© 2025 by Michael Firth KC, Gray's Inn Tax Chambers
Contact: michael.firth@taxbar.com
Rewrite and consolidating legislation
REWRITE LEGISLATION
Recourse to predecessor legislation
- Rewrite statutes intended to be relatively easy to use by reasonably informed taxpayer
"[9] In Eclipse Film Partners (No 35) LLP v Comrs of Her Majesty’s Revenue and Customs [2013] UKUT 639 (TCC); [2014] STC 1114 Sales J, likened the correct approach to statutory interpretation to that appropriate to a consolidation statute (as explained by the House of Lords in Farrell v Alexander [1977] AC 59):
“When construing a consolidating statute, which is intended to operate as a coherent code or scheme governing some subject matter, the principal inference as to the intention of Parliament is that it should be construed as a single integrated body of law, without any need for reference back to the same provisions as they appeared in earlier legislative versions. … An important part of the objective of a consolidating statute or a project like the Tax Law Rewrite Project is to gather disparate provisions into a single, easily accessible code. That objective would be undermined if, in order to interpret the consolidating legislation, there was a constant need to refer back to the previous disparate provisions and construe them …” (para 97)
[10] I would respectfully endorse this guidance, which should be read with Lady Arden’s comments (paras 84-90) on the relevance of prior case law. At the same time I would emphasise that the task should be approached from the standpoint that the resulting statutes are intended to be relatively easy to use, not just by professionals but also by the reasonably informed taxpayer, and that the signposts are there for a purpose, in particular to give clear pointers to each stage of the taxpayer’s journey to fiscal enlightenment." (R (oao Derry) v. HMRC [2019] UKSC 19)
"[66] In Derry, Lord Carnwath added that Sales J's comments should be read with Lady Arden's comments at [84]-[90] on the relevance of prior case law, but also emphasised the need to approach the task from the standpoint of the resulting statutes being intended to be "relatively easy to use"." (Beard v. HMRC [2025] EWCA Civ 385, Falk, Peter Jackson, Asplin LJJ)
- Public in principle to rely on current wording rather than historical study
"[88] None of these criticisms, especially the first, is entirely without substance, and they deserve to be appraised both separately and in combination. HMRC sought to meet the first criticism by pointing to the language not so much of section 298 itself, but of its statutory predecessors, backed up by the submission that the reformulation of the language in the 2001 Act was just a modernisation of language unaccompanied by any intended change in underlying meaning. There are warnings in well-known authorities about the general undesirability of becoming bogged down in statutory pre-history. Generally, a deliberate change in language implies some change in meaning, and the public is in principle entitled to understand the meaning of legislation by reading it in its current form, rather than by having to undertake a historical study of antecedent legislation now repealed and, in the modern world, usually struck out of the on-line publications of statutory law. See R (Derry) v Revenue and Customs Comrs [2019] UKSC 19; [2019] 1 WLR 2754, paras 7-10 (Lord Carnwath), comparing the approach to be adopted to the interpretation of consolidation statutes as explained in Farrell v Alexander [1977] AC 59; Urenco Chemplants Ltd v Revenue and Customs Comrs [2022] EWCA Civ 1587; [2023] STC 54, para 148 (Henderson LJ); and NCL Investments Ltd v Revenue and Customs Comrs [2022] UKSC 9; [2022] 1 WLR 1829, paras 44-47 (Lord Hamblen and Lady Rose).
