© 2025 by Michael Firth KC, Gray's Inn Tax Chambers
Contact: michael.firth@taxbar.com
C7. Subsequent legislation
General
- Meaning + effect of earlier legislation cannot be affected by later legislative choice
"[123]...First, legislation and construction are different acts done by different bodies. Second, the legislation which the tribunals were construing pre-dates the amending legislation. The meaning and effect of that earlier legislation cannot logically be affected by Parliament's later legislative choice. Third, there is a recognised presumption against retrospective legislation, but the effect of decisions of the courts is necessarily retrospective. That effect is not in itself a reason for not adopting a conforming interpretation." (Trustees of Panico Settlement v. HMRC [2026] EWCA Civ 744, Laing, Asplin, Miles LJJ)
- Legitimate to consider subsequent legislation on the same subject if earlier legislation is ambiguous
"[73] ... Subsequent legislation on the same subject matter may only be relied on as an aid to interpretation where the legal meaning of an enactment is doubtful (see News Corp UK & Ireland Ltd v HMRC [2023] UKSC 7 at [59]). Mr Grierson has not persuaded us that the effect of s.42(11A) and Schedule 1B TMA upon s.574 ICTA is doubtful." (Murphy v. HMRC [2025] UKUT 165 (TCC), Richard Smith J and Judge Rupert Jones)
"[66] It is said by HMRC that s 60, Corporation Tax Act 2010 cannot be relied on by HKAL for the interpretation of s 118ZC, a provision put on the statute book some 10 years earlier by the LLP Act. Lord Hodge referred, in Scottish Widows plc v Revenue and Customs Comrs [2011] UKSC 32, [2011] STC 2171, [2012] 1 All ER 379, to what Lord Diplock had said in IRC v Joiner [1975] STC 657 at 669, [1975] 1 WLR 1701 at 1715, 1716, namely that it was a legitimate purpose of legislation by Parliament to clarify the law by making it clear in which of two alternative meanings the ambiguous language of an earlier statute was to be understood, but that it would only be if the language of a provision in an existing statute was ambiguous that it would be legitimate to infer that a purpose of the subsequent statute was to remove doubts as to what the law had always been. HMRC's position is that s 118ZC is not ambiguous in a relevant sense and that it cannot be relied on.
[70]...I make no decision about the meaning of section 60 since it has not been argued. The fact that its meaning is unclear means that it is of no assistance in the exercise of interpretation of section 118ZC even if it is technically admissible for that purpose.
[71] As to the question of the admissibility of section 60 as an aid to construction, the Tribunal dealt with this in Decision [81] to [85]. I agree with their conclusion that there is no relevant ambiguity in section 118ZC and that section 60 cannot be relied on. But if that is wrong, section 60 does not, as I have explained, assist HKAL." (Hamilton & Kinneil (Archerfield) Ltd v. HMRC [2015] UKUT 130 (TCC), Warren J)
"[46] Dealing firstly with the submission that the amendments act as an aid to interpretation of the pre-amended legislation.
[47] In DSG Retail Ltd v Dixons Retail Group Ltd [2020] EWCA 671 it has been stated:
"57 … In the course of argument, a lengthy debate took place as to whether or not it was appropriate to use later primary and delegated legislation to interpret earlier legislation. Many authorities were cited, most of which were referred to in customarily erudite passages from Bennion on Statutory Interpretation at sections 24-19 and 26-10 under the respective headings: “Inferences from later Acts” and “Law should be coherent and self-consistent”. The principle stated under section 24-19 is that “[w]here the legal meaning of an enactment is doubtful, subsequent legislation on the same subject may be relied on as persuasive authority as to its meaning”. It is perhaps sufficient to record that Lord Sterndale MR in Cape Brandy Syndicate v. Inland Revenue Commissioners [1921] 2 KB 403 at page 414 emphasised the point that the legislation being construed had first to be shown to be ambiguous when he said:
“I think it is clearly established in Attorney-General v Clarkson [1900] 1 QB 156 that subsequent legislation on the same subject may be looked to in order to see what is the proper construction to be put upon an earlier Act where that earlier Act is ambiguous. I quite agree that subsequent legislation, if it proceed upon an erroneous construction of previous legislation, cannot alter that previous legislation; but if there be any ambiguity in the earlier legislation then the subsequent legislation may fix the proper interpretation which is to be put upon the earlier”.
[48] The section of Bennion referenced in Dixons goes on to state that “where one construction would render a later Act superfluous the presumption that the legislature does nothing in vain may be relevant.”
