Uber – a new front

Beleaguered regular readers will recall the Good Law Project’s ongoing High Court dispute with Uber in relation to its tax avoidance. You can see the latest briefing here.

Earlier today, I opened up a new front in that dispute. It’s important, but to understand it, you’ll need a short lesson in VAT.

Pay attention at the back.

Assume you’re registered for VAT. When you sell something for 100 you actually charge your customer 120 including VAT. Tax lawyers call the extra 20 your output tax. Now, assume that to make the thing worth 100 you have to buy stuff worth 70. Your supplier (if also registered for VAT) will also charge you an extra 20% so you’ll end up paying 84. The extra 14 is called your input tax. (Of course, for your supplier that 14 is a tax on its sales and so, for it, it is output tax).

Then, every so often, you pay to HMRC the difference between all of the 20s you’ve charged and all the 14s you’ve paid. On all the value you’ve added – hence “value added tax”.

Because the 14s reduce the amount of money you have to hand over to it, HMRC obliges you to hold good evidence that you’ve paid those 14s. They require you to hold a VAT invoice from your supplier. But they also recognise that sometimes it might be pretty clear that you’ve paid those 14s even though you don’t hold an invoice. And so they retain a discretion to allow a claim for a 14 even without an invoice.

Now, I say I took an Uber and that I am entitled to recover VAT on the cost of that journey. But I don’t have a VAT invoice because Uber won’t give me one. My claim that it must is the subject of the High Court case mentioned above.

But I can ask HMRC to exercise its discretion to allow me to claim the £1.06 of input tax I say I paid to Uber even without a VAT receipt. And earlier today I did. You can read my letter here HMRCInputTaxLetter.

Now, why is that important?

Well, if HMRC decides to allow my claim it will be accepting that I have paid £1.06 input tax to Uber and, implicitly, that it has to collect that £1.06 from Uber. And if that is true for my £1.06 it will also be so for every other £1.06 Uber has ever charged.

And if HMRC decides to refuse my claim I could have the opportunity to appeal against that rejection and contend that, contrary to its decision, I have paid input tax to Uber. And if I won that appeal the tribunal would be deciding that Uber has charged VAT and, implicitly, has to pay that VAT to HMRC. Along with all the other VAT Uber has charged.

And that appeal would be heard before the First-tier Tribunal (Tax Chamber). I would be the Appellant, HMRC would be the Respondent and Uber would be grumbling in the back of the room. And, unlike in the High Court, in the Tax Chamber the loser doesn’t have to pay the winners’ costs.

The (missing) Conservative Party Manifesto 2017

Who knows why the Conservative Party has deleted its Manifesto?


Surely not because they do not wish to be held to the promises they made to the electorate only a few short weeks ago? Surely?

Fortunately I have saved a copy. Just click here Manifesto2017.


Note: What the Conservative Party can take down, the Conservative Party can put back up again. Well, on its website anyway. And the Manifesto, which had been removed, is now back.

But as to which of the promises they made to the electorate in that document they still plan to keep – and which they plan to break – time alone will tell…


Grenfell Disaster Relief Funds

However angry we feel about apparent inaction before the Grenfell Tower disaster it is hard not to feel humbled by the response since. The streets around the Tower yesterday were filled with people donating their time – and also the result of many thousands of generous donations of clothes and household goods and food.

And the donations continue to pile up in the many crowd-funding sites.

Of the many challenges ahead, one is how to distribute those donations? How do you ensure they go to the right people? How do you match the need for speedy distribution of money to those in need with the need to ensure the money ends up in the right hands? This poses real challenges for even large organisations – but experience tells us it can be a cause of real concern to individuals whose fundraising efforts have raised, sometimes, very substantial sums of money indeed.

It also poses challenges for the crowd funding sites themselves. Whatever protocols they have in place there are reputational risks if those monies are misused.

To that end, I spoke to James Kessler QC yesterday and asked him whether he would be prepared to draft a trust deed. You might think of a trust as being a kind of strict legal guarantee that monies will only be used for the purposes of the trust.

This morning he forwarded to me a Deed and a Note on that Deed.

His Note can be seen here: GrenfellNotePDF. And the Deed can be seen here: GrenfellTrustPDF.

A few points on the Deed:

(1) I am in discussions with one of the major crowdfunding sites which is supportive of this initiative. I hope to be able to say which site later today.

(2) If that site is able to support the initiative we may also ask it to set up a page enabling donations to be made directly to the trust.

(3) The initial trustees – for the sake of speed – will be myself and PJ Kirby QC. Although there is provision in the Deed (as is normal) for professional trustees to be paid, neither I nor PJ will take any payment.

(4) Obviously it is desirable that the Trustees include key community stakeholders. And, should the Trust be taken up we will look to appoint them as additions to or replacements for PJ and myself.

(5) If you are someone who has crowdfunded and would like the trust to administer the monies you have raised, please write to me at info@goodlawproject.org. If you do ask the trust to administer those monies we will obviously have regard to the purposes for which you raised those monies and how you would like them to be distributed. We cannot agree to be bound by your views as to how they should be distributed.

(6) We would especially like to hear from people who have experience of establishing and administering such trust funds, especially if you have immediate capacity. If your situation is such that you need to be paid, please state that too. Please contact us at info@goodlawproject.org with a short CV.

(7) If you are a crowdfunding site that would like to avail yourself of this facility to help your fundraisers please also let us know.

It is my intention that this project going forward will be hosted at http://www.goodlawproject.org. When it is ‘up’ there, I will remove it from here.


On whether and why the Article 50 Bill is flawed

On the day the Government published its Article 50 Bill I wrote this piece setting out what seemed to be a technical flaw in the Bill.

