HMRC backtracks on no-deal Brexit ‘Henry VIII’ powers

HMRC has announced that it will not deploy emergency no-deal Brexit powers to change or waive existing laws on VAT, customs and excise. This follows the threat of a judicial review.

The right to change primary legislation by statutory instrument, outside of the parliamentary process, was controversial in the view of certain parts of the legal community. The Public Law Project, a legal pressure group, threaten a judicial review of the powers. The legal basis for the Public Law Project’s challenge was that the Cross-border Trade (Public Notices) (EU Exit) Regulations 2019 went beyond the powers of its parent act, the Taxation (Cross-border Trade) Act 2018 (TCTA). Statutory instruments are considered to be ultra vires (beyond their powers) and not lawful when they do so.

On 18 October, HMRC conceded and agreed not to use the powers.

The powers, passed under the Cross-border Trade (Public Notices) (EU Exit) Regulations, gave Treasury the rights to:

• waive tax obligations; 
• extend deadlines; 
• prolong any tax-related timescale; 
• waive duties to levy penalties or interest; and confer certain other benefits.

Any single measure would could only be used for two months. And the regulations were intended to cover the period 1 November 2019 until 30 April 2020.