[49] It is plain that the interpretation to be applied by HMRC would render the amendments superfluous and in vain. As such unless it can be established that the pre-amendment legislation was sufficiently ambiguous that it required clarification and that clarification was the legislative purpose for the amendments the later amendments would indicate that the interpretation contended for my HMRC would be unlikely to succeed." (Sally Judges v. HMRC [2022] UKFTT 77 (TC), Judge Amanda Brown QC)
- Interpretation of existing law not to be rejected because Parliament subsequently amended the law to make it explicit
"[87] That introduces one of the Respondents’ objections to HMRC’s proposed conforming interpretation set out in paragraph 86, namely that it impermissibly brings forward the effect of changes made by s30 of the Finance Act 2013. In the Respondents’ submission, Parliament legislated for those amendments to have effect only for accounting periods commencing on or after 1 April 2013. The Tribunal should not, under the guise of conforming interpretation, give legislation retrospective effect.
[88] We reject that submission. The process by which courts and tribunals interpret statutes inevitably results in what can loosely be termed “retrospective” effect since that process results in the true meaning of the statute being revealed only some time after it was enacted. That effect would be no more pronounced in this case simply because, as events turned out, Parliament chose to legislate in s30 of Finance Act 2013." (HMRC v. Volkerrail Plant Ltd [2022] UKUT 78 (TCC), Roth J and Judge Jonathan Richards)
- Absence of amendment in circumstances where another provision was amended may indicate the provisions should not be read as reaching the same result
"[58] Moreover, if, as Mr Thomas submitted, Parliament intended no or an extended time limit in section 44(9), the obvious course would have been for Parliament to have adopted the approach it adopted in amended section 80(4) FA 2003. As originally enacted, section 80(4) FA 2003 provided:
"(4) If the effect of the new information is that less tax is payable in respect of a transaction than has already been paid, the amount overpaid shall on a claim by the purchaser be repaid together with interest as from the date of payment."
This provision did not prescribe how (or when) the claim was required to be made. However, section 80(4) was amended by section 299(4) Finance Act 2004 to insert a new subsection (4) as follows:
"(4) If the effect of the new information is that less tax is payable in respect of a transaction […] than has already been paid –
(a) the purchaser may, within the period allowed for amendment of the land transaction return, amend the return accordingly;
(b) after the end of that period he may (if the land transaction return is not so amended) make a claim to the Inland Revenue for repayment of the amount overpaid."
In other words, on amendment in 2004 express provision was made in subsection (b) to enable a claim for repayment to be made after the expiry of the period allowed for amendment. Section 44(9) FA 2003 could have been similarly amended in 2004 to enable claims for repayment to be made after the expiry of the period allowed for amendment. However, it was not amended then or subsequently to make such provision." (Candy v. HMRC [2022] EWCA Civ 1447, Simler, Arnold, Nugee LJJJ)
- Purpose of subsequent legislation may be to remove doubt as to what the law has always been
“Lord Hodge referred, in Scottish Widows plc v Commissioners for HM Revenue and Customs (no.2) [2012] SC (UKSC) 19, to what Lord Diplock had said in Inland Revenue Commissioners v Joiner at pp 1715, 1716 namely that it was a legitimate purpose of legislation by Parliament to clarify the law by making it clear in which of two alternative meanings the ambiguous language of an earlier statute was to be understood, but that it would only be if the language of a provision in an existing statute was ambiguous that it would be legitimate to infer that a purpose of the subsequent statute was to remove doubts as to what the law had always been.” (HMRC v. Hamilton & Kinneil (Archerfield) Limited [2015] UKUT 130 (TCC), §66, Warren J).
- Earlier legislation should not necessarily be construed to conform with tax rewrite statute
“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).
Meaning does not change as a result of amendments to other legislation
"[91] Moreover, the “anomalies” to which HMRC refer arise as a consequence of the enactment of the regime conferring capital allowances on lessees under long funding finance leases many years after s61(1)(a) was enacted. We do not consider that these anomalies are a permissible aid to the construction of s61(1)(a). As Lord Neuberger said at [23] of Boss Holdings Ltd v Grosvenor West End Properties Ltd [2008] 1 WLR 289: "In my opinion, the legislature cannot have intended the meaning of a subsection to change as a result of amendments to other provisions of the same statute, when no amendments were made to that subsection, unless, of course, the effect of one of the amendments was, for instance, to change the definition of an expression used in the subsection."" (Altrad Services Limited v. HMRC [2022] UKUT 185 (TCC), Falk J and Judge Jonathan Richards)
- Subsequent legislation not casting significant light on how assessment provision interpreted
"[28] When considering the rival contentions, it is important, in my view, to remember that, during the period relevant to this appeal, section 29(1)(a) of TMA 1970 was in the form which it had taken when FA 1998 was passed, which did not differ significantly from the way in which it had been recast under FA 1994. We are thus concerned with the position in 1994/1998, not with that after any subsequent legislation had been enacted. That being so, I do not think the provisions of, say, the Finance Act 2004 (“FA 2004”), ITA 2007, FA 2012 or FA 2016 can shed any significant light on how section 29(1)(a) should be interpreted."(HMRC v. Wilkes [2022] EWCA Civ 1612, Newey, Baker, Arnold LJJ)
Meaning of definition does not change as a result of use of in later legislation
"[1] The question which arises on this appeal is whether a form of arrangement for the financing of litigation by third party funders is lawful and effective. This depends on the interpretation of an express definition of a term as set out in a statute. The case concerns the proper interpretation of a definition first used in one statutory context and then adopted and used in another context.
