© 2025 by Michael Firth KC, Gray's Inn Tax Chambers
Contact: michael.firth@taxbar.com
F1. Presumptions (general)
Ejusdem generis (general words following specific words apply to things of the same kind)
"[72] We do not agree that the Option can itself be an “other arrangement” and hence an employee benefit scheme within section 1291(2). The term “other arrangement” must be something akin to a trust or scheme and an option is not such an arrangement." (HMRC v. NCL Investments Ltd [2022] UKSC 9)
"[54] As to whether the UURBS is an "employee benefit scheme" within s.1291(2), while I agree that the concept of "arrangement" may be broad it must be read in its context. As Lord Hamblen and Lady Rose said in NCL SC at [72]:
"The term 'other arrangement' must be something akin to a trust or scheme…"" (A D Bly Groundworks and Civil Engineering Limited v. HMRC [2025] EWCA Civ 1443, Falk LJ)
"[71] In our view, there are other respects in which the wording of section 1291, construed in context, is inapt to describe the arrangements in this appeal. In isolation, the reference in the definition of "employee benefit scheme" in section 1291(2) to "a trust, scheme or other arrangement" might be wide enough to encompass the contractual arrangements in this appeal. However, construing sections 1290 and 1291 together in their entirety, we think it likely that the reference to "other arrangement" is to be construed sui generis to refer to something akin to a trust or similar arrangement. The latter construction finds support at NCL SC [72]." (A D Bly v. HMRC [2024] UKUT 104 (TCC), Judges Thomas Scott and Greenbank)
Singular includes the plural
"[97] This approach is permissible linguistically because the phrase "under a contract" does not command the identification of a single contract. In statutory language the general rule is that the singular includes the plural. The requisite commitment could be identified in a contractual relationship constituted by more than one contract, or by an original contract varied later by a further agreement made by the tenth anniversary. However it may have come to pass, there will only be a single relevant contractual relationship on the tenth anniversary, which either will or will not contain the requisite commitment to the incurring of the relevant expenditure." (R (oao Cobalt Data Centre 2 LLP) v. HMRC [2024] UKSC 40)
"[78] Regarding Mr Peacock's submissions that Part 22 does not envisage the transfer of a trade (or part) which is then carried on as two trades by the transferee, I agree with Mr Bremner's submissions that the normal approach to statutory drafting (in accordance with s6(c) Interpretation Act 1978) is that reference to "trade" in s951 CTA 2010 can include "trades". Consequently, s951(3)(a) CTA 2010 can be read as: "a company ("the transferor") ceases to carry on a part of a trade ("part Y") and another company ("the transferee") begins to carry on the activities of part Y as its trades." Therefore even when one applies s279 in relation to CNSL on the Hive-down, the result of CNSL carrying on two trades ab initio is a matter which is within the scope of s951(3)." (CATS North Sea Limited v. HMRC [2024] UKFTT 512 (TC), Judge Bowler)
- Parliament presumed not to intend
"[25] My Lords, the presumption against double taxation is one facet of a wider common sense principle of the construction of statutes by which courts will often imply qualifications into the literal meaning of wide and general words in order to prevent them from having some unreasonable consequence which it is considered that Parliament could not have intended: see Stradling v Morgan (1560) 1 Pl 199 and, for a more recent example, R (Morgan Grenfell & Co Ltd) v Special Commissioner of Income Tax [2002] 2 WLR 1299. The strength of the presumption depends upon the degree to which the consequences are unreasonable, the general scheme of the legislation and the background against which it was enacted.
...
