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

A taxpayer cannot establish arguable unfairness in tax administration merely by showing that other taxpayers who appear to have been in the same position were not assessed. The Revenue’s duty to treat taxpayers fairly does not require every taxpayer within a statutory charge to be pursued, particularly where there may be reasons connected with good management. A claim based on unequal treatment requires evidence of a specific distinguishing basis, favouritism, caprice or discriminatory decision-making. Mere speculation does not justify disclosure of other taxpayers’ affairs or substantive judicial review proceedings.

The claimant had been assessed to capital gains tax following transactions involving shares and loan notes. The Special Commissioners decided that the loan notes were not qualifying corporate bonds, and the claimant appealed that decision to the High Court.

He separately sought permission for judicial review, alleging that the Revenue had acted unfairly because two other taxpayers who had entered into similar transactions for the same year had not been assessed. Permission had already been refused in writing by Charles J. The issue was whether the asserted difference in treatment raised an arguable case of unfairness.

1. Application refused. The claimant had not shown an arguable case that the Revenue acted unfairly by assessing him when other taxpayers were apparently not assessed.
2. The Revenue was under statutory duties under sections 1 and 13(1) of the Inland Revenue Regulation Act 1890 to collect and cause to be collected every part of Inland Revenue. If the loan notes were not qualifying corporate bonds, the claimant was liable to capital gains tax under section 115 of the Taxation of Chargeable Gains Act 1992.
3. The duty to treat taxpayers fairly, recognised in R v Inland Revenue Commissioners, ex parte National Federation of Self-Employed and Small Businesses Ltd [1982] AC 617, did not require the Revenue to assess every taxpayer whenever the facts appeared similar. The duty operated subject to the requirements of good management.
4. A mere assertion that other taxpayers had escaped assessment, even where the same Revenue office was involved, did not require the Revenue to explain its confidential dealings with those taxpayers. The claimant needed evidence of a specific basis for differential treatment, such as favouritism, caprice or discrimination. The Revenue’s grounds of resistance were not evidence, and the court would not permit speculation to support substantive judicial review.
5. The claimant had shown nearly enough to raise no arguable case of unfairness. Permission was therefore refused.

Permission for judicial review had previously been refused in writing by Charles J. The Administrative Court, before Mr Justice Moses, refused permission.