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Where Parliament assigns disputes about tax assessments or relief to specialist commissioners, a taxpayer who can still obtain the disputed relief must ordinarily use that statutory procedure. The commissioners must give directly effective Community law priority and adapt or disapply incompatible domestic requirements.

The statutory route remains effective where it is no less favourable than comparable domestic procedures and does not make enforcement practically impossible or excessively difficult. Restricted interest, costs and case-management powers do not by themselves invalidate it. High Court claims for damages or restitution are normally inappropriate while the relief remains obtainable. Where statutory relief can no longer be obtained, despite seeking any available extension, an independent High Court claim may proceed.

Six groups of companies were selected as test claimants from group litigation concerning territorial restrictions on corporation tax group relief. Their substantive claims alleged incompatibility with articles 43 and 56 of the EC Treaty. Four types of loss were claimed, but the jurisdictional dispute concerned claims equivalent to the basic group relief allegedly denied.

Park J struck out those claims: [2004] STC 594. The Court of Appeal allowed the taxpayers' appeals and held that Community law required the High Court to entertain them: [2005] 1 WLR 52. The central issue before the House was whether claims equivalent to group relief should proceed in the High Court or through the statutory appeal procedure before the Special Commissioners, and whether the answer differed where statutory relief was no longer obtainable.

1. Appeals allowed by a majority of three to two. Lord Nicholls delivered the leading speech. Lord Steyn and Lord Millett agreed. The Court of Appeal's orders were set aside, and the six test cases were remitted to the Chancery Division.

2. Per Lord Nicholls, a claim whose substance is that an open tax assessment is wrong, and which seeks relief co-extensive with correcting that assessment, must ordinarily follow the statutory appeal route. High Court proceedings which circumvent the jurisdiction assigned to the tax commissioners are an abuse of process. Outside straightforward cases, the High Court retains a limited discretion, but either party is generally entitled to insist on the statutory procedure.

3. Per Lord Nicholls, section 2 of the European Communities Act 1972 requires inconsistent domestic tax provisions to take effect subject to directly enforceable Community rights. The Special Commissioners possess the same duty as the High Court to give those rights effect. They may disapply or adapt formal requirements, including requirements unsuitable for non-resident surrendering companies.

4. Where group relief remains obtainable, the statutory route satisfies the Community law principles of equivalence and effectiveness. Its disadvantages concerning interest, costs, formal claims and collective case management do not make enforcement practically impossible or excessively difficult. The ruling in Metallgesellschaft Ltd v Inland Revenue Commissioners; Hoechst AG v Inland Revenue Commissioners was distinguishable because it addressed a defence based on failure to pursue a tax advantage which national law denied on any view. It did not determine which national court or tribunal should hear an undecided claim where an effective statutory route remained available.

5. Accordingly, category (1) High Court claims were inappropriate where the taxpayer had appealed, could appeal, or remained able to make a group relief claim. The related satellite claims did not displace that conclusion. Those High Court proceedings were to be stayed rather than struck out, preserving their possible revival if unforeseen procedural obstacles arose.

6. Where statutory group relief could no longer be obtained, the commissioners could not adjudicate upon independent restitutionary or damages claims. Such claims could proceed in the High Court. Before doing so, however, the taxpayer should request any extension of time which the Revenue or commissioners had power to grant. If granted, the taxpayer should use the statutory route.

7. Lord Hope and Lord Walker dissented. They considered the common-law restitutionary claims independently justiciable in the High Court. In their view, the statutory code did not provide the relief claimed for non-resident companies, and the Community law principle of effectiveness supported allowing all the claims to remain in the High Court.

1. House of Lords: By a majority of three to two, allowed the Revenue's appeals, set aside the Court of Appeal's orders and remitted the test cases to the Chancery Division: [2005] UKHL 54.
2. Court of Appeal: Allowed the taxpayers' appeals and held that Community law obliged the High Court to entertain the claims: [2005] 1 WLR 52.
3. High Court, Chancery Division: Park J struck out the category (1) claims and held that disputes equivalent to claims for group relief should follow the statutory procedure before the tax commissioners: [2004] STC 594.