[2] It is necessary to consider the meaning of the definition in the first context. Lord Neuberger of Abbotsbury explained the proper approach in Williams v Central Bank of Nigeria [2014] AC 1189, at para 50:
“Where a term in a later statute is defined by reference to a definition in an earlier statute, it seems to me self-evident that the meaning of the definition in the later statute must be the same as the meaning of the definition in the earlier statute. Hence, the meaning of the term in the later statute is determined by the definition in the earlier statute. Further, the adoption of the definition in the later statute cannot somehow alter the meaning of the definition in the earlier statute. It accordingly follows that one has to determine the meaning of the term in the later statute simply by construing the definition in the earlier statute.”
We also have to consider whether later legislation throws any light on the proper interpretation of the earlier legislation." (R (oao Paccar) v. CAT [2023] UKSC 28)
- Legitimate to look at whether Parliament has acted on the basis of a particular interpretation
"[55] Even without explicitly requiring the courts to give a term in existing legislation a particular meaning, or to apply a specified rule when interpreting the term, Parliament may act in a way which treats the term as having a particular meaning and signals its approval of that meaning. A line of cases illustrates that this is a matter to which a court may properly have regard to resolve an ambiguity in the statutory language.
[56] In A-G v Clarkson [1900] 1 QB 156 the Court of Appeal had to decide whether property which was only contingently settled was "settled property" on which estate duty was payable under section 5 of the Finance Act 1894. In an earlier case a Divisional Court had decided that it was. The Court of Appeal was asked to overrule that decision. Lindley MR regarded the point as "an exceedingly nice one" but thought the question concluded by the fact that a subsequent statutory provision (section 14 of the Finance Act 1898) proceeded on the basis that estate duty was payable on contingently settled property. Lindley MR (with whom the other members of the court agreed) regarded this as "a parliamentary adoption" of the interpretation which the Divisional Court had put on section 5 of the 1894 Act.
[57] A similar point arose in Cape Brandy Syndicate v Inland Revenue Commissioners [1921] 2 KB 403, where Lord Sterndale MR said (at p.414):
"I think it is clearly established in A-G v Clarkson that subsequent legislation on the same subject may be looked to in order to see what is the proper construction to be put upon an earlier Act where that earlier Act is ambiguous. I quite agree that subsequent legislation, if it proceed upon an erroneous construction of previous legislation, cannot alter that previous legislation; but if there be any ambiguity in the earlier legislation then the subsequent legislation may fix the proper interpretation which is to be put upon the earlier."
In Ormond Investment Co Ltd. v Betts [1928] AC 143 at 156, Lord Buckmaster approved this statement as "an accurate expression of the law, if by 'any ambiguity' is meant a phrase fairly and equally open to diverse meanings". See also In re Macmanaway [1951] AC 161, 177; and Motala v A-G [1992] 1 AC 281, 291.
[58] A similar principle was endorsed in Re Billson's Settlement Trusts [1984] Ch 409, where the Court of Appeal thought it legitimate, if there was a doubt as to the true construction of the Legitimacy Act 1926, to take into account the fact that an Act of Parliament passed in 1969 was plainly drafted on the basis that the 1926 Act had a particular meaning. Browne-Wilkinson LJ said (at p.418):
"Although Parliament may, in 1969, have been mistaken as to the existing law, one should assume that it was not so mistaken; in the absence of clear words, one should seek to construe the earlier Act so as to accord with Parliament's understanding of its effect."
