Indigo Global Trading Ltd, R (on the application of) v HM Revenue and Customs

Judicial review will ordinarily be refused where an adequate statutory appeal provides the appropriate forum for resolving the dispute. A claimant cannot use a late amendment to introduce a new substantive ground after obtaining permission on confined grounds, particularly where the amendment requires an adjournment and causes substantial prejudice to the defendant. A legal argument concerning the validity of a VAT assessment falls within the jurisdiction of the VAT appeal tribunal, whereas a distinct challenge to HMRC’s enforcement policy may not. The court may refuse to stay judicial review proceedings where the proposed tribunal proceedings offer an adequate remedy and the stay would cause unfair prejudice. Indemnity costs may be ordered where the conduct of proceedings is out of the ordinary, without the order being punitive.

Indigo sought judicial review of HMRC’s refusal to pay approximately £2.2 million in claimed input VAT credits. Permission had been granted on two confined grounds: an argument that attempted electronic payments had converted the credits into money already payable, and an alleged discriminatory HMRC enforcement policy.

After HMRC had prepared its evidence and the substantive hearing was imminent, Indigo sought permission to add a new argument concerning the interpretation and domestic effect of Kittel, together with an adjournment. Alternatively, it sought to stand over the claim pending appeals concerning its VAT assessments before the First-tier Tax Chamber. The issues were whether the amendment or stay should be permitted and whether the proceedings should be withdrawn.

1. Amendment and adjournment refused. The proposed Kittel argument was raised at the last minute, although it could have been advanced much earlier. Allowing it would require HMRC to defend what was effectively a new claim and would reward the claimant’s failure to articulate its case within the permission granted.
2. The argument that the interpretation of Kittel was inconsistent with Article 22(8) of the EC directive was a legal argument directed to the validity of the assessments. It therefore fell within the jurisdiction of the First-tier Tax Chamber under section 83(1)(p) of the Value Added Tax Act 1994. That was distinct from the existing challenge alleging that HMRC had adopted an unlawful discriminatory enforcement policy.
3. The tribunal route was an adequate alternative remedy. If necessary, the interpretation issue could be determined as a preliminary issue and pursued on appeal. Theoretical disadvantages concerning interim relief or damages did not justify judicial review in the circumstances.
4. The alternative application to stand over the judicial review claim was refused. It sought to re-litigate an issue already decided by Mr Ockelton, and an indeterminate stay would cause further unfair prejudice to HMRC. The existing grounds were acknowledged to be unlikely to succeed and were to be abandoned if both applications failed.
5. Indigo withdrew the claim. The applications to amend and to stand over were refused. Indigo undertook to file a notice of discontinuance within seven days and was ordered to pay HMRC’s costs, including reserved costs, on the indemnity basis. Such costs reflected the out-of-the-ordinary conduct of the litigation and were not punitive.

• High Court (Administrative Court): Slade J initially refused permission on the papers. HHJ Pearl later granted permission on two confined grounds. Mr Ockelton refused an application to stand over the claim, and Foskett J ordered Indigo to confine its case to the permitted grounds. Mr Justice Stadlen refused the later applications to amend and stand over, and the claim was withdrawn.