Blackpool Football Club Properties Ltd & Anor , R (on the application of) v Revenue & Customs

A representation by a public authority may generate a legitimate expectation capable of giving rise to a public law remedy. The expectation remains conditional upon satisfaction of any conditions conveyed with the representation. Where the authority concludes that those conditions have not been met, the expectation is not necessarily frustrated merely because that conclusion may be wrong. A taxpayer must generally pursue the substantive tax dispute before the specialist tribunal. Judicial review operates as a backstop and will not ordinarily determine an issue that is properly before the Special Commissioners.

The claimants sought permission to apply for judicial review of HM Revenue & Customs’ decision to pursue a dispute concerning Enterprise Investment Scheme relief before the Special Commissioners. They relied on an alleged undertaking made by a senior HMRC official at a meeting in June 2005. The alleged undertaking was that relief would be granted if the claimants established that money had been intended to enter the company as share capital and that an employee knew of that requirement.

The claimants argued that the representation created a legitimate expectation, that HMRC had failed to honour it, and that the court should order HMRC to grant relief. They also sought an extension of time. The central questions were whether the expectation had been denied and whether judicial review should intervene while the same substantive dispute remained before the Special Commissioners.

1. Permission refused. The court accepted, for present purposes, that the alleged representation had been made and that it could give rise to a legitimate expectation capable of supporting a public law remedy.
2. The expectation was conditional. On the claimants’ own case, they had to make out a case concerning the money introduced into the company, the second claimant’s instructions, and the employee’s knowledge that the money had to be introduced as share capital. On a sensible reading of the account of the meeting, the case had to be one acceptable to HMRC.
3. HMRC had considered the material collected and submitted by the claimants and had taken counsel’s opinion. HMRC concluded that the necessary case had not been established, including that the advances were unauthorised payments. Accordingly, even if HMRC had been wrong on the underlying facts or tax law, the legitimate expectation had not been denied on the basis advanced.
4. The issue was also properly before the Special Commissioners. There may be parallel tax and public law remedies, but judicial review should not determine the same substantive issue while the specialist tribunal process remains available. Judicial review operates as a backstop, and the dispute could be tested before the Commissioners by evidence and cross-examination.
5. The claim was brought in time. The court accepted that there were reasonable explanations for the delay and that no relevant hardship or prejudice to good administration had been shown. Permission was nevertheless refused on the substantive and alternative-remedy grounds. Costs were awarded against the claimants, subject to detailed assessment if not agreed.