[89] In the present case HMRC were allowed to take the court through the antecedents to section 298 to see if they added anything usefully supportive of the suggested "same building, same site" condition. In our view they did not..." (R (oao Cobalt Data Centre 2 LLP) v. HMRC [2024] UKSC 40)
- Not to be interpreted to conform precisely with preceding legislation if natural meaning differs
“The Corporation Tax Act 2010 formed part of the tax code rewrite: it was an Act “to restate with minor changes…certain enactments”. It was not a pure consolidating Act. It should not be interpreted so as to conform precisely with the legislation it supersedes if a difference in meaning is the natural meaning of the words used; nor should earlier legislation necessarily be construed so as to conform with the clear meaning of the superseding legislation.” (HMRC v. Hamilton & Kinneil (Archerfield) Limited [2015] UKUT 130 (TCC), §67, Warren J)
- Not necessary to look at previous law if word used unambiguous and can be construed satisfactorily
"[47] Lady Arden’s comments were not necessary for determination of the appeal in Derry and the effect of Farrell v Alexander regarding reference to the case law interpreting statutory provisions as they appeared prior to consolidation was not the subject of any written or oral submissions in Derry. It is not necessary in the present appeal to consider whether what was said in Derry is consistent with what was said about consolidation statutes in Farrell v Alexander nor how that would apply to a Tax Law Rewrite Project statute. In the present case, the use of the word ‘incurred’ is different from the earlier wording considered in Lowry; it is a plain English word that is unambiguous and can be construed satisfactorily in its context without the need to consider any glosses or baggage that might have attached itself to the earlier, pre-Rewrite provisions." (HMRC v. NCL Investments Ltd [2022] UKSC 9)
"[59(3)] The focus should remain on s1259 CTA 2009 and its particular statutory context, not s114. As Mr Tidmarsh pointed out, the Supreme Court in R (Derry) v HMRC [2019] UKSC 19 (at [9] and [10]) endorsed guidance as regards consolidation (that was also applied in relation to a tax law rewrite project which gathered disparate provisions into a single code) to the effect that "the principal inference as to the intention of Parliament is that it should be construed as a single integrated body of law without any need for reference back to the same provisions as they appeared in earlier legislative versions..."." (Muller UK and Ireland Group LLP v. HMRC [2024] UKUT 273 (TCC), Trower J and Judge Raghavan)
- Deliberate change in language generally implies some change in meaning
"[88]...There are warnings in well-known authorities about the general undesirability of becoming bogged down in statutory pre-history. Generally, a deliberate change in language implies some change in meaning..." (R (oao Cobalt Data Centre 2 LLP) v. HMRC [2024] UKSC 40)
- Rewrite unintentionally changing the law
"[61] The wording of section 574 ICTA and section 380 ICTA in the form that they were in immediately before ITA is very similar once the wording that relates to the particular form of loss is removed. Whilst we acknowledge that there are some material differences in the nature of share loss relief as compared to the other forms of loss relief - for example, in the manner in which the provisions of section 574 ICTA isolate the loss arising from the relevant disposal from the general computation of gains and losses for the year - we have not been directed to any provision in the law before the introduction of ITA which would suggest that there was a material difference in the manner in which share loss relief and the other forms of loss relief were to be claimed and enquired into. We can only conclude - consistent with the implication from Lord Carnwath's judgment in Derry SC - that there was no material difference in the law applicable to the manner in which share loss relief and the other forms of loss relief prior to ITA (i.e. that Schedule 1B TMA applied) and that ITA made a material change to the law in that respect, but only in relation to claims for share loss relief.
[62] On the first issue, we therefore agree with HMRC that Mr Murphy was not entitled to claim share loss relief "in" his return for the tax year 2005/6. Schedule 1B TMA applied and so the loss related to the tax year 2007/8." (Murphy v. HMRC [2024] UKFTT 537 (TC), Judge Greenbank)
Case law on predecessor legislation
See also presumption re Parliament's knowledge of the existing law
- Query whether it is permissible to look at previous case law
"[47]...However, given the prominence which the comments of Lord Carnwath and Lady Arden in Derry were given in parts of HMRC’s submissions, we think we should sound a note of caution that in a future case it may be necessary to give further consideration, with the benefit of submissions on the issue, as to whether and when it is appropriate to refer to earlier case law either in relation to a consolidation statute properly so called or to a Tax Law Rewrite Project statute." (HMRC v. NCL Investments Ltd [2022] UKSC 9)
"[87] It would often be laborious for a court to investigate what provisions had been consolidated in any particular provision of a consolidating statute. It would be wrong in general for it to do so. The process of drafting a consolidation statute requires specialist techniques and skills and can be very complex.