[28] I do not think that it advances the argument to debate whether this is really a case of double taxation or not. The question is whether the Act authorised what actually happened, whatever you choose to call it. The inevitable consequence of the valuation regime created by the ESI Order was to make the sale of the power stations irrelevant to PowerGen's rate liability in the 1999-2000 rating year but to allow the rating authority to claim rates from Edison for the period of its occupation. As the latter is conceded to be lawful, the question is whether a valuation regime which takes no account of the disposal of hereditaments to a rateable occupier in a rating year is so unreasonable, viewed against the scheme of the 1988 Act and the background to its enactment, that Parliament cannot be supposed to have intended paragraph 3(2) of Schedule 6 to authorise it." (R (Edison First Power Limited) v. Central Valuation Officer [2003] UKHL 20)
"[107] If HMRC’s argument were right, the result in F S Securities would have been different. The dividends that were in dispute in that case derived from income of the three companies in which the taxpayer had bought shares (one of which appears to have been a wool merchant). Those three companies earned that income presumably in the course of a myriad of transactions with third parties. It fed into the calculation of their profit which was then taxed in their hands and the franked dividends were then paid to the taxpayer. The payment of the dividends was a completely different transaction between different parties from the transactions by which the income had been earned but the House of Lords still held that the no double taxation principle applied and the dividends were not taxable as income in the hands of the taxpayer shareholder.
[108] I would therefore dismiss HMRC’s appeal in relation to Garrard and allow the Appellants’ appeal to that extent. There is no basis for remitting the Garrard transactions to the FTT. The outcome of these proceedings so far as the tax treatment of Garrard is concerned is that the no double taxation principle applies to exclude from the computation of the income of the Appellants’ solo financial trades the amount of the profit that is already taxed in their 114(2) trades." (Investec Asset Finance Plc v. HMRC [2020] EWCA Civ 579, Rose LJ)
"[53] In determining Parliament’s purpose, there is a general presumption that Parliament does not intend to legislate in a way that produces an unfair or unreasonable outcome. In R (on the application of Edison First Power Ltd) v Central Valuation Officer and another [2003] 4 All ER 209, a case alleged to constitute double taxation, Lord Millett put matters in the following terms at [116] and [117]:
“[The presumption against double taxation] is … a species of a wider genus, viz. the presumption that Parliament intends to act reasonably … The courts will presume that Parliament did not intend a statute to have consequences which are objectionable or undesirable; or absurd; or unworkable or impracticable; or merely inconvenient; or anomalous or illogical; or futile or pointless. But the strength of these presumptions depends on the degree to which a particular construction produces an unreasonable result. The more unreasonable a result, the less likely it is that Parliament intended it. … I do not, therefore, find it profitable to discuss whether the effect of the [Order] amounts to “double taxation”… I would prefer to go straight to the real question: whether the scheme established by the [Order] is so oppressive, objectionable or unfair that it could only be authorised by Parliament by express words or necessary implication.”" (HMRC v. Candy [2021] UKUT 170 (TCC), Mellor J and Judge Andrew Scott)
“While s 385 appears to contemplate that more than one person could be subject to tax on the same dividend (for instance, where one person received it but another person was entitled to receive it), a better reading is that only one person is liable to tax on the same dividend. Any other reading gives rise to double taxation.” (Vowles v. HMRC [2017] UKFTT 704 (TC), §78, Judge Mosedale).
Double taxation
- Taxing company and individual onward recipient from company not double taxation
"[128]There is a presumption that Parliament does not intend to tax the same person on the same income twice unless it clearly and expressly legislates to the contrary. This is the principle of double taxation and Lord Macmillan explained the principle in Canadian Eagle Oil Company Limited v R (1945) 27 TC 205 (which was concerned with the rules for taxing foreign companies on income with a UK source) at 257: “The result of these considerations is to satisfy me that for the purposes of Income Tax, the income of a foreign company and the income received from it in dividends by its British shareholders are not to any extent or effect one and the same income, but are two distinct incomes. The fact that the foreign company’s total income is in part composed of British dividends which have borne tax by deduction is entirely irrelevant to the question of the tax to be paid by a British shareholder on the dividends received by him from the foreign company. There is no such identification of the British shareholder with the foreign company as there is between a British shareholder and a British company, and the attempted analogy is only misleading. The income of the foreign company and the income received in dividends from it by its British shareholder are in our revenue law the incomes of two different persons, and there can thus be no room for any invocation of the rule against double taxation, which applies only against taxing twice the same income of the same person.”
