was defective for lack of reasoning, succeeded at the remittal before the Health Professions Council in persuading the Panel to reduce the severity of the sanction to a professional caution.

In April 2009 Steph Brennan ran onto a rugby pitch in his capacity as a professional physiotherapist for Harlequins RFC and gave a player a fake blood capsule in order to feign an injury. This notorious episode and its aftermath became known as “Bloodgate” and rocked the rugby world. Dean Richards, the team coach, was banned for three years from rugby. Wendy Chapman, the doctor who deliberately cut the player as part of the deceitful coverup of the false injury, was given a caution to lie on her professional record, but allowed to continue practising. Steph Brennan, however, was given a 2 year ban from rugby and struck off his professional register altogether.

Unable to continue his new appointment as physiotherapist for the England Rugby team, and indeed faced with an end to his career, Steph Brennan turned to a fresh legal team consisting of Paul Harris QC and Stephen Hornsby of Davenport Lyons in order to seek a more proportionate remedy.

Paul Harris QC argued successfully before the High Court that the striking off order was unnecessary in the circumstances to protect the public and, first on an interim basis, and then on a final basis, that order was set aside as disproportionate by the High Court. In January 2011 the matter of correct sanction was ordered to be remitted back to the professional body for physiotherapists, the Health Professions Council (HPC).

Yesterday in London, Paul Harris QC, in reliance on the High Court judgment and following a fresh hearing, succeeded in persuading the same Panel of the HPC who had struck Steph Brennan off the register in September 2010 that the proportionate remedy in the circumstances was not a striking off, nor even a period of suspension, but was instead a caution to lie on Steph Brennan’s professional record for a period of 5 years. In this way, the last leg of the unsavoury “Bloodgate” saga has finally been brought to a just conclusion.

Steph Brennan paid tribute to the performance of his Silk with the following words:

“From the minute I met Paul Harris I knew I had hired the right barrister. His personable, confident and professional demeanour was an immediate comfort during what was a very unsettled time. He provided a clear message of how he would like to take my case forward. As someone with no experience in legal matters this was a major relief to me.

I made some huge mistakes in my capacity as a Sports Physiotherapist. Before Paul’s help, these were going to mean the end of my career. I now have a second chance to make amends for these mistakes and to repay my profession for my stupidity. I will be eternally grateful to Paul for giving me this opportunity. I simply could not ask for anything more.”

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Paul Harris QC

In one of Sir Stephen Oliver’s last decisions, the Upper Tribunal has, for the first time, dealt definitively with the Capital Goods Scheme (CGS) under the VAT General Regulations 1995. In the context of a leaseback scheme, the Upper Tribunal applied the ECJ’s ruling in Case C-275/01 Sinclair Collis v HMRC and found that payment of rent is an essential component for a lease under the applicable Community law definition. The President then went on to explain the practical calculation of CGS under the Regulations and to find that the relevant change of use was to be determined as a matter of fact in all the circumstances. On the facts of this appeal it was held that there had been a change of use (from leasing activity) and that that change was total, requiring a 100% repayment from the Appellant. Appeal from the First-tier Tax Tribunal dismissed.

Philip Moser of Monckton Chambers acted for the successful Respondent, HMRC.

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Philip Moser QC

John Swift QC spoke at an event to celebrate Peter Freeman QC’s tenure as Chairman of the Competition Commission.  Freeman, was appointed Chairman in 2006, having been a member since May 2003 and a Deputy Chairman since September 2003.

John Swift QC commented “So you can leave Office with the satisfaction that under your leadership the Competition Commission has gained a truly excellent reputation among the competition authorities of the world.”

Peter Freeman was co-founder of and, until 2007, Chairman of the Regulatory Policy Institute.  In March 2010 he was appointed honorary Queen’s Counsel and in June 2010 was awarded a CBE in the Queen’s Birthday Honours.

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John Swift QC

Paul Lasok QC and Philip Woolfe are to take part in a unique tax debate hosted by Farrer & Co at The National Gallery on Thursday 19 May.  The debate promises to be a lively affair with over 250 tax experts in attendance.

The debate will focus on whether  ‘Clear and unambiguous tax law is an invitation to raid the public purse’.  Corporate tax avoidance is in the spotlight with campaigners alleging that large multinationals have avoided huge sums through complex loopholes, mainly by being based offshore.

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Paul Lasok QC
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The Lawyer has announced their nominations for The Lawyer Awards and we are honoured to have been shortlisted for ‘Chambers of the Year’.  The awards ceremony will be held at Grosvenor House, Park Lane London on 21 June.

The High Court has today dismissed a challenge to the lawfulness, under EU law, of the provisions of the Digital Economy Act 2010 aimed at requiring internet service providers (ISPs) to help reduce illegal ‘peer to peer’ file-sharing.

Under the Act, Ofcom must make a Code requiring ISPs to notify their subscribers of alleged instances of online copyright infringements, and to compile lists to allow copyright owners to identify repeat offenders. The Act also makes provision potentially to require ISPs to take “technical measures” against the most serious copyright infringers, such as to limit their use of, or even to terminate, their internet connections.

