Fixing Drafting Errors from the Bench: Tax Certainty, Legislative Gaps, and the Role of the CCJ

In tax planning conversations, you still sometimes hear this line:

“Yes, that looks like a gap in the law. But if Parliament didn’t write it in, the court can’t put it there. So we’re safe.”

After the Bank of Nova Scotia v Comptroller of Inland Revenue (Saint Lucia) decision, that comfort looks increasingly fragile.

In this case, the Caribbean Court of Justice (CCJ) was willing to treat an obvious omission in the relevant Schedule of the Income Tax Act as a drafting error—and interpret the statute as if the missing words were there. That choice ensured that branch-to-head-office payments fell within the withholding tax (WHT) regime, in line with what the Court saw as Parliament’s clear purpose.

For businesses operating in the Caribbean, this has big implications:

• Legislative gaps are no longer “automatic wins” for taxpayers.

• Courts may “fix” obvious drafting mistakes where the intention is clear.

• Tax planning that relies on clever spotting of omissions is now much riskier.

This article explores how and why courts correct drafting errors, what the CCJ’s approach means for tax certainty, and how Boards, CFOs, and Tax Leaders should adapt their risk and planning strategies.

1. When Courts Admit the Text Is Wrong

Courts generally start from a simple place: they apply the words Parliament has written. But what happens when:

• the words are obviously incomplete,

• they lead to nonsense or absurdity, or

• they clearly defeat the purpose of the legislation?

In those situations, courts sometimes invoke a limited power to correct drafting mistakes. The classic formulation (from decisions like Inco Europe in the UK) is that judges can:

• add, omit, or substitute words only if:

  • it is clear that a mistake has been made,

  • it is clear what the legislature must have intended, and

  • the proposed fix is no more than necessary to give effect to that intention.

The CCJ applied this type of reasoning in the BNS case. It openly recognised that the relevant Schedule had a missing element—but concluded that the omission was a drafting slip, not a deliberate policy choice. So the Court read the provision as if the missing words were included.

For taxpayers, the key point is simple: the literal text is no longer the only line of defence when the intention is obvious.

2. The BNS Decision: Closing a Gap to Protect the Tax Base

In BNS v Comptroller of Inland Revenue (Saint Lucia), the issue was whether payments from a Saint Lucian branch of an international bank to its head office and related regional entities for services (IT, risk, HR, compliance, etc.) were within the scope of WHT on management charges.

The relevant legislative scheme clearly aimed to:

• tax certain types of income accruing to non-residents from the jurisdiction;

• include management charges and similar payments in that net;

• apply this to situations where a business operating in Saint Lucia relied on services from outside.

However, when you looked closely at the Schedule that dealt with management charges, there was an apparent omission in how certain payments were described. Taken literally, taxpayers could argue that some branch-to-head-office flows were not caught, simply because of the way the text was drafted.

The CCJ refused to let that omission undermine the scheme. It effectively said:

• Parliament clearly intended to tax cross-border payments for management and related services;

• It would be absurd if a simple drafting slip allowed branch-based business models to escape WHT;

• The Schedule should therefore be read as if it contained the missing words.

The Court did not treat the gap as a loophole to be exploited. It treated it as an error to be corrected.

3. What This Means for “Gap-Based” Tax Planning

In the past, some tax strategies rested heavily on pointing to specific omissions or awkward phrasing in legislation and arguing:

• “The law doesn’t say ‘branch’; it only mentions ‘company’, so we’re out.”

• “The Schedule lists A, B, and C, but not D—even though D is similar—so D must be exempt.”

• “The cross-reference is wrong, so the charging provision can’t bite.”

After the CCJ’s approach in BNS, strategies that rely on these kinds of arguments look weaker, particularly when:

• the omitted case clearly falls within the policy of the regime;

• the gap is likely a drafting oversight rather than a conscious exclusion;

• leaving the gap in place would make the law self-defeating.

This does not mean taxpayers can never rely on the text. Courts are still cautious about rewriting statutes. But it does mean:

• where the purpose is obvious and documented,

• and the error is equally obvious,

courts may feel both able and obligated to fix the problem.

4. Tax Certainty vs. Judicial “Repair Work”

Businesses prize tax certainty. Investors and Boards want to know:

• what the rules are,

• how they will be applied, and

• how stable they are over time.

At first glance, the idea of courts correcting legislation might seem to undermine that certainty. But it can also protect certainty in a more meaningful way.

How It Helps Certainty

• It prevents arbitrary results where similar taxpayers are treated very differently due to minor wording quirks.

• It supports the coherence of the tax system by aligning outcomes with Parliament’s clear policy.

• It reduces the incentive for aggressive advisers to exploit technical glitches at the expense of fairness and predictability.

Where the Risk Lies

The risk for taxpayers is when their planning:

• depends heavily on technical anomalies, and

• cannot be justified in terms of substance and purpose.

In that scenario, judicial “repair work” becomes a direct threat to the structure. A court may decide the loophole was never meant to exist and simply “close” it by interpretation.

The message is clear: true certainty no longer lies in exploiting drafting errors, but in aligning your structures with the evident policy of the law.

5. Practical Examples of Dangerous Reliance on Drafting Gaps

To see how this plays out beyond the BNS facts, consider a few typical patterns of gap-based planning:

Example 1: Narrow Definition of “Management Charges”

A statute defines “management charges” in broad language but omits one particular phrase (say, “technical support”). A group argues that IT support services fall outside the WHT regime because “technical support” is not expressly listed.

If the legislative history and surrounding context clearly show that all forms of management and support services were intended to be covered, a court might:

• treat the omission as a drafting oversight, and

• read “technical support” into the category.

