Introduction

Those accused of child abuse, but who maintain their innocence, may seek compensation from those who have initiated the allegations or acted upon them (e.g. medical professionals or those working in social welfare or child protection services). The damage for which compensation is sought may vary from psychiatric injury or distress to damage to reputation or economic losses in the form of lost remuneration or forfeited career opportunities. To this end, the alleged abuser may consider bringing proceedings asserting, for example, that doctors have provided an inadequate standard of therapeutic care or that local authorities have negligently or maliciously conducted their investigations into the alleged child abuse. Such claims may sound in malicious prosecution, defamation or the tort of negligence.

Introduction

It has been suggested that in the United States, the preferential legal treatment accorded to abuse claimants has resulted in the courts applying a ‘broad brush’ approach to proof of damage and causation. Once the wrong has been proved, the courts tend to assume that the abuse is responsible for all of the claimant's psychological problems without applying the strict rules of causation which would often otherwise spell the end of the claimant's case. Whatever the experiences of the US, the requirements pertaining to the proof of damage and causation may very well constitute insurmountable obstacles for the abuse claimant in England and Wales. It should be noted, however, that matters pertaining to proof of damage and causation in this type of litigation have rarely surfaced in our courts because the claim has been disposed of on prior issues of limitation or liability, leaving other issues unexposed and unexplored. The potential concerns arising out of the damage/causation inquiry are myriad, and the lack of legal authority on these issues specific to abuse claims makes reference to the experiences of other similar jurisdictions expedient for the purposes of speculating how these issues might be played out in the future. For example, it is frequently the case that abuse claimants have suffered a number of traumatic events apart from the abuse which is the subject of the litigation, and such complexity causes intractable problems when assessing causation and quantum.

The limitation framework

At the time of writing, the law of limitation as it affects abuse claims is poised for reform. If reform occurs, it will most likely take the form of a House of Lords ruling in an appeal from the A v Hoare judgment or Parliament's overdue enactment of a Bill implementing the Law Commission's recommendations of 2001. If reform has been effected by the time of publication, much of the discussion surrounding Stubbings v. Webb which follows will be of largely historical interest, but much of what is examined under the heading ‘non-battery claims’ will become equally relevant to actions in battery against the perpetrators of abuse.

Whatever the current state of the law, the popularity and potency of the limitation ‘defence’ to child abuse litigation has profound implications for claims in this area. It is undoubtedly the effectiveness of our limitation regime in pre-empting most civil litigation concerning abuse from ever reaching a full hearing that is responsible for the stunted development of the law covered in this book.

Mirroring the pattern of civil litigation connected with child abuse, the majority of this text has dealt with compensation for the harms inflicted by sexual abuse. Many have asserted that this type of abuse is unique in causing such extraordinary psychological repercussions to the abused and in being an act of such extreme heinousness on the part of the abuser. This distinctiveness has led to an assumption that the claims derived from sexual abuse merit special treatment by the courts. Whether or not these assertions of uniqueness are exaggerated, this perceived exceptionality has shaped the case law which emanates from claims for compensation. It seems that this real or perceived distinctiveness has found expression in two converse judicial responses: the ‘pliable’ and the ‘exacting’ responses.

Under the exacting response the courts tend to pronounce abuse claims as unworkable; their lack of fit with the templates of traditional tort actions may prompt the rejection of claims on procedural or doctrinal grounds. The courts express themselves as unwilling to accommodate this unfortunate victim and as not being prepared to distort principle to cater for an exceptional abhorrence. There are a number of examples of this approach in the jurisprudence of England and Wales, the most well known being Stubbings v. Webb, in refusing to accept that intentional abuse could be articulated as a ‘breach of duty’ in order to provide abuse victims with access to more generous and flexible limitation periods.

Introduction

This chapter explores civil litigation by adult claimants alleging that they were abused during their childhood years and examines the different forms of action which might be used to launch such proceedings. The particular difficulties in establishing each cause of action will be addressed and, where the courts of England and Wales have yet to hammer out these issues, case law from other jurisdictions is referred to as a means of providing tentative suggestions as to how English law might develop. Generic issues of proof of damage, causation, remoteness and limitation are dealt with in later chapters.

