E5. Other pre-legislative materials

- Legitimate to look at pre-legislative materials where there is doubt

"[51] Where there is doubt as to the correct interpretation of a statutory provision, assistance may be derived from relevant consultation papers, reports, and explanatory notes: R (O) v Secretary of State for the Home Department [2022] UKSC 3, [2022] 2 WLR 343, paras 30-32; R v Luckhurst [2022] UKSC 23, [2022] 1 WLR 3818, para 23." (Rakusen v. Jepsen [2023] UKSC 9)

Consultation papers

"[109]...In carrying out their interpretative role, the courts can look not only at the statute but also, for example, at the explanatory notes to the statute, at relevant consultation papers, and, within the parameters set by Pepper v Hart [1993] AC 593, at ministerial statements reported in Hansard. We have seen that the EAT in this case took into account the explanatory notes and the Government’s response to the Public Consultation reviewing the Employment Relations Act 1999, published on 2 December 2003; and, in the light of those materials, it is not in dispute that one of the purposes of sections 145A-145F of the 1992 Act was to ensure that domestic law complied with the ruling of the ECtHR in Wilson and Palmer v UK which was itself concerned to ensure compliance with article 11 of the ECHR." (Kostal UK Ltd v. Dunkley [2021] UKSC 47)

- Useful confirmation

"[51] I have already noted that neither the Upper Tribunal nor the Court of Appeal had the benefit of the submissions of specialist counsel, nor the assistance of the intervener, in the way that has been of great assistance to this court. Nor does it appear that they were shown paragraph 88 of the consultation paper on the draft Bill quoted above which, so far as is relevant, makes the then intention of the promoters of the Bill crystal clear on this very point.
[52] Paragraph 88 easily satisfies the requirement for admissibility that it squarely addresses the point in issue. But it is only part of a consultation paper, and counsel were not able to put before the court any of the replies to consultation, or the other travaux préparatoires which may have lain between that consultation stage and the passing of the 2002 Act. Mr Loveday was able to point to a significant change in wording between clause 53 of the draft Bill and section 71 of the Act, by the introduction of the phrase “in relation to” the management of premises. This, he said, was amply sufficient to widen the previous management of the premises alone to a concept of the management of related shared rights and facilities. But no similar change was introduced into clause 71(1) of the draft Bill, which became section 96(1) of the 2002 Act. There even the draft Bill used the expression “relating to” the whole or any part of the premises. At that stage the promoters clearly did not regard the use of “relating to” as wide enough to extend the scheme to the shared management of estate facilities. In my view nothing turns on the change made to clause 53, since section 71 which replaces it is only introductory, and merely reflects section 96(1) by way of summary.
[53] I would for my part be cautious in giving too much weight to a statement in a consultation paper, although I would not accept Mr Loveday’s supposed distinction between assistance in divining high level policy or purpose and detailed application, when the statement in question is so precisely on point. In the end it is the language Parliament has chosen to use which must be the primary guide, both to purpose and detailed application. In the present case that language easily persuades me that the right to manage conferred by the 2002 Act does not extend to the shared management of estate facilities. Paragraph 88 is just useful confirmation that this fully accords with the intention of the designers and promoters of the scheme." (Firstport Property Services ltd v. Settlors Court RTM Company Ltd [2022] UKSC 1)

- Legitimate to use as guide to purpose of legislation

"[25]...It is legitimate to have regard to this paragraph as a general statement of the purpose of the CLRA. The Consultation Paper stood as an explanation of the government's policy to which the Bill which became the CLRA was to give effect, in a manner which made it functionally equivalent to a government white paper and other types of report proposing draft legislation, which are legitimate guides to the purpose of legislation adopted in the light of them: see Black-Clawson International Ltd v Papierwerke Waldhof-Aschaffenburg AG [1975] AC 591, in particular p 647 per Lord Simon of Glaisdale; Wilson v First County Trust Ltd (No 2) [2003] UKHL 40; [2004] 1 AC 816, para 56; and R (O) v Secretary of State for the Home Department; R (Project for the Registration of Children as British Citizens) v Secretary of State for the Home Department [2022] UKSC 3; [2023] AC 255, para 30. The Explanatory Notes dated 20 December 2000 for the Bill which became the CLRA referred to the Consultation Paper as the relevant statement of government policy: for the relevance of Explanatory Notes for identification of the purpose of legislation, see R (PACCAR Inc) v Competition Appeal Tribunal [2023] UKSC 28; [2023] 1 WLR 2594, para 42.

...

