Churchhouse, R (on the application of) v Inland Revenue

Section 32 of the Inland Revenue Regulation Act 1890 gives the Commissioners a discretion whether to reward a qualifying informer and, if so, as to the amount. It imposes at most a duty to consider a claim and determine whether the statutory conditions are met.

The Commissioners may adopt their own policy or criteria, provided they act within the statutory power and apply criteria that are rational, reasonable and connected with the statutory purpose. The court should not substitute its own operational policy. A disappointed informer cannot require disclosure that would breach taxpayer or informer confidentiality. Judicial review will succeed only on an arguable public-law ground.

The claimant supplied information to the Inland Revenue about a corporate taxpayer and had previously received discretionary rewards. The Inland Revenue declined to pay a further reward, concluding that the information had either confirmed information already held or related to historic periods and had not led to recovery of additional revenue.

The claimant sought permission to apply for judicial review. He argued that section 32 of the Inland Revenue Regulation Act 1890 imposed a duty to reward him, that the Inland Revenue had adopted an unlawful test, that he had a legitimate expectation of payment, that the decision might have relied on incorrect information, that it was irrational, and that the rewards scheme involved conflict of interest or bias.

1. Application dismissed. The challenge disclosed no arguable ground for judicial review.
2. Section 32 of the Inland Revenue Regulation Act 1890 confers a discretion to reward persons who inform the Commissioners of an inland-revenue offence or assist in recovering a fine or penalty. The discretion concerns both whether to pay and the amount. The Commissioners may have a duty to consider a claim from a person who may fall within a statutory class, but no duty to make a payment arises.
3. The pre-1868 regime and the 1872 administrative minute could not alter the plain meaning of the 1890 Act. Section 34 did not create a mandatory entitlement, and the legislative history could not revive provisions abolished by Parliament.
4. A policy such as whether information must lead directly to, or result in, recovery of revenue is lawful if it is intra vires, rational, reasonable and non-arbitrary, has a reasonable relationship with the statutory policy, and rests on a rational basis within the Commissioners’ knowledge and experience. Formulating the operational criteria was for the Commissioners, not the court. On the evidence, the criteria used were lawful.
5. The information supplied had not led to recovery of additional revenue. It either confirmed information already held or was historical. The Commissioners’ conclusion was therefore not irrational. The claimant had also failed to establish the facts necessary for a legitimate expectation, applying R v Inland Revenue Commissioners ex p MFK Underwriting Agents Ltd [1990] 1 WLR 1545.
6. The claimant had produced no evidence that the decision was based on incorrect information. Confidentiality duties owed to taxpayers and informers meant that the Inland Revenue was not required to give full reasons or disclosure. The alleged conflict of interest and bias were unsupported; the Commissioners were exercising a statutory discretion, not determining an existing right.

Not stated in the judgment.