Page 739 - SAIT Compendium 2016 Volume1

CASE DIGEST 2012–2013
Held
For those reasons the judge concurred with Nugent JA that the appeals be upheld and that a declaratory order be issued. The judge con ned that order to one declaring that at the time these proceedings were commenced the anti-dumping duties in issue in this case as incorporated in the Second Schedule to the Customs and Excise Act were valid and of full force and effect. As to costs the 6th to 21st appellants have been largely successful in securing the dismissal of the application and an order that the duties they sought to support are valid and of full force and effect. The authorities should be ordered to pay their costs, including the costs of two counsel, where two counsel were employed. As regards the remaining appellants, whilst they have been successful in having the application dismissed, they have failed to do so for the reasons they advanced and the declaratory order that the court grants is fundamentally contrary to their submissions and their aim in participating in these proceedings. In fairness the judge thought it appropriate that they and the authorities should each be liable for their own costs.
[Link: http://c.ymcdn.com/sites/www.thesait.org.za/resource/resmgr/2014_case_law/association_of_meat_importer. pdf]
5. Whether the assistance in the collection of taxes in terms of article 25A of the tax treaty between South Africa and the United Kingdom applies to taxes which arose prior to the insertion of the article into the tax treaty?
[Ben Nevis (Holdings) Limited and Metlika Trading Limited v Commissioners for HM Revenue & Customs (Case No: A3/2012/2201 / [2013] EWCA Civ 578]
Introduction
In this matter, the appellant’s original case was that Article 25A of the 2010 Protocol, which amended the 2002 Convention (Double Tax Agreement) between the United Kingdom and South Africa, did not apply to tax debts arising prior to the introduction of that Protocol. Alternatively, the effect of Article 27 was to limit the temporal scope of Article 25A for tax debts raised on or after 1 January 2013. The appellants abandoned the former argument, leaving their case in the ground for appeal. Within these grounds, the appellants submitted that Article 25A does not permit the collection of tax debt because Article 27 applies to Article 25A and has the effect of precluding mutual assistance in the collection of tax debts which relate to periods prior to 1 January 2003.
Facts
Ben Nevis ( rst appellant) and Metlika Trading Limited (MTL) (second appellant) are both companies incorporated in the British Virgin Islands. These companies are owned and controlled by a South African businessman, Mr David King. Ben Nevis became liable for the total sum of R2.6 billion (approximately £222 million) in taxes to the Commissioner for the South African Revenue Service (SARS) during the 1998, 1999 and 2000 years of assessment.
SARS argued that Mr King became aware of the investigation into Ben Nevis’ tax affairs and transferred the company’s assets into MTL. SARS found out that as a result of these activities, a fund of approximately £7.8 million has been credited to a London bank account in the name of MTL. SARS made a request to the Her Majesty’s Revenue and Customs to assist in the collection of the tax debt.
In 1988, the Council of Europe and the OECD adopted a joint convention on mutual administration assistance in tax matters which included the provision for assistance in the recovery of taxes. Since 2003, the OECD modern conventions on double taxation have also included provisions for mutual assistance in the collection of taxes. There have been double tax agreements in force between the United Kingdom and South Africa since 1939. During the appeal, the courts have examined the text from double tax agreements from 1939, 1946, 1962, 1968 and 2002. The 2002 Convention was signed on 4 July 2002. In its original form there were no provisions for mutual assistance in the collection of taxes. On 8 November 2010, the United Kingdom and South Africa signed a Protocol, also known as the 2010 Protocol, which amended the 2002 Convention and it came into force on 13 October 2011. This Protocol introduced for the rst time, in a treaty between the United Kingdom and South Africa, a provision for the assistance in the collection of taxes (Article 25A and Article 27).
Held
The High Court dismissed the appellant’s argument and further held that once the 2010 Protocol entered into force, Article 25A will apply to all tax debts regardless of when they arose. These taxes will only be subject to the quali cations in Article 25A itself and to the request for assistance being made on or after the 2010 Protocol entered into force. The High Court considered this to be in accordance with the OECD’s Model Tax Convention on which both Article 25A and the Double Tax Agreement is based.
The purpose of the 2010 Protocol was to assist international tax enforcement. This does not suggest any logical or policy reason for imposing a temporal limitation on the scope of Article 25A which gave it retrospective effect but excluded tax years arising earlier than the coming into effect of the 2002 Convention.
[Link: http://c.ymcdn.com/sites/www.thesait.org.za/resource/resmgr/2014_case_law/ben_novis_correct.pdf]
6. The leave of the court in respect of the institution of winding-up proceedings in terms of s 177 of the Tax Administration Act
[CSARS v Miles Plant Hire (Pty) Ltd (Case No 23533/2013: North Gauteng High Court Pretoria – 3 October 2013)]
Introduction
The Commissioner for the South African Revenue Service (the applicant) applied for the nal winding-up of Miles Plant Hire (Pty) Ltd (the respondent). The respondent opposed this application based on the provisions of s 177(3) of the Tax
SAIT CompendIum oF TAx LegISLATIon VoLume 1 731
CASE DIGEST 2012-2013