Neil Martin Ltd v Revenue and Customs

A statutory duty does not ordinarily give rise to a private claim for damages unless that intention appears from the statute construed as a whole. The statutory scheme’s purpose, remedies and enforcement structure are central. A public authority’s failure to perform a statutory duty will not, without more, create a common-law duty of care for economic loss. A duty may nevertheless arise from a distinct relationship or assumption of responsibility, subject to the statutory framework. Administrative contact during a compulsory statutory process did not amount to such an assumption of responsibility. The Revenue was therefore not liable for delay in processing a construction-industry tax certificate, although the court identified substantial culpable delay on alternative assumptions.

Neil Martin Limited claimed damages from the Commissioners of HM Revenue and Customs for delay in issuing a construction-industry sub-contractor’s tax certificate. The claim alleged breach of statutory duty under section 561(2) of the Income and Corporation Taxes Act 1988, a direct common-law duty of care, and vicarious liability for the conduct of the Revenue officer who handled the application.

The court tried preliminary issues concerning the existence and breach of those duties. It was not asked to determine causation or quantum. The central questions were whether the statutory scheme created a private damages action, whether a common-law duty could arise from the Revenue’s processing of the application, and whether the officer’s dealings with the claimant created a basis for vicarious liability.

1. Statutory duty. The claim for damages for breach of section 561(2) failed. The court was prepared, without deciding the point, to assume that the provision required the Revenue to act within a reasonable time. Whether a private remedy exists depends on construction of the whole statute and its context. Section 561(9) supplied an appeal against refusal or cancellation but no compensation remedy. That structure, together with the purpose of Part XIII Chapter IV of the Income and Corporation Taxes Act 1988, indicated that Parliament had not intended a private damages action for delay.
2. The statutory provisions were principally directed to protecting the Revenue and the public against tax fraud, rather than protecting sub-contractors. Judicial review could compel performance of the statutory duty, so the absence of damages did not reduce the duty to a merely aspirational obligation.
3. Direct common-law duty. The Revenue owed no direct duty of care to process the application with reasonable expedition. The claimant’s personal contact with the Revenue officer was part of the compulsory statutory process and did not logically create a damages duty owed by the Revenue to all applicants.
4. Vicarious liability. The officer was a Revenue employee exercising relevant skills and expertise. Nevertheless, applying the Caparo framework alongside assumption of responsibility and incremental reasoning, it would not be fair, just and reasonable to impose a duty of care. The dealings were not professional advice, the officer had not voluntarily assumed responsibility, the proposed duty would risk creating a statutory damages claim through the back door, and the voluntary COP1 redress scheme was a factor against liability.
5. Alternative breach findings. Had a duty existed, reasonable processing would have allowed one month at the local office and three weeks at the national processing centre. The court found 52 days’ culpable delay attributable to Revenue failures, or 57 days attributable specifically to the officer’s negligence. The answers to the preliminary issues were therefore: statutory cause of action, no; statutory breach, yes to the stated extent; direct common-law duty, no; breach of common-law duty, yes to the stated extent.