Carvill v Inland Revenue

Tax authorities must collect liabilities determined through the statutory assessment and appeal machinery. They are not required, when considering repayment, to re-determine factual disputes decided by Special Commissioners, particularly where the decisions depended on different evidence and witness assessment. A refusal to reopen a final liability is not irrational merely because a later tribunal reached a different conclusion for later years.

Care and management powers permit pragmatic decisions about future assessments, but do not authorise deliberate non-collection of tax which Parliament has clearly imposed. Public-law unfairness requires more than a decision that appears harsh. A taxpayer’s expectation that the Revenue might exercise a discretionary repayment power is not, without more, a possession protected by Article 1 of the First Protocol.

The claimant sought judicial review of the Revenue’s refusal to repay income tax and statutory interest assessed for the earlier years under section 739 of the Income and Corporation Taxes Act 1988. His earlier appeal had been dismissed by one Special Commissioner and the assessments had become final.

A different Special Commissioner later allowed appeals concerning the same underlying transactions for later years, on different and additional evidence. The Revenue declined to reopen the earlier liabilities, while deciding pragmatically not to raise assessments for future years. The claimant alleged irrationality, unfairness, abuse of power and breach of Article 1 of the First Protocol.

1. Application dismissed. The Revenue’s refusal to repay the tax for the earlier years was neither irrational nor so unfair as to amount to an abuse of power.
2. The statutory assessment and appeal procedure provides the framework within which liability is determined. It is not the Revenue’s administrative function to second-guess final judicial determinations, especially findings based on credibility and evidence not available to Revenue officials. The absence of issue estoppel between different years does not require the Revenue to choose which of two Commissioners’ decisions was correct.
3. The Revenue was entitled to treat the earlier decision, the later decision and the differences in the evidence as relevant considerations, and to refuse repayment after considering them. The case was materially different from R v IRC, ex p. Unilever plc [1996] STC 682, which concerned an administrative windfall contrary to an established practice.
4. The care and management power in section 1 of the Taxes Management Act 1970 permits pragmatic decisions about whether to litigate assessments for future years. It does not permit the Revenue deliberately to refrain from collecting tax which Parliament has unequivocally imposed, as explained in R (Wilkinson) v Commissioners of Inland Revenue [2003] EWCA 814.
5. The Willoughby repayment policy concerned a House of Lords decision on a point of law, multiple taxpayers and exceptional administrative circumstances. The equitable-liability practice concerned estimated assessments and did not apply to tax determined through an exercised right of appeal. Neither analogy made the refusal irrational.
6. The asserted right to be considered for discretionary repayment was not a possession, and refusal to repay was not a deprivation, for Article 1 of the First Protocol. The judicial-review challenge to repayment of the claimed 41 per cent attributable to the old minority shares also failed: it would improperly reopen a point conceded in the earlier appeal on the basis of later findings and speculation about the parties’ state of mind.

First-instance judicial review proceedings. The judgment records that the related restitution claim had been struck out by order following preliminary issues determined by Mr Justice Hart, with no appeal from that order. The present judicial-review claim was dismissed.