HONG KONG resident Peter Willoughby, whose tax-avoidance dispute with the British revenue authorities could have important implications for others, has finally had his day in the House of Lords. Monday's hearing of the Inland Revenue's appeal turned out to be brief. The five Law Lords cut short the tax authority's lawyer and told Mr Willoughby's counsel that a presentation of his case would not be necessary. This surprising turn of events has boosted spirits in the former University of Hong Kong professor's camp. A statement issued by Mr Willoughby's London-based solicitors, Baileys Shaw & Gillett, said: 'In the circumstances, the Willoughbys are optimistic about the outcome of the hearing and are awaiting with interest their Lordships' judgment, which it is hoped will be given soon.' It could be as long as two months before the written judgment is released. However, the brevity of the hearing, which had been postponed several times since late 1995, has sparked speculation that the judgment could be given much sooner. Britain's tax authorities appealed to the House of Lords after Mr Willoughby argued successfully before both the Inland Revenue's Special Commissioner and the Court of Appeal that several private-portfolio bonds purchased on his retirement as a professor of law in 1986 should be treated as constituting a bona fide retirement plan, with tax applied against withdrawals rather than income accrued. Revenue officials have attempted to tax income and certain capital gains generated by the bonds. This interpretation of the law could see about 1,500 returned expatriates who hold private-portfolio bonds facing tax demands of at least GBP18 million (about HK$223 million), according to Inland Revenue estimates. Unable so far to press its case successfully in court, the British Government is now attempting to legislate a 'clarified' version of the law. Under changes included in the British Budget package announced in November, income on assets transferred abroad would become taxable upon the taxpayer's return to Britain. This would be regardless of whether or not they were ordinarily resident in Britain when the transfer was made and whenever one purpose of the transfer was tax avoidance. Mr Willoughby has argued he was attempting to defer tax, not avoid it. He said people who, like him, set up portfolio-bond arrangements under a special 1984 tax regime should not be affected by the proposed legislative changes.