The Trustees of the Panico Panayi Accumulation and Maintenance Settlements Numbers 1 to 4 & Anor v The Commissioners for HMRC

The Trustees of the Panico Panayi Accumulation and Maintenance Settlements Numbers 1 to 4 & Anor v The Commissioners for HMRC

The incompatibility with EU law arises from the absence of a deferral option for payment of exit tax, not from the imposition of the exit tax itself. A conforming interpretation is possible by reading into ss59B and 59D TMA an option to defer payment in five equal annual instalments, with the first instalment due on the normal payment date and subsequent instalments annually thereafter. This interpretation is consistent with CJEU jurisprudence, goes with the grain of UK law, does not breach legal certainty, and does not require impermissible judicial legislation. The Tribunal has jurisdiction to apply this interpretation. The FTT erred in law by excluding interest from the conforming...

Parties
First Appellants: The Trustees of the Panico Panayi Accumulation and Maintenance Settlements Numbers 1 to 4; Second Appellant: Redevco Properties UK1 Limited; Respondents: The Commissioners for His Majesty’s Revenue and Customs
Jurisdiction
England and Wales
Judgment Date
08 October 2024
Procedural Posture
Tax Appeal (upper Tribunal, Tax and Chancery Chamber) / Appeal From First Tier Tribunal, Remaking of Decision
Outcome
Appeals allowed in part; FTT decisions set aside and remade to adopt a conforming interpretation; exit tax payment to be deferred in five equal annual instalments with interest as per statute.
Legal Topics
Exit Tax, Freedom of Establishment, Conforming Interpretation, Retrospective Effect, Legal Certainty, Capital Gains Tax, Corporation Tax, Trust Taxation, Company Migration, Deferral of Tax Payment
Tax Law European Union Law Public Law Exit Tax Freedom of Establishment Conforming Interpretation Retrospective Effect Legal Certainty +5 more

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Parties

The Trustees of the Panico Panayi Accumulation and Maintenance Settlements Numbers 1 to 4

First Appellants

Redevco Properties UK1 Limited

Second Appellant

The Commissioners for His Majesty’s Revenue and Customs

Respondents

Procedural Posture

Tax Appeal (upper Tribunal, Tax and Chancery Chamber) / Appeal From First Tier Tribunal, Remaking of Decision

Legal Issues

  1. 1 Whether UK exit tax provisions (ss80 and 185 TCGA, para 10A Sch 9 FA 96, ss59B and 59D TMA) are compatible with EU law rights to freedom of establishment in the absence of a deferral option for payment of tax on migration;
  2. 2 Whether a conforming interpretation of UK legislation is possible to remedy the incompatibility with EU law;
  3. 3 Whether the appropriate remedy is conforming interpretation or disapplication of the offending provisions;

Ratio Decidendi

The incompatibility with EU law arises from the absence of a deferral option for payment of exit tax, not from the imposition of the exit tax itself. A conforming interpretation is possible by reading into ss59B and 59D TMA an option to defer payment in five equal annual instalments, with the first instalment due on the normal payment date and subsequent instalments annually thereafter. This interpretation is consistent with CJEU jurisprudence, goes with the grain of UK law, does not breach legal certainty, and does not require impermissible judicial legislation. The Tribunal has jurisdiction to apply this interpretation. The FTT erred in law by excluding interest from the conforming...

Court Disposition

Appeals allowed in part; FTT decisions set aside and remade to adopt a conforming interpretation; exit tax payment to be deferred in five equal annual instalments with interest as per statute.

Orders

  • The decisions of the FTT in Panayi FTT and Redevco FTT are set aside as to the issues within the scope of this appeal.
  • The Tribunal remakes the decisions by reading into ss59B and 59D TMA an option to defer payment of exit tax in five equal annual instalments, first instalment due on the normal payment date, subsequent instalments annually.