[98] First, the purpose of the legislative scheme as explained in the Consultation Paper includes the objective that opportunities for obstructive landlords to thwart the transfer of the right to manage should be kept to a minimum. The procedural requirements have not been included to create traps for the unwary, nor to afford unwarranted opportunities for obstruction on the part of objecting landlords who have not themselves been significantly affected by any particular omission to comply with them." (A1 Properties (Sunderland) Ltd v. Tudor Studios TRM Company Ltd [2024] UKSC 27)

"[54]...The genesis and broad purpose of the legislation about "salaried members" of LLPs contained in sections 863A to 863G of ITTOIA are, in my judgment, reasonably clear from the consultation exercise carried out by HMRC, following the announcement in the 2013 Budget of the proposal to enact targeted anti-avoidance provisions to remove the presumption of self-employment for some LLP members so as "to tackle the disguising of employment relationships through LLPs". I have already cited some of the main provisions in this consultation exercise which show the general nature of the mischief which the proposed legislation was intended to counter, and the evolution in the form of the envisaged remedial provisions in the light of the responses to the initial consultation: see [5] to [11] above.

[55] In particular, this material shows that, by the time the Finance Bill 2014 was published on 27 March 2014, the focus had shifted from an initial proposal to replicate the tests used in employment law generally when seeking to identify LLP members who were disguised employees, in favour of a new tripartite test which had no precise statutory or common law antecedents but instead sought to encapsulate three typical criteria for distinguishing a traditional relation of partnership on the one hand from a relationship more akin to employment on the other hand. These criteria became Conditions A, B and C, all of which would have to be met if M was to be treated as an employee of the LLP for tax and NIC purposes. It was never any part of the proposal that M should be deemed to be an employee for other, non-fiscal purposes. Consistently with this important limitation, section 863A(2) states explicitly that the deemed employment of M is only "for the purposes of the Income Tax Acts"." (HMRC v. Bluecrest Capital management (UK) LLP [2025] EWCA Civ 23, Henderson, Lewison, Arnold LJJ)

- Use to identify mischief not the meaning of words used

"The exclusionary rule was later extended so as to prohibit the court from looking even at reports made by commissioners on which legislation was based: Salkeld v. Johnson (1848) 2 Exch. 256, 273. This rule has now been relaxed so as to permit reports of commissioners, including law commissioners, and white papers to be looked at for the purpose solely of ascertaining the mischief which the statute is intended to cure but not for the purpose of discovering the meaning of the words used by Parliament to effect such cure: Eastman Photographic Materials Co. Ltd. v. Comptroller-General of Patents, Designs and Trademarks [1898] AC 571 and Assam Railways and Trading Co. Ltd. v. Commissioners of Inland Revenue [1935] AC 445, 457–458. Indeed, in Reg. v. Secretary of State for Transport, Ex parte Factortame Ltd. [1990] 2 AC 85 your Lordships' House went further than this and had regard to a Law Commission report not only for the purpose of ascertaining the mischief but also for the purpose of drawing an inference as to Parliamentary intention from the fact that Parliament had not expressly implemented one of the Law Commission's recommendations." (Pepper v. Hart [1993] AC 593, per Lord Browne-Wilkinson)

But see above Lord Browne Wilkinson's criticism of the distinction between mischief and intention.

- Unlikely for major change to be made without any discussion in preceding consultation document

"[57] We are strengthened in this conclusion by consideration of the statutory background to the introduction of sections 684 and 687 ITA 2007 in 2010. We have already mentioned the Consultation Document. Nowhere in that Consultation Document do we see any evidence of an intention to amend the TIS legislation so that a main purpose of obtaining a CGT exemption should necessarily constitute a purpose of obtaining an income tax advantage.

[58] We asked Mr Afzal whether, under the TIS provisions which preceded the amendments made in 2010, the argument which HMRC now advanced would have been possible. Mr Afzal argued, unconvincingly in our view, that such an argument could have been advanced on the earlier provisions. Mr Peacock submitted that that argument could not have been put forward. In our view, that argument was simply not open to HMRC under the earlier versions of the TIS provisions.

[59] It seems strange that such a fundamental change as that contended for by HMRC, should be wrought without any notice being given and without any discussion in the Consultation Document which heralded the introduction in 2010 of the new sections 684 and 687. That, of itself, suggests that HMRC's argument is unsound, although it is not necessary to our conclusions which are based on the proposition that something being an inevitable result does not necessarily and without more, and without consideration of subjective intention, make it a main purpose." (Osmond v. HMRC [2025] UKUT 183 (TCC), Meade J and Judge Brannan)

Treasury press statement accompanying budget

- Used to identify purpose

"[78] As to context, enterprise zones with their special features, including the availability of 100% capital allowances for expenditure on the construction of buildings in an enterprise zone in the year when the expenditure was incurred, were introduced in order to promote the regeneration of economically deprived areas. The regime was introduced in 1980, with the provisions for capital allowances included in the Finance Act 1980. A Treasury press statement accompanying the budget statement in that year set out clearly the underlying purpose of the regime:...

...

