The Whitehouse Consultancy

It seems common sense that, if an error is found in legislation, then this law should be immediately amended; at the very least, the erroneous provision should not be allowed to influence the course of a related court proceeding. This is not, however, how some EU Member States seem to view such a scenario.

Three years ago a company called me up with quite a technical problem relating to import duties on whey protein products. In essence, this company was being faced with a very large demand of back duty from the UK tax authority, Her Majesty’s Revenue and Customs, based on the results of a test for milk fat provided in EU legislation. It rapidly became apparent that this test was faulty and gave wrong results when applied to whey protein products – this placed the products in a category for which higher duty was demanded.

This should have been an easy case to solve: since the test had been proven to throw up results that were wrong, the UK authority should have withdrawn its demand, whilst asking the European Commission to amend its legislation.

Instead, however, the case escalated to the tax tribunal and ultimately required a three year long lobbying campaign just to ensure that a responsible company was not penalised on the basis of an erroneous provision. Who is to blame is hard to say, as all authorities involved had their reasons – some reasonable, some less so.

The UK tax authority was bound to apply EU legislation (even if erroneous); the European Commission could only amend the rules on the basis of an independent scientific analysis (itself quite time consuming), and any resulting amending legislation could only be adopted if approved – or a at least not opposed – by the EU Member States (who, for their own reasons, didn’t support the solutions presented by the Commission).

The issue was a drain on the time and effort of virtually everyone involved. Without the assistance of Members of the European Parliament, national Parliamentarians, the US authorities and a strong EU wide public affairs campaign continually pressing for action form all involved, the issue could still have dragged on into the next European Parliament, requiring even more time and effort to brief new MEPs.

We are now hopefully only a couple of weeks away from a provisional solution that will ensure that a responsible business is not penalised until an alternative scientific test for milk fat is proposed and adopted at the EU level. The Commission now needs to formally adopt its proposed amendment that was debated – at length – by the then 28 EU Member States, who all had different views as to how the issue is to be tackled.

This issue has not shown the European Union at its most dynamic, even despite the Commission being very helpful and proactive. What the three-year-long saga has shown, however, is the value of a consistent and informed lobbying campaign. Only a campaign that harnesses specialist knowledge of the European decision-making process and the bodies involved can give one company a chance, in the face of institutional sluggishness, of fairly resolving a complicated tax case such to nearly everybody’s satisfaction.

Chris Whitehouse is Chairman of leading public affairs consultancy ww.whitehouseconsulting.co.uk whose Food Regulation Team advise many organisations and businesses in the specialist food product sector. He is also Director of Strategy of consumer organisation Consumers for Health Choice www.consumersforhealthchoice.com and of the European Specialist Sports Nutrition Alliance www.essna.com.

 

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