The current state of civil litigation relating to abuse

The number of civil claims for the harm caused by child abuse appears to be rising steadily and promises to continue to do so. This is not necessarily part of any compensation culture (which in any case has been rejected as fictional) but is the result of the fact that the prevalence of child abuse and the association between sexual abuse and long-lasting psychological trauma are now widely accepted.

Introduction

As will become apparent, the identification of child abuse is a multidisciplinary affair, drawing upon the combined but not necessarily compatible wisdom of medicine, law and sociology. This book seeks to provide an account of the journey of child abuse through the evolution of these different perspectives culminating in the legal, clinical and sociological discourse which prevails today. It is hoped that this discussion will serve as a useful backdrop and prelude to examination of the legal issues which have arisen in the context of abuse claims, and that it will assist in explaining judicial attitudes to abuse claims and some of the peculiar difficulties which abuse claimants face.

Evolving constructions of child abuse

The concept of child abuse has been described as ‘more like pornography than whooping cough’: in other words, it is a socially constructed phenomenon which reflects the operative values and opinions of a particular culture at a given point in time rather than an objectively defined occurrence. A striking example of this fact is the story of the Pitcairn Islanders recently convicted of having sex with adolescent girls from the age of 12. The case for the defence (although ultimately unsuccessful) was built upon the revelation that the practice of sex with adolescent girls on the islands had become the cultural norm and was an accepted ritual in Pitcairn Islands' society.

INTRODUCTION

Almost all national-level (central-government) VATs rely on the destination principle to tax international transactions, with tax imposed on imports and removed from exports. For example, under the destination-principle Japanese Consumption Tax (a form of credit-subtraction VAT), domestic sales and imports for consumption within Japan are taxable, but exports of goods to be consumed elsewhere are zero rated.

The adoption at the subnational level of some form of value adding technique (see Table 2.7 for a review of the forms) is being debated or enacted in many countries. There has been renewed interest in the problems of cross-border trade in the European Union (EU) and within federal systems, especially in Canada, India, Brazil, and the United States. In addition to the long-standing problems faced by the EU and federal countries with cross-border trade, some of the recent attention to these issues by the EU, academics, the International Monetary Fund, and others has been propelled by the explosion of trade over the Internet (electronic or e-commerce). Indeed, the United States Congress enacted a moratorium on state taxes on Internet access and on multiple or discriminatory taxes on e-commerce.

Subnational units of government should control the revenue necessary to provide the services that they render. In any federal system, the fiscal authority and responsibility of subnational (referred to in this chapter also as regional) units of government must be established – what revenue sources are available to the region, who defines the bases and the rates, and who administers the tax.

FORMS OF CONSUMPTION-BASED TAXES

INTRODUCTION

In this section of the chapter, there is a discussion of a direct tax on individuals that is measured by their level of consumption rather than their income. This tax is commonly referred to as a cash-flow or consumption-based income tax. Most taxes on consumption are indirect taxes. These taxes, also discussed in this chapter, are collected by sellers of taxable goods and services and are expected to be borne by final consumers of those goods and services. The indirect tax on consumption may take the form of a single-stage tax like the retail sales tax or a multistage tax like a value added tax.

A value added tax is a generic name associated with a multistage tax that is levied on the value added by each business firm at every stage of production and distribution of goods and services. In part, the description of a VAT depends on the method used in calculating tax liability. In this chapter, there is a discussion of the addition, sales-subtraction, and credit-subtraction methods of calculating VAT liability.

The legislature may alter a VAT base by removing some sellers or some goods and services. This alteration of tax base is accomplished by providing an exemption for designated businesses (such as small businesses) or entities, such as units of government or nonprofit organizations. The legislature also can alter the tax base by granting exemption or altering the rate for particular goods and services, regardless of the nature of the seller.

INTRODUCTION

The VAT has spread around the world more quickly than any other new tax in modern history. According to Alan Tait, the value added tax “may be thought of as the Mata Hari of the tax world – many are tempted, many succumb, some tremble on the brink, while others leave only to return, eventually the attraction appears irresistible.” The extreme of a country that left, only to return, is Japan. It enacted a VAT in 1950, delayed its effective date for several years, repealed it in 1954, and then enacted a different version of VAT in 1988.

