Monro v HM Revenue & Customs

A taxpayer cannot use a common-law restitutionary claim to circumvent the statutory limits governing repayment of tax where the claim falls within Taxes Management Act 1970, section 33. This remains so whether the claim is characterised as recovery of tax paid under a mistake of law or as recovery of tax paid pursuant to an unlawful demand. The statutory scheme may displace common-law remedies where Parliament has addressed the same subject and expressly excludes relief in the relevant circumstances.

Mr Monro had paid capital gains tax calculated in accordance with the generally prevailing practice. Following Mansworth v Jelley [2003] STC 53, he concluded that his gain had been overstated and sought repayment of £846,000.

The time for amending his self-assessment had expired. HMRC refused relief under section 33 of the Taxes Management Act 1970 because section 33(2A) excluded mistakes made in accordance with the generally prevailing practice. The issue was whether he could nevertheless recover the overpayment at common law, either as money paid under a mistake of law or as money paid pursuant to an unlawful demand.

1. The claim was dismissed. The court accepted that, subject to statutory displacement, English law recognises restitutionary remedies for tax paid under a mistake of law and for tax paid pursuant to an unlawful demand.
2. Section 33 of the Taxes Management Act 1970 applied because the claimant alleged that an assessment was excessive by reason of an error or mistake in his return. Section 33(2A) expressly precluded relief where the return was made on the basis of the practice generally prevailing at the time.
3. The statutory scheme therefore excluded a common-law restitutionary claim based on mistake of law in precisely the circumstances addressed by section 33(1) and section 33(2A). The reasoning in Johnson v Unisys Ltd [2001] ICR 480, Marcic v Thames Water Utilities Ltd [2004] 2 AC 42 and Deutsche Morgan Grenfell Group plc v IRC [2006] 3 WLR 781 did not permit a claimant to obtain through the common law what the statutory provision expressly withheld.
4. The alternative unlawful-demand analysis produced the same result. The claim concerned payment of capital gains tax under an assessment and therefore fell within section 33, whatever label was attached to the cause of action. Section 33(2A) consequently barred the common-law claim.
5. The court left to Parliament the question whether the statutory time limit and exclusion of relief produced an undesirable result.

First-instance decision. No prior appellate decision in the same proceedings is stated.