Philip Simpson QC

The challenge was brought in Scotland; there are parallel proceedings raised by other individuals in London.

The basis of the challenge was that imposing a tax on an amount of unpaid loan was a breach of the free movement of capital under EU law, which could be relied upon because the loan charge legislation was enacted prior to the end of the implementation period.

The court held that the challenge could not be brought by way of judicial review: it ought to have been brought by appeal to the First-tier Tribunal against any assessment eventually made on the petitioner on the basis of the loan charge legislation.

In any event, the free movement of capital was not engaged; the loan charge legislation did not interfere with the free movement of capital or, if it did, any interference was proportionate and justified.

The fact that it applied based on loans made before it entered into force did not render the legislation invalid. There was no infringement of the principles of fiscal legality (nullum tributum sine lege), legal certainty or legitimate expectations. Tax arising pursuant to the loan charge legislation was not a ‘penalty’ on the tests laid down by EU law.

Accordingly, the proceedings were dismissed.