This book covers value added tax and, in some parts, other consumption taxes in use or proposed in developing and developed countries. A valuable resource in electronic form that assists in locating tax legislation around the world is http://www.itdweb.com, developed jointly by the International Monetary Fund, the Organization for Economic Co-operation and Development, and the World Bank.

Tax on consumption generally refers to a tax on goods and services that are acquired by individuals for their personal use or satisfaction. It generally does not include goods and services that are physically used or incorporated by business in the production or distribution of goods or in the rendition of services (business inputs).

It is difficult for a business to operate internationally without considering the implications of sales tax or value added tax on international trade, whether or not the company's country of residence has a broad-based tax on consumption.

INTRODUCTION

Thomas S. Adams, an American, was one of the first commentators to discuss the concept of a VAT. Other than flirting with a possible federal sales tax as a source for revenue to finance World War II, the U.S. Congress has not seriously debated a proposal for a federal tax on consumption.

Retail sales taxes account for a significant share of state and local revenue, and at least one state relies on a state-level value added tax.

As discussed in Chapter 2, a consumption-based tax can take the form of an individualized consumption-based income tax (commonly referred to as a “consumed” or “cash-flow income tax) or the form of a consumption-based tax on sales of goods and services (single stage sales tax or multistage value added tax). This book has focused on the latter. Indeed, because most countries with consumption-based taxes rely on European-style VATs, this book concentrated on that kind of VAT.

On January 7, 2005, President Bush established a panel to recommend revenue-neutral options to reform the federal tax system to make it simpler, fairer, and more pro-growth to benefit all Americans. The panel issued its report on November 1, 2005. Although the panel received many submissions and discussed the possible introduction of a federal sales or value added tax, the panel did not include a transactional tax on consumption to supplement or replace any of the existing federal taxes on income, payroll, and wealth transfers. The next section discusses the panel's report.

GENERAL INTRODUCTION

There are a group of services that pose particular problems under a credit-invoice VAT like the EU VAT. They are gambling, transactions involving money and other financial products that are priced to include implicit fees, and insurance (a particular kind of financial service). In all three cases, the value added by the service provider should be subject to a broad-based VAT, at least to the extent that they represent personal consumption expenditures. In all three cases, more than with other consumer goods (other than used goods) and services, a significant portion of the business inputs are obtained from consumers who are not registered for VAT purposes. As a result, those nonregistered suppliers do not issue VAT invoices and the casino, bank, investment firm, or insurance company is not entitled to claim credit for any VAT component embedded in the price of those acquired goods or services. If VAT were imposed on the consideration for these services or products, the tax would apply to more than the value added by the service provider. Absent administrable rules to tax only the value added, it is not surprising that the default rule was to exempt these services. Recently, rules have been developed to bring more of these services within the VAT base, but problems remain. The chapter starts with an easy to understand example, gambling.

INTRODUCTION

Most VAT regimes require registered (or taxable) persons to file returns (and remit tax). In most cases, a firm is required to register if it makes or expects to make at least the statutory minimum level of annual taxable sales in connection with its business or economic activity.

Not all sales by a person come within the scope of a VAT. For example, in most countries, an individual's casual sales do not constitute taxable business activity and are not taxed. Hobbies and similar activities that do not rise to the level of a “business” generally are not taxed. An employee could be treated as a person rendering taxable services to her employer and therefore a VAT taxpayer, but no country has done this. This chapter discusses registration (including some required registration by nonresidents), who is liable for tax, and what economic activity subjects a seller to tax under various VAT regimes. In a significant case decided by the European Court of Justice, the court ruled that a person who, without his knowledge, participated in a carousel fraud was engaged in economic activity and was entitled to claim input tax credits.

REGISTRATION

IN GENERAL

Registration is part of a self-assessment VAT system that typically is reinforced with harsh civil and criminal penalties for noncompliance. Many VAT systems define a taxable person subject to the VAT rules as a person who is registered (a registrant) or is required to register.