[129] In our judgment, the FTT’s conclusion that the present case did not involve double taxation (in the sense described by Lord Macmillan in Canadian Oil) was correct. The Corporate Partner and the IP Appellants were not the same person and they were not taxed on the same income. They were being taxed on income from separate sources. The Corporate Partner has been taxed on its profit allocation and the IP Appellants were chargeable to tax under Case VI on the receipts derived from the final PIP Awards based on the decisions made by the Corporate Partner. For these reasons we dismiss the IP Appellants’ appeal on the Miscellaneous Income Issue." (HMRC v. Bluecrest Capital Management LP [2022] UKUT 200 (TCC), Leech J and Judge Herrington)
NOT PRESUMPTIONS
No presumption that statutory power cannot be used to override statutory duty (depends on interpretation)
"[62] In my judgment, there is no such general principle of statutory construction. It will of course be relevant to the assessment of rival interpretations of a provision that, on one view, it would permit a direction to be given that has the effect of precluding the performance of what would otherwise be a statutory duty, but that is no more than one of the factors which will need to be considered in arriving at the proper construction of the provision. It is not a principle or presumption of the sort which applies when a court is asked to determine whether a statutory provision overrides fundamental rights or the rule of law, or confers on another body the power to do so. As Lord Hodge said in R (O) v Secretary of State for the Home Department at para 43:
“Where the court is not dealing with an interference by statute with a common law constitutional right or with a statutory provision which declares such a fundamental or constitutional right, the normal canons of statutory construction apply.”" (R (oao VIP Communications Ltd v. SoS for Home Dept [2023] UKSC 10)
No domestic law principle that exceptions to be construed strictly
"[36] Mr Goudie sought to rely on a principle in the interpretation of EU legislation, according to which exceptions to a general rule laid down in the legislation are to be strictly construed: see Expert Witness Institute v Customs and Excise Comrs [2001] EWCA Civ 1882, [2002] 1 WLR 1674, paras 16-17. He submitted that section 43(6) was an exception to the general rule that occupied non-residential hereditaments are subject to rates and should therefore be given a strict construction to limit the extent of that exception.
[37] We do not accept this, for two reasons. First, there is no directly equivalent principle of interpretation of domestic legislation. The ordinary rules of statutory interpretation apply. Sometimes the main policy of a statute might be so clearly stated that it may be relevant to interpret any departure from it in a strict way, but much will depend on the particular features of the specific legislation in issue and there is no automatic or rigid rule to that effect.
[38] Secondly, in this case it is not possible to say that the principle of the taxation of occupied non-residential hereditaments is governing or dominant in this sense so as to justify such an approach. In fact, there is no exception to the principle of taxation of occupied non-residential hereditaments, but a carefully calibrated relief provision first in section 11 of the 1961 Act and now in section 43(6) (the extent of the relief having been adjusted over time) to fulfil a distinct policy objective as identified in the Pritchard Report." (London Borough of Merton Council v. Nuffield Health [2023] UKSC 18)
- However, possibly err on the side of less expansive interpretation
"[74] Here, the statutory scheme is one whereby agreements entered into between the tax authority and the taxpayer are given statutory force as an exception to the statutory provisions that would otherwise apply. As a starting observation that might well suggest erring on the side of an interpretation that is less expansive rather than more. While the statutory scheme sets some parameters around the subject matter that the agreement can cover (i.e. the matters referred to in s218 TIOPA), and that it can apply to one or more chargeable periods, it leaves open the precise scope. That is entirely to be expected given that the point of having a framework which gives effect to agreements with individual taxpayers is to reflect the particular circumstances of the taxpayer." (R (oao Refinitiv Limited) v. HMRC [2023] UKUT 257 (TCC), Green J and Judge Raghavan)