[59] This approach seems to me to respect the constitutional principle of Parliamentary sovereignty. Bennion (at p.801) quotes a statement of Thomas Hobbes in Leviathan (chapter 26) that "the legislator is not he by whose authority the laws were first made, but by whose authority they now continue to be laws." If Parliament has proceeded on the basis that an existing law has a particular meaning at a time when, if Parliament had understood the law to have a different meaning, it is reasonable to infer it that would have acted differently, that may properly be treated as an implied directive as to how a previously ambiguous law should be interpreted." (R (oao ZYN) v. Walsall Metropolitan BC [2014] EWHC 1918 (Admin))
- Assuming Parliament made a mistake about the law is an interpretation of last resort
"[65] That suggestion might have force if ascertaining the intention of Parliament involved a sociological inquiry into what was actually in the minds of individual legislators. However, that would be to mistake the nature of the interpreter's task. When courts identify the intention of Parliament, they do so assuming Parliament to be a rational and informed body pursuing the identifiable purposes of the legislation it enacts in a coherent and principled manner. That assumption shows appropriate respect for Parliament, enables Parliament most effectively to achieve its purposes and promotes the integrity of the law. In essence, the courts interpret the language of a statute or statutory instrument as having the meaning which best explains why a rational and informed legislature would have acted as Parliament has. Attributing to Parliament an error or oversight is therefore an interpretation to be adopted only as a last resort." (R (oao ZYN) v. Walsall Metropolitan BC [2014] EWHC 1918 (Admin))
- Explanatory notes to subsequent legislation not admissible
"[73] The Tribunal has some concern at referencing Explanatory Notes which relate to later legislation when the terms of the legislation, as interpreted by the FTT in circumstances in which it is right to apply the principle of comity, are clear and for which no contrary view is evident in the Explanatory Notes to the legislation to be interpreted. It is acknowledged that these Explanatory Notes state that the provisions “confirm” the principles outlined. However, mindful of the warning of Brooke LJ as set out in paragraph [64] above the Tribunal considers that to interpret the pre amendment language by reference to this note is at risk of treating the “wishes and desires” of HMRC about the historic scope of the statutory language as reflecting the will of Parliament." (Sally Judges v. HMRC [2022] UKFTT 77 (TC), Judge Amanda Brown QC)
Unimplemented proposals for change
- Shed no useful light on existing legislation
"[39] I would add, for completeness, that we were taken, as was the Upper Tribunal, to a number of discussion papers and proposals for possible extension or reform of the rules relating to the funding of political parties in the UK over the last thirty years, but as none of them was implemented, they can shed no useful light on the interpretation of section 24 in its existing form. As the Upper Tribunal rightly said, at [153] of the UT Decision:
"In summary, while there have been a number of proposals and reports commissioned in relation to the reform of political funding, changes have not been made to the conditions either for Short Money or for IHT relief. We were taken to several of the reports in some detail. We do not propose to comment on them save to note, overall, they serve to emphasise that this is a sensitive political area where proposals for change have been put forward, but, for whatever reason, the legislature has not resolved to implement them." (Banks v. HMRC [2021] EWCA Civ 1439)
Comparison with contract
- Subsequent conduct not a legitimate aid to interpretation
"… it is not legitimate to use as an aid in the construction of the contract anything which the parties said or did after it was made. Otherwise one might have the result that a contract meant one thing the day it was signed, but by reason of subsequent events meant something different a month or a year later." (Whitworth Street Estates (Manchester) Ltd v. James Miller & Partners Ltd [1970] AC 583 at 603, Lord Reid)
Conforming constructions
- Subsequent amendments cannot affect conforming construction of existing legislation
"[123] Mr Johnston relied on the last two sentences of paragraph 106 of the judgment of Lewison LJ (with whom the other members of this court agreed) in Revenue and Customs Commissioners v Ampleaward Ltd [2021] EWCA Civ 1459; [2021] STC 2260. He 'note[d]' that when Parliament eventually amended the legislation, that legislation was not retrospective. He added: 'The suggested conforming interpretation would have retrospective effect, although Parliament had expressly decided that it should not'. The ground on which this court dismissed HMRC's appeal in that case was that HMRC's conforming interpretation directly contradicted the words of the relevant legislation (see paragraph 106) and that that interpretation did not remedy an error in the domestic legislation (paragraph 109). The passage on which Mr Johnston relies is an obiter comment and does not bind this court. I am not, in any event persuaded by it, for three reasons. First, legislation and construction are different acts done by different bodies. Second, the legislation which the tribunals were construing pre-dates the amending legislation. The meaning and effect of that earlier legislation cannot logically be affected by Parliament's later legislative choice. Third, there is a recognised presumption against retrospective legislation, but the effect of decisions of the courts is necessarily retrospective. That effect is not in itself a reason for not adopting a conforming interpretation." (Trustees of Panico Settlement v. HMRC [2026] EWCA Civ 744, Laing, Asplin, Miles LJJ)