[88] But the position is different in relation to prior case law. The restraint required by the House of Lords in Farrell v Alexander [1977] AC 59 relates to legislative history, and not to relevant antecedent case law. Moreover, in practice, even where a statute is a consolidation statute, courts often look at previous case law on provisions that are consolidated to assist them interpret the new provision where there is any doubt or simply to confirm the view that they have formed. This is good sense in the interest of the consistency of the law, the fulfilment of Parliament’s presumed intention and the efficient use of judicial resources.
[89] There is a further issue, yet to be resolved, as to the application of the doctrine of precedent where there is a previous binding decision on the same provision in the earlier enactment: see the discussion in Bentine v Bentine [2016] Ch 489.
[90] Reference back to the earlier case law does not undo the good work done by the consolidation, or run counter to it, since Parliament is likely to have had the previous case law in mind in any event when enacting the consolidating statute without any pre-consolidation amendment." (R (oao Derry) v. HMRC [2019] UKSC 19)
- Apply previous case law if same wording is re-enacted
"[64] Fourthly, the concept of "items of a capital nature" has a very long history in the case law going back for almost a century. I will return to that case law later. It can reasonably be presumed therefore that, in enacting a similar provision in 2004, the intention of Parliament was to adopt the meaning which had been given to that concept in the case law.
[65] In R (N) v Lewisham London Borough Council [2014] UKSC 62; [2015] AC 1259, the Supreme Court re-affirmed the well known principle in Barras v Aberdeen Steam Trawling and Fishing Co Ltd [1933] AC 402. At para. 53, Lord Hodge JSC said that:
"… where Parliament re-enacts a statutory provision which has been the subject of authoritative judicial interpretation, the court will readily infer that Parliament intended the re-enacted provision to bear the meaning that case law had already established …"
[66] In my view, what Parliament did in 2004 is analogous. This indicates that Parliament intended that the phrase "expenses of a capital nature" should be interpreted in accordance with the meaning which it had acquired in the case law on what is materially the same phrase in other parts of the tax code." (HMRC v. Centrica Overseas Holdings Limited [2022] EWCA Civ 1520, Singh, Newey, Henderson LJJJ)
"[26] There is another principle of statutory interpretation (usually referred to as the Barras principle). This principle is that where words in an Act of Parliament have been given a clear and authoritative judicial interpretation, and Parliament uses the same words in a subsequent Act in a similar context, those words will be taken to have been used in the same way as the courts had previously interpreted them: Barras v Aberdeen Steam Trawling and Fishing Co Ltd [1933] AC 402. But since we are concerned with guidance given by HMRC rather than with court rulings, that principle is not in play." (Hyman v. HMRC [2022] EWCA Civ 185, Lewison, Simler, Snowden LJJJ)
- Apply previous case law where it is clear that Parliament intended a continuity of approach
"[70] On the facts of this case I have no doubt that it is appropriate to consider the earlier case law, for the following reasons:
a) As is apparent from the preamble to ITTOIA, its purpose was to restate the law with minor changes. That alone suggests that, in general, Parliament intended a continuity of approach.
b) That this is so is made plain in the Explanatory Notes to the Bill. They both confirm the purpose of the Act (to rewrite in clearer language, without generally changing the law) and indicate specific minor changes that are intended. No intended change is indicated in respect of s.402. This is obviously not determinative, but it is relevant in ascertaining Parliament's intention.
c) As will be seen from the discussion below, there was a well-established body of case law, including House of Lords authorities, that had identified the correct approach to determining whether a receipt from a foreign possession was income or capital for the purposes of Schedule D Case V. That is part of the context in which s.402 was enacted.
d) Importantly, paragraph 192 of the Explanatory Notes to the Bill expressly refers to that earlier case law and to the test as set out in the leading text book, Whiteman on Income Tax.
e) Since the Explanatory Notes are on any basis a legitimate aid to interpretation to understand the background to and context of the legislation, the mischief at which it is aimed and its purpose, it must be right to have regard to the fact that they refer to the earlier case law.
...
[126] As to what is income and what is capital, the obvious place to look must be the earlier case law. Given that it is a question of UK law (see [84] above) there is no other sensible candidate. If there were any possible doubt on the point then the Explanatory Notes make it crystal clear." (Beard v. HMRC [2025] EWCA Civ 385, Falk, Peter Jackson, Asplin LJJ)