As a follow-up to what JP wrote about the bad effects of retroactive legislation, here’s a bit of legal context.
It is a central principle of English law that laws are not retroactive. Because of the Supremacy of Parliament they can be made to be, but it is very rare.
When the Budget is passed our rights are changed, we are subject to new taxes. Lord Rodger pointed out this interference is not retroactive. Real retroactive laws have an unattractive trend, and the Barclays idea fits the bill.
The case of Burma Oil Company v Lord Advocate required the government to compensate the owners of oil fields in Burma that had been torched during World War II. The torching was lawful, but amounted to a requisition of property. The compensation was for the requisition, not the damage – like compulsory purchase. The War Damages Act 1965 overturned the decision, exempting the government from paying.
Although retroactive criminal law is proscribed by the European Convention on Human Rights (ECHR), the War Crimes Act 1991 made it possible to try British citizens for war crimes committed in World War II. It was done because there was no provision to deport war criminals who had not been British citizens in the war, but who had become citizens since.
This Barclays law will not be the first retroactive tax law. The Finance Act 2008 amended pre-existing legislation – the amendments were treated as “always having had effect.”
Although the ECHR protects property, it says:
No one shall be deprived of his possessions except in the public interest ... The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary … to secure the payment of taxes.
And the Court of Appeal found that the Finance Act 2008 was lawful because it achieved “a fair balance between the interests of the general body of taxpayers and the right of the claimant to enjoyment of his possessions, without imposing an unreasonable economic burden on him.”
So this proposed Barclays law would be lawful under our own constitution and under the ECHR.
The overriding point for me is that Barclays has effectively been able to contract out of taxation law (even though not to its benefit) and that is a far more dangerous precedent to set than mere retroactive law. A court will never uphold such an agreement – statute always prevails – but in an uncodified constitution such political changes can have large unanticipated effects.
As an example, after the 1868 election Disraeli resigned before going to Parliament and losing a vote; a generation later that was commonplace. Parliament lost its most important function because of a political decision.