In the following sub-paragraphs, I set the argument in its broader context. But in reading that context it will be helpful if you bear in mind the structure of Article 50, paragraph 1 of which requires a decision to withdraw in accordance with our constitutional requirements; and paragraph 2 of which requires notification of that decision:

(1) what the Bill – now of course an Act – does do is authorise the Prime Minister to notify the EU that we intend to leave the EU;

(2) what it does not do is make a decision that we should leave the EU;

(3) you search for such a decision in vain. Even if you extend your search beyond the Act. Despite what David Davis asserted in debates in Parliament, the Supreme Court was very clear that the Referendum was not legally a decision to withdraw. In private correspondence, the Brexit Secretary has pointed to facets of the broader political context but he has not pointed to any decision;

(4) the reason the Referendum was not a decision to withdraw is because, in enacting it, Parliament chose to make it advisory;

(5) the Supreme Court judgments do not demonstrate a laser-like focus on whether they are addressing the Article 50.1 limb (the decision to withdraw) or the Article 50.2 limb (the notification of that decision). The (likely) reason for this is that the Claimants decided – and eventually the Government agreed – that for the purposes of the point before the Supreme Court the difference between the two was only formal;

(6) however, the structure of Article 50 is quite clear: it is only the decision that need be made in accordance with our constitutional requirements. There are no formalities governing the notice itself – it could be made via a tweet; and

(7) remember point (6) and the Supreme Court judgments are brought into some focus. In addressing, as they do, what our constitution requires they must (primarily) be concerned with the decision rather than its notification.

This sequence of reasoning has animated a number of campaigners. Might it have as a consequence that, legally speaking, the Article 50 clock has yet to start because we have yet to decide to leave. And that what was notified to Donald Tusk was a nothing? So that Parliament would have now to choose whether we want to leave the EU?

I’ve sat apart from those discussions for various reasons. One of them was that I hadn’t understood why the Government did things in this way? Why did it not enact a decision? Why no section 1(1) of the European Union (Notification of Withdrawal) Act 2017 saying: “The United Kingdom intends to withdraw from the European Union”?

It is inconceivable to me that this omission was accidental. The short Act is drafted with some care. By way of simple illustration I spent some time with a leading Constitutional Law QC examining whether it was effective to notify a decision to withdraw the United Kingdom from Euratom before concluding that, despite initial appearances, it was.

But here’s a speculation and one – I think – that has the ring of truth.

If you were determined to leave the EU you would not want the decision to do so to be sourced in an Act of Parliament. After all, a thing that is done by MPs can be undone by MPs. But source that decision in the Referendum, source it in ‘the will of the people’, and it cannot be undone otherwise than by the people whose future will you could then choose to mute. And the fact that, legally, in the Referendum the people had not decided to leave but simply to advise Parliament, well, that would be a nuance too far for Parliament. It would lack the will or the courage or the perspicacity to seek to amend the Bill to introduce a decision to leave.

It takes no great effort for me to imagine a conversation between David Davis and James Eadie QC (First Treasury Counsel and the Government’s key legal advisor). Davis says that for his own reasons he wants the Act not to make the decision to leave the EU. Eadie responds by observing that to do so would leave the Act with a technical flaw. Davis says that, surely, no judge would dare declare the withdrawal notification a nullity. Surely?

And what does Eadie respond? Well, someone will have to go to court to find out.





How to choose the next Prime Minister – and influence Brexit

The candidates are lining up in the race to succeed Theresa May as next leader of the Conservative Party and – barring yet another General Election – Prime Minister.

They range, as can be seen, from the fantastically toxic Michael Gove to the public’s choice, Ruth Davidson. The race looks certain de facto to be a third – in the space of little over a year – referendum on the nature of our future relationship with the EU.

The procedure whereby the leader is chosen is set out in Schedule 2 of the Conservative Party Rulebook.

Broadly, if there is more than one candidate – and after the disaster of Theresa May’s premiership it is hard to imagine another act of anointment – MPs narrow that number down to two candidates and members then make the final decision.

Which members get to make the final decision? Well, Schedule 2 Rule 5 (see above) sets out two criteria. You have to be a member at the time of the “call for nominations” (and at the time of writing there has been none) and you have to have been a member for three months at the close of the ballot (presumably of Party Members) for the leadership.

So, unless the contest is over within three months (and remember: it has yet to even start) new members joining now will have a right to vote.

Joining costs £25 – or a mere £5 if you are under 23. This compares with the last Labour leadership election where becoming a “Registered Supporter” cost £25 whatever your age.

Most importantly of all, you will have a high degree of influence. The Conservative Party membership is low. This recent estimate from Professor Tim Bale (published by the House of Commons Library) gives a figure of between 130,000 and 150,000.

And, of course, turnout will be less than 100%. In the 2016 Labour Leadership election, for example, it was 78% but that may, given the febrile atmosphere, have been artificially high. In 2010 it was 72%. 72% of the middle figure of 140,000 is 101,000 so the winning candidate would need only 51,000 (rounding to the nearest thousand) votes. It is perfectly possible that just a few thousand could tip the balance.

Are there any catches?

Well, Rule 17.7 gives the Board of the Party an absolute discretion to cancel or refuse your membership. But nothing ventured nothing gained, you may think. And on a refusal – and I think likely a cancellation – you would get your money back.

Membership is open to those who share the Conservative Party’s objects and values (see Clause 3 of the Rules). But they are (so far as I can see) nowhere stated.

You would – at least if the Labour Party found out (often they don’t) – lose any membership of the Labour Party (see Chapter 2 Clause 1.4.B).

And you have to agree to the Terms and Conditions of membership of the Conservative Party.

But they are relatively modest.

If you want to choose the next Prime Minister – albeit from a shortlist – and influence Brexit… perhaps you should join the Conservative Party.