Example 2: “Resident” vs “Non-Resident” Definition

Suppose the definition of “non-resident” in a withholding tax provision is mis-worded in a way that accidentally excludes a category of obvious non-residents (e.g., branches of foreign banks).

If the overall scheme is clearly to tax all non-residents earning certain income from the jurisdiction, a court may interpret the definition purposively and close the gap—just as the CCJ did for branches.

Example 3: Incorrect Cross-Reference

A charging section refers to “paragraph 4” of a Schedule when the intended provision is “paragraph 5”. A taxpayer claims that, because paragraph 4 is irrelevant, the charge fails.

If it is obvious from context, legislative history, and the structure of the Act that paragraph 5 was meant, the court may treat the cross-reference as a typographical error and apply paragraph 5 anyway.

In each case, literalism alone is no longer a safe bet.

6. The Caribbean Context: Why Courts May Be More Willing to Fix Tax Laws

There are several reasons why courts in small, open economies like those in the Caribbean may be especially inclined to correct tax drafting errors.

• Revenue sensitivity: Small economies rely heavily on protecting their tax base from erosion via cross-border payments. Allowing obvious errors to open large holes in the base is unattractive from a public policy perspective.

• Capacity constraints: Parliamentary drafting offices and revenue authorities often have limited resources. Mistakes will happen. Courts are aware that perfection is unrealistic and may be more forgiving where errors are clearly inadvertent.

• Growing sophistication of tax planning: As multinational tax planning becomes more complex, courts may feel a responsibility to ensure that statutes keep pace with the spirit in which they were enacted, even if the letter is imperfect.

The CCJ’s approach in BNS fits into this broader trend of aligning Caribbean tax systems with modern, purposive, substance-based interpretation.

7. What Boards, CFOs, and Tax Leaders Should Do Differently

In light of this shift, business leaders need a new approach to evaluating tax risk.

(a) Test Positions Against Purpose, Not Just Text

When considering a tax position, ask two questions:

1. Is this supported by the wording?

2. Does this clearly align with the purpose of the legislation?

If your answer to (1) is “yes” but to (2) is “probably not,” you may be sitting on a fragile position.

(b) Identify Where You Rely on “Gaps”

Carry out a review of:

• WHT positions (especially on cross-border management, technical and service fees);

• incentive or exemption regimes (where your eligibility turns on narrow wording quirks);

• branch vs subsidiary structures (where you rely on the absence of express coverage);

• special calculations, thresholds, or definitions (where drafting anomalies give you a technical advantage).

Highlight positions that would collapse if a court decided a provision should be read in a more purposive, gap-fixing way.

(c) Rebalance Your Tax Planning Philosophy

Shift from:

• gap exploitation (finding missing words and technical missteps),

towards:

• policy alignment (designing structures that make sense both commercially and in light of legislative purpose).

This does not mean abandoning tax efficiency. It means seeking efficiency in ways that are sustainable under scrutiny.

(d) Improve Documentation of Commercial Rationale

Courts are more likely to sympathise with taxpayers whose structures:

• have clear commercial logic;

• are consistent across jurisdictions;

• are supported by contemporaneous documentation.

If your only answer to “Why did you do it this way?” is “Because the wording allowed it,” you are more vulnerable.

(e) Engage Proactively with Legislators and Authorities

Where a drafting problem materially affects your sector:

• consider raising the issue with industry bodies and regulators;

• support efforts to clarify or amend legislation;

• seek advance rulings or written guidance where possible.

It is better to help fix a problem transparently than to quietly rely on it until a court removes it in a contentious case.

8. How Dawgen Global Can Guide You Through This New Reality

Adapting to a world where courts may actively correct tax drafting errors requires more than technical reading—it requires strategic thinking and integrated advice.

As an integrated multidisciplinary professional services firm with a strong presence across the Caribbean, Dawgen Global is well placed to help.

Our Tax Advisory Services can support you to:

• Diagnose gap-based risk
  Review your key tax positions and structures to identify where you are relying heavily on drafting anomalies, cross-reference errors, or omissions.

• Reframe planning around purpose and substance
  Help you redesign arrangements—especially for management charges, cross-border services, and branch structures—to align with both legislative intent and business reality.

• Strengthen governance and Board oversight
  Develop Board-level briefings, risk registers, and governance frameworks that recognise the role of purposive interpretation and judicial correction in modern tax law.

• Support dispute management and litigation strategy
  Assist you in assessing when to defend a position, when to settle, and when to restructure—always with an eye on how courts like the CCJ are likely to view drafting errors and legislative gaps.

• Engage with policy and regulatory development
  Work with you to respond to consultations, propose clarifications, and build a more predictable tax environment for your sector.

Next Step: Don’t Build Your Tax Strategy on a Typo

In a post-BNS world, “the law forgot to say it” is no longer a comfortable shield. If the purpose of a tax rule is clear, courts may fix the wording—even in ways that close off carefully constructed planning strategies.

If your organisation has not recently:

• reviewed where it relies on gaps or quirks in tax legislation,

• tested its structures against a purposive, gap-correcting lens, or

• briefed its Board on how courts are now approaching tax interpretation,

then this is the moment to act.

Dawgen Global Tax Advisory Services can help you move from vulnerable positions to robust, policy-aligned strategies.

👉 Let’s have a conversation about your tax structures, legislative gaps, and risk exposure.

At Dawgen Global, we help you make Smarter and More Effective Decisions.

• 🔗 Visit: https://dawgen.global/

• 📧 Email: [email protected]

• 📞 USA: +1 855-354-2447

Invite our team to stress-test your tax planning today—before a court decides that a “small drafting error” changes everything.