The challenge was brought by two major ISPs, BT and TalkTalk, who argued that the imposition of requirements on ISPs under the Act would breach EU law, because:

(i) the Act had not been notified in draft to the European Commission under the Technical Standards Directive;

(ii) the requirements would be incompatible with EU Telecoms Directives (including the E-Commerce Directive, the Privacy and Electronic Communications Directive, and the Authorisation Directive); and

(iii) the requirements were disproportionate in their impact on ISPs, consumers and others, and therefore breached EU law and the European Convention on Human Rights.

The Court rejected the challenge to the Digital Economy Act in full.  However, the Court found for the Claimants on one ground of challenge, which related not to the Act itself, but to proposed rules requiring ISPs (as well as copyright holders) to contribute towards Ofcom’s costs of administering the scheme.  The Court’s judgment means that, unless there is a successful appeal, the Government is free to press ahead with implementing the Digital Economy Act regime, subject only to making adjustments to the way Ofcom’s costs will be recovered.

The Claimants have not yet said whether they will seek permission to appeal against the judgment

Robert Palmer and Alan Bates represented the Secretary of State for Business Innovation and Skills (the Defendant).

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Robert Palmer
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Described by Chambers UK as ‘personable and responsive’ providing ‘proactive and high-quality advice’ Tarl, with over 20 years’ experience as a tax lawyer joins Monckton from Charles Russell LLP, where he founded and headed the Corporate Tax department. Tarl will be specialising in direct and indirect taxes, advising businesses and individuals. His particular strength lies in advising those in the property sector. Tarl has special interests in the effect of EU law on UK taxes; and environmental taxes.

Tarl is a fellow of the Chartered Institute of Taxation and member of the VAT Practitioners Group. He has recently contributed two chapters to ‘Value Added Tax – Commentary & Analysis‘ on Property and the Taxable Amount. Tarl has also written a number of articles on matters such as anti avoidance tax rules affecting transactions in land and tax issues for charities.

Tarl comments; “I feel privileged that I can launch my career at the Bar as a member of Monckton Chambers. I look forward to the exciting challenges ahead.”

David Hockney, Senior Clerk; “I am delighted that Tarl has accepted our offer of tenancy. He has genuine depth to his practice with the ability to offer clients a range of direct and indirect tax services. He is particularly renowned for his work in relation to VAT and more generally taxes associated with the property sector. His knowledge on employment taxes and employee share schemes adds a significant string to the bow of our collective expertise.”

Paul Lasok QC, Head of Chambers; “Tarl is a welcome addition to those members of Chambers who do tax work and enhances our ability to provide a comprehensive tax advisory and litigation service to our clients”.

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The Competition Appeal Tribunal has allowed in large part the appeals of 3 undertakings against the penalties imposed by the OFT in relation to the construction recruitment cartel.

The OFT fined 7 construction recruitment agencies for engaging in a collective boycott of an intermediary for the supply of candidates to construction companies in the UK and price-fixing. The OFT imposed fines totaling over £40 million.

3 recruitment agencies appealed the amounts of their fines: Eden Brown, CDI and Hays.

The Tribunal gave detailed consideration to several aspects of the Penalties Guidance used by the OFT when calculating fines and to the OFT’s approach to the MDT.  The Tribunal held that the OFT was wrong (i) to calculate the penalties by reference to the agencies’ gross turnover rather than net turnover representing the commission earned on placements and (ii) to calculate the MDT by reference to worldwide turnover only, which resulted in disproportionate penalties. The Tribunal carried out its own assessment to re-calculate the Appellants’ fines, including their respective leniency reductions.

The total amount of the fines imposed on Appellants was reduced by over £30 million.

David Unterhalter SC and Alan Bates represented the Office of Fair Trading.

Paul Harris QC represented Eden Brown Limited and Hays plc, Hays Specialist Recruitment Limited and Hays Specialist Recruitment (Holdings) Limited.

Ronit Kreisberger and Owain Draper represented CDI AndersElite Limited and CDI Corp.

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David Unterhalter SC
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Ronit Kreisberger
Alan Bates

The United Kingdom Border Agency, represented by Elisa Holmes, has won a hearing determining its application to have an automatic suspension imposed under Regulation 47G of the Public Contract Regulations 2006 (as amended by the Public Contract (Amendment) Regulations 2009) lifted.

Metropolitan Resources, represented by Philip Moser, issued a claim in February on the basis that UKBA’s decision to obtain what is known as Initial Accommodation services for asylum seekers from a provider – Happy Homes (who to date had only provided a different kind of accommodation for asylum seekers) – instead of from Liverpool City Council (with whom it had a sub-contract but whose contract with UKBA was about to expire) without conducting any kind of competitive procedure was unlawful. The effect of Regulation 47G of the Regulations is that upon the issue of such the claim, UKBA was prevented from finalising arrangements to obtain the services from Happy Homes.

In only the fourth case of its kind, Mr Justice Newey made the order removing the automatic suspension on the basis of the application of American Cyanamid principles. He held that whilst damages would not be an adequate remedy for the Claimant if it was successful in the substantive proceedings, nor would they be adequate for the UKBA if it was successful. The balance of convenience lay in favour of lifting the automatic suspension because if it were not brought to an end, UKBA would in effect be forced to enter into another contract with Liverpool City Council, that such arrangements may well themselves result in a contravention of the Regulations and that UKBA had had concerns with the provision of the services by Liverpool City Council through its sub-contract with the Claimant to date.

The Judgment has not yet been published.

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Philip Moser QC
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