Commissioners of Inland Revenue v National Federation of Self-Employed and Small Businesses Ltd

The requirement of a "sufficient interest" to obtain leave for judicial review is a mixed question of law and fact. It must be assessed with reference to the matter complained of and the evidence available. A person ordinarily lacks sufficient interest to challenge the tax affairs of another taxpayer, but exceptionally a taxpayer or representative body may obtain review where there is a prima facie case that the tax authority acted ultra vires or for extraneous reasons. The Inland Revenue owes a legal duty to treat taxpayers fairly, but that duty is subject to wide managerial discretion and confidentiality constraints.

The National Federation of Self-Employed and Small Businesses sought judicial review of a decision by the Commissioners of Inland Revenue not to pursue historic tax liabilities of a class of casual printing workers. The Divisional Court refused leave for want of "sufficient interest". The Court of Appeal reversed and declared that the Federation had a sufficient interest. The Commissioners appealed to the House of Lords. The House was asked to determine whether the Federation had the threshold standing under R.S.C. Order 53 r.3(5) and, subsidiarily, whether the Revenue's conduct was unlawful. The principal issues were the scope of "sufficient interest" for prerogative relief and the legal duties of the Revenue in administering income tax.

1. The appeal is allowed. The application for judicial review should have been dismissed. (overall outcome)
2. The test of "sufficient interest" in R.S.C. Order 53 r.3(5) is a mixed question of law and fact. It must be assessed in relation to the particular matter complained of and on the available evidence. A threshold prima facie view at the leave stage is appropriate, but the issue may be revisited at the substantive hearing. (see paras discussing Rule 3(5) and threshold leave)
3. Where mandamus or other prerogative relief is sought, the court must examine the statutory duty alleged to be breached and decide whether the applicant is within the scope of that duty. Standing cannot be decided in the abstract. (analysis of duties and locus standi)
4. The Commissioners of Inland Revenue are amenable to judicial review. Their statutory duties (Inland Revenue Regulation Act 1890 and Taxes Management Act 1970) give rise to duties and wide managerial discretions which the courts can supervise where the authority acts ultra vires or for extraneous reasons. However, managerial discretion and statutory confidentiality limit review. (jurisdiction and limits)
5. As a general proposition, one taxpayer ordinarily does not have a sufficient interest to challenge the assessment or non-assessment of another taxpayer because of statutory confidentiality and the individualised nature of assessment. Exceptional cases may arise where there is substantial evidence that the authority acted ultra vires or for improper extraneous reasons. Such cases will be rare. (principle and exception)
6. On the evidence before the Divisional Court and this House, the Revenue acted bona fide in the exercise of its managerial discretion in making the special arrangement for the Fleet Street casuals. There was no sufficient evidence of ultra vires conduct or improper motive. Accordingly the Federation had no sufficient interest to obtain the relief sought and the substantive claim would fail. (application to facts and disposition)
7. Practical consequences: leave to apply for judicial review should not be granted where, after inter partes evidence, the applicant cannot show a prima facie case of illegality. Discovery should be withheld unless the court is satisfied that reasonable grounds exist for believing a breach of public duty; the public interest immunity and confidentiality protections remain available to the Revenue. (procedural guidance)
8. Order: the Court allows the appeal, restores the Divisional Court's order dismissing the originating motion and remits costs accordingly. (operative order)

• Court of Appeal (Civil Division): The Court of Appeal allowed the Federation's appeal and declared that the applicants had a sufficient interest to apply for judicial review. [See [1980] 2 All E.R. 378]
• Divisional Court (Queen's Bench Division): Earlier refused leave to apply for judicial review on the ground that the Federation had no sufficient interest. (order dated 22 November 1979)