Ritchie on the law

All of which has always left me thinking that an essential component of a GAAR is a change to the basis on which tax law is interpreted from a legal (literal) basis to an equitable (common law) basis.

This is after he complains about the Duke of Westminster and Partington cases which are, as any fule kno, the application of the Common Law to tax legislation.

Sigh.

20 comments on “Ritchie on the law

  1. Equity is by definition not common law, although it is true to say that equity is a creation of the English jurists working in a common law jurisdiction (England).

  2. As EL says, by definition.

    Aside from that, Ithink the only equitable way to interpret tax law is literally.

  3. What he really wants is a vague law so that it becomes ‘tax by negotiation’, but with HRMC having all the cards in its favour. Especially against smaller taxpayers who don’t have the stomach and resources for a fight.

    He despises rule of law, but knows he can’t come out and say it.

    So he farts about with nice sounding but meaningless soundbites like ‘spirit of the law’ or ‘equitable’ (as EL says, an expression he has confused) to hide his true desires.

    He is a dangerous guy.

  4. “change to the basis on which tax law is interpreted from a legal (literal) basis to an equitable (common law) basis.”

    (1) a ‘legal’ interpretation is not necessarily a ‘literal’ interpretation, especially in a common law jurisdiction.

    (2) Common law in not equity. They are fundamentally different. He should actually read a book.

    (3) The ‘legal’ basis he refers to is in fact a common law system. I don’t know how he differentiates. Well actually he does so because of a chronic lack of understanding of the legal system.

  5. Well actually he does so because of a chronic lack of understanding of the legal system.

    Which goes into a bucket with his chronic lack of understanding of economics, incentives, the tax system, the political system and even the basic principles of accountancy.

  6. What he seems to be saying in the quoted quote is that equity should be used to give courts the discretion to, as a lawyer would say, “do justice in the individual case” irrespective of what the law says.

    Which amounts to pretty much the criticism of him around these parts, that he wants the law to bend to his will where he doesn’t like the smell of something.

    On reflection I think my initial observation was too superficial. Equity does allow – indeed the reason it exists is to give – the courts freedom to do justice where black letter law is inadequate, but it’s far from being a carte blanche to make stuff up as you go along, which seems to be what’s he contending for.

    Equity, for example, has certain maxims (you can wikipedia them). For instance: he who comes to equity must do so with clean hands – ie, equity won’t ride to your assistance if you’ve been less than pure yourself; where equities are equal, the law will prevail, ie, where two countervailing equitable judgments cannot be resolved, the court will return to the black letter law to resolve the impasse, and so on…

    What’s important about these maxims, from the perspective of the principle for which he seems to contend, is that even the most obliging judge would have difficulty applying equity in aid of the state where a person or company had complied with the black letter law in the first place.

    I struggle to see how doing justice in the given case, as Ritchie would have it, could ever give rise to such arbitrary application of equity.

    So I think he’s identified a tool that suits his purposes, but you’d never be able to get it down off the shelf of the tool shed.

  7. Let me join everyone else in pointing out that if this moron knew anything about the law he would know that Equity, in the legal sense, arose because of the overly literal application of the Common Law.

    People who did not like the Common Law decisions, because they were, ta da, inequitable could and did petition the Crown. Who was usually busy seducing Ladies in Waiting, executing wives and looting the Fisc so he delegated it to the Lord Chancellor. Who was also a little busy and so set up the Courts of Chancery. Who promptly spent the next 400 or so years in direct conflict with the Common Law Courts – the battle between Certainty and Equity.

    Which was not resolved until the Courts of Chancery were abolished in the 1870s and the powers of Equity, plus all that case law, was merged with the Common Law Courts.

    Even a reasonably good knowledge of Dickens would have told him this.

  8. A good summary, SMFS, if I may say so… but I think your initial paragraph is wide of the mark: his terminology is loose, but I think he’s well aware that equity exists to get around black letter law. That’s what he wants. But as I think we’re agreed, equity would probably not deliver what he wants.

