EU-New Zealand Treaty Talks in Trouble Before They Start

The EU hopes to start talks on a trade deal with New Zealand this year, the EU Commission announced this week, but adding only after all the preparatory work was complete.
The problem the EU has is that on past form it is hidebound, riven by conflicting interests squabbles and is getting left behind. It took the EU a marathon 7 years to negotiate and then 2 years to ratify the Canada deal.
A recent opinion from the highly-regarded Advocate General (AG) Sharpston of the European Court on the proposed EU-Singapore trade deal, Opinion Procedure C-2/15, that it can only be ratified by the EU and members states acting together further complicates things.
Although strictly not binding on the European Court the AG’s opinion is usually followed. This opinion especially is a hugely impressive and comprehensive legal analysis of the complex issues of the EU ratifying treaties. Her opinion runs to 570 paragraphs, plus an appendix of 131 paragraphs and 418 footnotes.
Tellingly the AG notes in her paragraph 565 that:-
“A ratification process involving all the Member States alongside the European Union is of necessity likely to be both cumbersome and complex. It may also involve the risk that the outcome of lengthy negotiations may be blocked by a few Member States or even by a single Member State. That might undermine the efficiency of EU external action and have negative consequences for the European Union’s relations with the third State(s) concerned.”
Sadly the EU is now sclerotic in its ratification of international deals.

Eamon McNicholas
Tax Barrister, Accountant
http://www.EamonMcNicholas.com

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VAT and affiliation fees for sports clubs – Notice 701/45

HMRC has given notice of the withdrawal of its extra statutory concession (ESC) on VAT and affiliation fees for sports clubs, currently published as paragraph 3.6.2 of VAT Notice 701/45.
“A sport’s governing body, or similar umbrella organisation, often charges an affiliation fee to individual clubs who make an onward charge to their members. Where the clubs are non-profit making, the supply of this affiliation fee to their individual members is exempt from VAT.
However, if the club is a profit-making commercial club, then the supply to their individual member is standard rated.
The concession seeks to put profit-making commercial clubs in a similar position to non-profit making clubs, in that they do not need to account for output tax on the fee charged. It achieves this by allowing profit-making commercial clubs to treat these re-charges to their members as though they were disbursements. However, as such re-charges of affiliation fees are not legally a disbursement the concession goes beyond HMRC’s discretion and it will be withdrawn with effect from April 2018.
Withdrawal of the concession means that the onward charge of the affiliation fee will be liable to VAT unless it meets the conditions of a disbursement.
The withdrawal of this concession has no impact on the VAT treatment of affiliation fees by non-profit making sports governing bodies, or similar umbrella organisations, and on non-profit making sports clubs to their members. In their case, the charge they make of affiliation fees continue to be exempt under the law.”

Eamon McNicholas
Tax Barrister, Accountant
http://www.EamonMcNicholas.com

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Tax-Deductible Professional Bodies and Societies

An updated list of professional bodies, and learned societies, whose subscriptions HMRC has approved for tax deduction has been published.
But for tax deduction the subscription has to be necessary or helpful to a taxpayer doing their work and paid for by them.
The list of approved bodies ranges from the Aberdeen Junior Chamber of Commerce to the Zoological Society of London. As well as tax bodies like the Chartered Institute of Taxation or the VAT Practitioners Group

Eamon McNicholas
Tax Barrister, Accountant
http://www.EamonMcNicholas.com

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NAO Queries HMRC Estate Plan

 

The National Audit Office (NAO) in a report has queried HMRC’s handling of it changing its estate from 170 local offices to just 13 regional centres (plus four specialist sites and a London HQ).
Particular problems identified were HMRC’s original plan being unrealistic and them not yet identifying the taxpayer service and HMRC’s internal administrative benefits.
In addition HMRC was impaired in doing what it wanted due in part to its Mapeley STEPS contract (when it sold and leased back its land estate).

Eamon McNicholas
Tax Barrister, Accountant
http://www.EamonMcNicholas.com

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EU and Special Sweetheart Tax Deals

The European Commission President, Mr Junker, is under pressure from some quarters to explain his alleged role in facilitating multi-national tax avoidance while Luxembourg prime minister.
Critics claim that while Luxembourg PM he helped give special sweetheart tax deals to multinational companies and tried to frustrate EU tax reform on corporate tax avoidance.
In his defence it is pointed out on behalf of Mr Juncker that as Commission President he has presided over an unprecedented wave of actions against tax avoidance. The Commission has been especially successful in using illegal state aid actions as a way to fight back against big multi-national tax avoidance.
It seems to me that Mr Juncker has preached EU-wide solidarity while also acting to look after the interests of his own country. All perfectly standard EU behaviour, that is how the EU club works.

Eamon McNicholas
Tax Barrister, Accountant
http://www.EamonMcNicholas.com

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Reminder on Married Tax Allowance

HMRC are reminding people that there is a limited married or civil partnership tax allowance. A quick summary can be found on HMRC’s part of the Gov.UK website where they say :-
“Marriage Allowance lets you transfer £1,100 of your personal allowance to your husband, wife or civil partner – if they earn more than you.
This reduces their tax by up to £220 in the tax year (6 April to 5 April the next year).
To benefit as a couple, you (as the lower earner) must have an income of £11,000 or less.”

Eamon McNicholas
Tax Barrister, Accountant
http://www.EamonMcNicholas.com

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Zurich Made to Pay Damages for Wrong Tax Advice

The High Court has found Zurich Assurance Ltd, and others, liable for bad inheritance tax (IHT) advice given to Mrs Lenderink-Woods. She had married a Dutch naval captain in WWII and not lived in the UK since 1948.
In bringing her claim she very impressively she gave video-link evidence aged 96. In finding against Zurich the Judge noted Zurich’s own media relations manager saying, when the Claimant was then aged 92, that :-
“The media would find it inexcusable that we have not been able to clarify the tax position much earlier – if we had we would have been able to avoid all of this and not had to make an offer which we later withdrew. The fact that she is so elderly certainly does not go in our favour!”
But still Zurich fought the case vigorously and were subject to criticism from the Court in taking a bad and losing point that a third party helping Mrs Lenderinck-Woods somehow debarred her claim. Zurich even talked of seeking costs from the third party, about which the Court noted:-
“Such behaviour has a chilling effect on those who advise clients who are pursuing claims against large providers of financial services.”
The Court found as a fact that the Claimant had made out her case of negligent tax advice. In assessing damages, at £223,000, the Court made an incisive point on its function in deciding quantum :-
“My task is to assess (not to compute) damages for the loss caused to Mrs Lenderink-Woods. I do not aim for spurious precision. All the work of the experts (for which I am grateful) enables me to reach broad conclusions even if I cannot myself undertake calculations.”
The case is reported as Lenderink-Woods v Zurich Assurance [2016] EWHC 3287 (Ch), Dec/16.

Eamon McNicholas
Tax Barrister, Accountant
http://www.EamonMcNicholas.com

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