R v Inland Revenue Comrs, Ex p National Federation of Self-Employed and Small Businesses Ltd (Inland Revenue Comrs v National Federation of Self-Employed and Small Businesses Ltd)

An applicant has a sufficient interest for judicial review only when its relationship to the subject matter is assessed alongside the public body's powers, duties and alleged breach. Standing is therefore a mixed question of law and fact, not an abstract preliminary issue.

An ordinary taxpayer generally has no sufficient interest in another taxpayer's assessment. Tax affairs are confidential and taxpayers have no common proprietary interest in tax receipts. Exceptionally grave or widespread illegality may justify review at a taxpayer's instance.

The revenue authority has a wide statutory discretion to manage tax collection pragmatically. Its decisions remain reviewable for illegality, improper purpose or abuse of power, but not merely because lawful administration appears unfair or unwise.

R v Inland Revenue Comrs, Ex p National Federation of Self-Employed and Small Businesses Ltd (Inland Revenue Comrs v National Federation of Self-Employed and Small Businesses Ltd) concerned an arrangement for collecting tax from casual printing workers. The arrangement secured future compliance and payment of arrears from 1977–78, but ordinarily avoided investigation of earlier years.

The Federation sought a declaration that the Commissioners had acted unlawfully and mandamus requiring assessment and collection of the earlier tax. The Divisional Court refused judicial review because the Federation lacked a sufficient interest. The Court of Appeal, by a majority, reversed that decision and declared that the Federation had sufficient interest: [1980] 2 All E.R. 378.

The central questions were whether standing could be decided separately from the statutory duties, alleged illegality and evidence, and whether the Commissioners' arrangement was a lawful exercise of their tax-management powers.

The House unanimously allowed the appeal. The Court of Appeal's order was reversed, the Divisional Court's order restored and the originating motion dismissed.

1. Per Lord Wilberforce, with Lord Fraser and Lord Roskill expressly agreeing with his reasoning, sufficient interest could not ordinarily be decided in the abstract. The court had to consider the public body's powers and duties, the applicant's relationship to them, the alleged breach and the relief sought. Lord Diplock and Lord Scarman likewise treated standing as dependent upon the matter disclosed by the application and evidence.

2. Per Lord Diplock and Lord Scarman, the permission stage required only a prima facie assessment. Leave should be granted where the available material disclosed an arguable case, but that provisional assessment could be revised when the full evidence was available. All five Law Lords considered that the initial grant of leave was justified.

3. Per Lord Wilberforce, Lord Fraser and Lord Roskill, an ordinary taxpayer had no sufficient interest in the assessment or non-assessment of another taxpayer. Income-tax assessments were confidential, tax receipts did not constitute a common fund belonging to taxpayers, and aggregating persons without standing did not create standing. Lord Diplock and Lord Scarman accepted that a taxpayer or pressure group might nevertheless have standing in a rare case of serious or widespread illegality.

4. Per all five Law Lords, the Commissioners possessed a wide managerial discretion under the revenue legislation. They could balance the practicability and cost of recovering past tax against the advantages of securing future compliance. The evidence established that the arrangement was made honestly for good-management reasons. It disclosed no unlawful dispensing power, improper pressure, extraneous purpose or dereliction of statutory duty.

5. Per Lord Diplock, lawful exercises of administrative discretion were not reviewable merely because they appeared unfair or unwise. The Commissioners remained amenable to judicial review if they acted outside their powers, abused those powers or relied upon ulterior considerations.

6. Per Lord Diplock, Lord Scarman and Lord Roskill, Order 53 of the Rules of the Supreme Court unified public-law procedure and permitted declarations or injunctions where prerogative relief could formerly have issued. It did not enlarge substantive law or the High Court's jurisdiction. Lord Scarman separately considered that the Commissioners owed taxpayers a legal duty of fairness, subject to sound management; that view was unnecessary to the unanimous conclusion that no breach had been shown.

1. House of Lords: In R v Inland Revenue Comrs, Ex p National Federation of Self-Employed and Small Businesses Ltd (Inland Revenue Comrs v National Federation of Self-Employed and Small Businesses Ltd), [1982] AC 617, the House unanimously allowed the Commissioners' appeal, reversed the Court of Appeal's order and restored the Divisional Court's order.
2. Court of Appeal: Lord Denning MR and Ackner LJ, Lawton LJ dissenting, reversed the Divisional Court and declared that the Federation had sufficient interest to apply for judicial review: [1980] 2 All E.R. 378.
3. Divisional Court: Lord Widgery CJ and Griffiths J refused the application at the inter partes hearing because the Federation lacked sufficient interest. Leave had previously been granted ex parte.