Huntingwood Trading Ltd, R (on the application of) v HM Revenue & Customs

A substantive legitimate expectation requires a representation by a public authority that is clear, unambiguous and devoid of relevant qualification. In dealings with a tax authority, a claimant must also make full disclosure and clearly seek a considered ruling if reliance on an informal assurance is intended. Ambiguous correspondence, continued payments made without further evidence, and general consultation material do not ordinarily create such an expectation. Where later correspondence introduces uncertainty about the evidence required for excise duty drawback, earlier informal indications cannot safely be relied upon without clarification.

Huntingwood Trading Limited sought judicial review of HM Revenue and Customs’ decision dated 25 April 2007 refusing 101 excise duty drawback claims totalling approximately £1.26 million. The claims concerned beer and lager purchased with invoices stating that the goods were UK duty paid. HMRC was not satisfied that duty had been paid because missing or defaulting traders appeared in the supply chains.

The claimant alleged that HMRC had created a substantive legitimate expectation that professionally prepared invoices, reasonable enquiries and due diligence would suffice. It also relied on earlier payments, HMRC advice, a consultation document and correspondence in April 2006. The claimant abandoned its Wednesbury ground. The central issue was whether the alleged expectation was sufficiently clear and unqualified to make refusal of the claims unfair or an abuse of power.

1. The application was dismissed. The alternative statutory review and appeal procedure did not provide an adequate remedy for the legitimate-expectation claim because the Commissioners and tribunal could determine whether duty was payable and whether the statutory conditions were met, but could not order payment on the basis of legitimate expectation. The claim was therefore not out of time by challenging the decision of 25 April 2007.
2. The governing principle, drawn principally from R v Inland Revenue Commissioners, ex parte MFK Underwriting Agencies Ltd [1989] STC 873, was that an informal representation by a public authority must be clear, unambiguous and devoid of relevant qualification. In a tax case, reliance on an informal ruling also ordinarily requires full disclosure of the specific transaction, identification of the ruling sought, a request for a fully considered ruling and an indication of the intended use of the ruling.
3. The letter of 20 April 2006 was ambiguous. It withdrew an orally proposed requirement for original evidence, but stated that supply-chain verification might affect repayment and that Huntingwood had to exercise appropriate duty of care. It did not preserve any earlier assurance in sufficiently clear terms. Continued payment of claims on invoices marked duty paid was neutral conduct and did not convert the ambiguity into an unqualified representation.
4. The July 2005 advice was likewise insufficient. The letter referred both to earlier advice favourable to Huntingwood and to the statutory requirement that HMRC be satisfied that duty had been paid, while warning that irregularities could lead to an assessment. That tension prevented a reasonable reliance on the alleged assurance without seeking clarification.
5. The reference to relaxed evidence requirements in the consultation document, previous payments, and the August 2006 comment that Huntingwood had provided what was required did not independently establish a clear and unqualified representation. The alternative formulation discussed in Rowland v Environment Agency [2003] EWCA Civ 1885, based on unfairness amounting to abuse of power, did not alter the result on these facts. Permission to appeal was granted.

First-instance judicial review application. The judgment records that permission to bring the application had been granted by Mr Justice Cranston. Permission to appeal from this judgment was granted.