Shiner, R (on the application of) v HM Revenue & Customs

A judicial review claim must be characterised by its substance. A communication explaining the effect of retrospective tax legislation is not necessarily a reviewable decision. Where the real challenge is to the validity or compatibility of legislation, the claim may be out of time and the statutory tax appeal system will ordinarily provide the appropriate route. Tax tribunals can determine issues of EU law and may refer uncertain questions to the European Court of Justice. The court should be cautious about assuming judicial review jurisdiction over tax liabilities capable of being addressed through that statutory scheme.

The claimant challenged a letter from HM Revenue and Customs concerning the retrospective effect of section 58 of the Finances Act 2008 on income derived through Isle of Man partnerships. The claimant alleged incompatibility with Articles 56 and 58 of the EU Treaty and Article 1 of the First Protocol to the European Convention on Human Rights.

The central issue was whether the claim was genuinely directed to a reviewable decision in the letter, or was substantively a late challenge to the legislation itself. The court also considered whether the statutory tax appeal scheme provided the appropriate forum.

1. The court held that the substance of the claim was a challenge to the retrospective operation and compatibility of section 58 of the Finances Act 2008, rather than a challenge to a legally effective decision contained in HM Revenue and Customs’ letter. The letter merely conveyed the consequences of the legislation.

2. Because the claim was substantively directed to the legislation, it was out of time. The possible future issue of closure notices or jeopardy assessments did not convert the explanatory letter into a reviewable decision.

3. Where tax liabilities can be challenged under the statutory appeal scheme, the Administrative Court should ordinarily refuse judicial review jurisdiction, absent exceptional circumstances. The tax tribunals could determine the EU Treaty issues and, if necessary, refer questions to the European Court of Justice.

4. The European Convention claim was subsidiary. The court considered that it should not express a view on the merits of the EU Treaty challenge, and noted that the tribunals could not make declarations of incompatibility. Permission was refused in respect of the Treaty claims and otherwise, apart from the incompatibility claim. Permission on that remaining claim was reserved pending judgment in related proceedings and written submissions. Costs were to be dealt with on paper.

First-instance judicial review proceedings. Permission was refused for the EU Treaty claims and other claims, while permission on the European Convention incompatibility claim was deferred.