Ben Nevis (Holdings) Ltd. v. Revenue and Customs Commissioners, [2013] BTC 485, [2013] EWCA Civ 578

Before rejecting the taxpayer's submission that the enacting U.K. legislation for Article 25A of the Convention between South Africa and the U.K., which if it permitted the South African Revenue Service to collect tax debts arising prior to the coming into force of the Convention through the respondent (HMRC) of South African taxes, would thereby entail retrospective application of such legislation, Lloyd Jones LJ, in confirming the decision below, referred with approval (at para. 48) to:

the distinction drawn by Lord Rodger in Wilson v First County Trust (No. 2) [2004] 1 AC 816 at paras. 186 et seq., between retroactive operation of legislation and statutes making prospective changes to existing rights. In the present case the judge found that an enactment is not retrospective in any objectionable sense where the enactment is simply applied at a time after its commencement to a state of affairs existing at that time, even though that state of affairs came in to existence before the commencement.

Before rejecting the taxpayer's submission that Article 25A of the Convention between South Africa and the U.K., which if it permitted the South African Revenue Service to collect tax debts arising prior to the coming into force of the Convention through the respondent (HMRC) of South African taxes, would thereby entail retrospective application of the Convention, Lloyd Jones LJ referred to Article 28 of the Vienna Convention ("Unless a different intention appears...the [treaty's]provisions do not bind a party in relation to any act or fact which took place or any situation which ceased to exist before the date of the entry-into-force of the treaty..."), and stated (at para. 43):

Although the Vienna Convention is not in force between the United Kingdom and South Africa, the basic rule on non-retroactivity reflected in Article 28 may be taken to be declaratory of existing rules of customary international law binding on all States (Ambatielos case (Preliminary Objections) ICJ Rep. (1952) 40; Sinclair, The Vienna Convention on the Law of Treaties, 2nd Ed. (1984) p. 85). However, the principle of non-retroactivity is not a peremptory norm of international law and, as Article 28 makes clear, it is open to the parties to agree to the contrary.

Before rejecting the taxpayer's submission that Article 25A did not apply to permit the collection through the respondent (HMRC) of South African tax debts arising prior to the coming into force of the 2002 Convention between South Africa and the U.K., Lloyd Jones LJ stated (at para. 23):

For centuries, courts in this jurisdiction have refused to entertain claims for the enforcement of revenue or other public laws of a foreign State (See, for example, Government of India v Taylor [1955] AC 491). …[T]his reflects a well-established and almost universal principle that the courts of one country will not enforce the penal and revenue laws of another country. The principle is, however, subject to contrary agreement by treaty… .

The most recent Income Tax Convention between the U.K. and South Africa had entered into force on 17 December 2002, and a Protocol providing for mutual collection assistance (through the addition of Article 25A) was subsequently entered into "in respect of requests for assistance made on or after the date of entry into force of this Protocol" of 13 October 2011. After obtaining judgment against a South African resident (Nevis) on 4 March 2011 for Rand 2.6 billion of unpaid taxes for 1998 to 2000, the South African Revenue Service (SARS) (subsequently to 13 October 2011) requested the respondent (HMRC) for collection assistance. In rejecting the taxpayer's submission that Article 25A did not apply to the collection of tax debts arising prior to the coming into force of the 2002 Convention, Lloyd Jones LJ stated (at para. 23):

"Taxes" in Article 25A(2) does not need to be limited by reference to the date of their accrual. Article 25A has no bearing on liability to tax and is merely concerned with proceedings for enforcement. Whereas provisions which modify tax changes need to be linked to the relevant tax period so as to ensure a smooth transition from the existing rules to the new rules, there is no need to make similar provision for administrative provisions such as Article 25A which may, without difficulty, be brought into effect as soon as the Protocol comes into effect.