  9. Even equity is very formulaic in application now. The idea that judges can just make stuff up in order to impose an ‘equitable’ solution, then point to the maxims as justification, is both outdated and overly romanticised. Even in its heyday I don’t think it really worked like that, though my memory of the details has faded.

  10. Edward Lud – “A good summary, SMFS, if I may say so… but I think your initial paragraph is wide of the mark: his terminology is loose, but I think he’s well aware that equity exists to get around black letter law. That’s what he wants. But as I think we’re agreed, equity would probably not deliver what he wants.”

    Thank you, but what was wrong with my first paragraph? He identifies the Common law with Equity. When historically it was Black letter law. It was because of the Common Law being applied as was writ that Equity was needed – and hence led to two sets of Courts in England. He gets it wrong. He understands the conflict between Certainty and Equity but assigns the Common Law to the wrong side.

    10MyBurningEars – “Even equity is very formulaic in application now. The idea that judges can just make stuff up in order to impose an ‘equitable’ solution, then point to the maxims as justification, is both outdated and overly romanticised.”

    I think that is precisely what courts do with Human Rights law. Except they don’t bother pointing to the maxims.

  11. SMFS – “He identifies the common law with equity”…I’m not sure he does, actually, which is why I say his terminology is loose (and my initial observation, at the top of this thread, superficial). Or at least, if he does, I think he understands that it is not common law but that it exists in common law jurisdictions … which may, incidentally, be another problem for him: he wants, I think, a new international accounting regime, but equity only exists in common law jurisdictions. Civil law jurisdictions have something similar called, if memory s any guide, usufruct, but it’s not really the same thing. Which leaves conflict of laws to resolve the issue… I assume (bit outside my field of practice)

  12. Come now, folks, why so literal about Ritchie’s comment? We all know what he actually is saying…

    The law should be what I say it is.

  13. Of course as usual he hasn’t thought of the flip side – if the State can get more out of some taxpayers, because thats more ‘equitable’, it follows that other taxpayers may be able to argue they should pay less tax, because thats more ‘equitable’ too.

    When you start to play fast and loose with the law, it tends to come back and bite you on the bum, as Sir Thomas More wisely realised.

  14. Jim (#14), Edward (#12), I suspect what he really wants is something like the civil law “abus de droit”, which (I think) only works in favour of the State, not the taxpayer.

  15. there is a long standing principle of common law statutory interpretation when it comes to tax law (and criminal law). Effectively where there is ambiguity in the law which cannot be resolved through other methods of legal reasoning the courts will interpret the law in favour of the taxpayer.

    This rule is based on the premise that if the state wishes to use legal force to take the private property of an individual then it had better make sure that the law is clear. If it is not then the tax payer get the benefit of the doubt.

    Seems pretty logical to me

  16. Btw, HMG’s gonna introduce deferred prosecution agreements. Their application is initially likely to be as against ill-defined corporate ‘misfeasance’, but I can certainly see how Ritchie will end up getting his way, via DPAs. You know the sort if thing: Mr Vodafone, we’re very concerned about your tax return this year, we have the bottomless patience of the pliant taxpayer to support an interminable and costly investigation into you, which may or may not result in prosecution, we reckon it’ll cost you £400 million to fight us off, why don’t you write out a cheque for £399 million and we’ll call it quits.

    Ritchie doesn’t need equity at all. Not does he need helpful law. What he needs is muscle, leverage: DPA

  17. @Edward Lud: Isn’t that pretty much what they can effectively threaten now?

    Anyone who takes on the Revenue’s interpretation of the law knows its going to be a long, hard and costly fight, and its probably going to end up in court at some point, with consequent appeals, so they have to figure out if its worth the candle to pay up or fight.

  18. Jim, yes, up to a point, but DPAs add spice (prison) to the mix: we won’t prosecute you if you stop arguing and cough up, as distinct from what happens now, namely, we won’t mess you around for years on end, costing you an arm and a leg and possibly your business in the process.

Leave a Reply

Name and email are required. Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.