[83] The point that emerges from the Treasury press statement is that the government conceived that the need to kick-start industrial development within enterprise zones was to be attempted by a package of measures, including both tax reliefs and reduced interference from planning and other regulatory controls, over a 10 year period." (R (oao Cobalt Data Centre 2 LLP) v. HMRC [2024] UKSC 40)

Tax bulletin

- Contemporaneous tax bulletin used to shed light on mischief targeted

"[50] Mr Henderson's instructions were that the final paragraph above is a "limited concession allowed pursuant to HMRC's care and management powers". However, leaving to one side that it has never been published as a concession, both of the paragraphs derived from the Tax Bulletin are telling.

[51] First, the Tax Bulletin was published relatively shortly after the provisions were enacted, so what was said is capable of providing some guide to the mischief and purpose of the legislation as intended by its framers (see the comments of Lord Hodge in the R(O) case at [30] and the Cobalt Data Centre case at [71], supra). Secondly, the final paragraph clearly reinforces the link to paragraph 3 of Schedule 7 which I have already explained. Thirdly, the wording of that paragraph necessarily assumes that the claim "made" was a successful one, because that is the only situation in which paragraph 3 of Schedule 7 can apply. Fourthly, a situation where a claim is validly made but is subsequently recovered under paragraph 3 of Schedule 7, by means of a fresh charge at the time of degrouping rather than a retrospective cancellation of the earlier relief, is in fact harder to justify by reference to the wording of the proviso than the Appellant's interpretation. Finally and relatedly, it makes HMRC's overall position inconsistent and incoherent. It is very hard to see a legitimate basis to choose not to invoke the proviso where group relief was successfully claimed but is clawed back by a charge under paragraph 3 of Schedule 7, but to apply the proviso where the group relief claim did not succeed in the first place. That would be a highly questionable exercise of HMRC's care and management powers. Rather, if what was said in the Tax Bulletin was indeed a concession as HMRC (now) say that it is, then that might be justified on the basis of the Appellant's interpretation, but not HMRC's. If it was not a concession then I certainly cannot see how it can be said to be consistent with HMRC's approach.

[52] I should emphasise that the Appellant cannot succeed because HMRC have apparently adopted an inconsistent approach, however unattractive that is. This is neither a claim for judicial review nor could it be said that the Appellant's case falls within what was said in the Tax Bulletin. Rather, the Tax Bulletin is relevant due to its proximity to the introduction of the legislation and what it tells us about its purpose and the mischief at which it was aimed. The Tax Bulletin extract provides a strong indicator that the proviso is aimed at disapplying the Case 3 exception where group relief has actually been enjoyed. In other words, it provides a clear illustration of the mischief at which the proviso is aimed." (The Tower One St George Wharf Limited v. HMRC [2025] EWCA Civ 1588, Falk LJ)

Draft legislation (comparison with)

"[111] Andrew Burns QC, counsel for Kostal, pressed upon us that we should also take into account earlier versions of the Bill. He pointed out that the words “will not” in section 145B(2) were only inserted in later versions of the Bill, once it had been decided to include not only recognised unions but also unions seeking recognition. This was to support his submission that, in the case of a recognised union, the relevant words were “will no longer” which supported the interpretation that one was concerned with workers relinquishing their rights in the future to have their terms of employment determined by collective bargaining (ie that the workers were “contracting out” of collective bargaining). We are not convinced that it is permissible to consider previous versions of the Bill that became law. But even if we were to take those earlier versions into account, we do not think that it takes matters much further. In particular, it would be very odd, if Mr Burns’ submission were correct, for the words applicable to the standard situation of a recognised union (“will no longer”) to be relegated to brackets." (Kostal UK Ltd v. Dunkley [2021] UKSC 47)

- Deliberate decision to omit clause that would have achieved effect now sought

"If section 31 of the Act of 1981 were to be construed in isolation, I would see great force in the reasoning set out in the judgment of Woolf L.J. in S.K.F. [1989] 2 W.L.R. 378, 390-391 which I have cited. But in the light of the history it seems to me that there are three reasons why it is impossible to construe section 31(2) as having the effect attributed to it by Woolf L.J. of conferring a new jurisdiction on the court to grant injunctions against the Crown. First, section 31(2) and Ord. 53, r. 1(2) being in identical terms, the subsection and the sub-rule must have the same meaning and the sub-rule, if it purported to extend jurisdiction, would have been ultra vires. Secondly, if Parliament had intended to confer upon the court jurisdiction to grant interim injunctions against the Crown, it is inconceivable, in the light of the Law Commission's recommendation in paragraph 51 of its report, that this would not have been done in express terms either
in the form of the proposed clause 3(2) of the Law Commission's draft Bill or by an enactment to some similar effect. There is no escape from the conclusion that this recommendation was never intended to be implemented." (R v. Secretary of State for Transport (ex p. Factortame) [1990] 2 AC 85)