HMRC has power to conduct informal investigation
The taxpayer, resident here, but with substantial oversea business interests, challenged the conduct of an informal investigation of his businesses under the 2005 Act, saying that HMRC, as a creature of statute, are only permitted to do that which they are expressly authorised to do by statute. They have no general powers to do anything not authorised by statute.
Held: Nugee J was right to reject the appellants’ main contention that outside the power to investigate ‘as of right’ under a section 9A enquiry, HMRC can only use compulsory powers to obtain documents under schedule 36 FA 2008, which require a rational basis for suspecting underpayment of tax. The duty to collect tax is to collect, so far as reasonably possible, the correct amount of tax rather than simply the tax that a taxpayer accepts is due.
Section 9 CRCA 2005 gives HMRC the power to conduct informal investigations. Judicial review of the exercise of that power is available on ordinary public law grounds but in practice it will take a wholly exceptional case on its legal merits to justify judicial review of a discretionary decision by HMRC to conduct an informal investigation of the kind conducted here. Finally, the judge was correct to conclude that whatever the test, the circumstances of the appellants’ case did not meet the threshold for the court to intervene on judicial review.
Lady Justice Simler DBE, Popplewell LJ
[2020] EWCA Civ 784
Bailii
Commissioners for Revenue and Customs Act 2005
England and Wales
Citing:
Appeal from – JJ Manangement Llp and Others, Regina (on The Application of) v Revenue and Customs and Another Admn 25-Jul-2019
Challenge to the lawfulness of an investigation by HMRC of tax affairs relating to the claimant’s businesses in Europe. HMRC had been claiming a right to conduct an informal investigation using the 2005 Act. The taxpayer sought judicial review of . .
Cited – Regina v Panel of Takeovers and Mergers ex parte Fayed CA 1992
Steyn LJ said of the reviewability of decisions of the Director of Public Prosecutions: ‘. . it seems to me that, in the absence of evidence of fraud, corruption or mala fides, judicial review will not be allowed to probe its decision to charge . .
Cited – Regina v Inland Revenue Commissioners, ex parte the National Federation of Self-Employed and Small Businesses Ltd HL 9-Apr-1981
Limitations on HMRC discretion on investigation
The Commissioners had been concerned at tax evasion of up to 1 million pounds a year by casual workers employed in Fleet Street. They agreed with the employers and unions to collect tax in the future, but that they would not pursue those who had . .
Cited – Regina v Inland Revenue Commissioners, ex parte MFK Underwriting Agents Ltd CA 1990
Legitimate Expectation once created not withdrawn
The claimant said that a change of practice by the Revenue was contrary to a legitimate expectation.
Held: The Inland Revenue could not withdraw from a representation if it would cause: substantial unfairness to the applicant; if the . .
Cited – Hazell v Hammersmith and Fulham London Borough Council HL 1991
Swap deals outwith Council powers
The authority entered into interest rate swap deals to protect itself against adverse money market movements. They began to lose substantial amounts when interest rates rose, and the district auditor sought a declaration that the contracts were . .
Cited – ABC Ltd and Another v HM Revenue and Customs CA 7-Jul-2017
Temporary approval pending appeal was preferred
The company challenged refusal of fit and proper approval for registration as wholesaler of duty paid alcohol.
Held: The appeals were allowed in part. HMRC, having once concluded that the applicant was not fit and proper was not free to . .
Cited – Revenue and Customs v Tower MCashback Llp 1 and Another SC 11-May-2011
No re-opening after closure notices
The taxpayer had purchased software licences (SLA), and set out to claim the full cost against its tax liabiilities under the 2001 Act in the first year. The taxpayer said that after the Revenue had issued closure notices, it was not able to re-open . .
Cited – Bermingham and others v The Director of the Serious Fraud Office QBD 21-Feb-2006
Prosecution to protect defendant not available
The claimants faced extradition to the US. They said that the respondent had infringed their human rights by deciding not to prosecute them in the UK. There was no mutuality in the Act under which they were to be extradited.
Held: The Director . .
Cited – Sharma and others v The Attorney General of Trinidad and Tobago PC 20-Jun-2007
(Trinidad and Tobago) The issue in this appeal is whether the appellants are entitled to remuneration as members of the House of Representatives on a delay in the House sitting after an election. . .
Cited – Corner House Research and Others, Regina (on the Application of) v The Serious Fraud Office HL 30-Jul-2008
SFO Director’s decisions reviewable
The director succeeded on his appeal against an order declaring unlawful his decision to discontinue investigations into allegations of bribery. The Attorney-General had supervisory duties as to the exercise of the duties by the Director. It had . .
Lists of cited by and citing cases may be incomplete.
Taxes Management
Updated: 01 November 2021; Ref: scu.651859