HM Revenue & Customs v Rogers

The statutory machinery for challenging a tax assessment is generally exclusive, but it does not prevent the High Court from staying recovery proceedings while an appeal or postponement application remains pending. The stay jurisdiction is exercised by balancing prejudice, including the risk that refusal would cause irreparable harm or render the appeal ineffective.

Summary judgment may be granted only where the defence has no realistic prospect of success and there is no other compelling reason for trial. Exceptionally, a taxpayer may resist recovery proceedings where the Revenue’s enforcement of a statutory debt amounts to an abuse of public law power. A defensible allegation that the assessment was reached without due care and diligence can justify a trial.

HM Revenue and Customs brought proceedings against Mr Rogers to recover approximately £2.7 million alleged to be due under an income tax assessment. The assessment treated shares allocated during his employment as taxable employment income.

Mr Rogers had appealed the assessment and had also challenged a General Commissioners’ refusal to reopen postponement arrangements under section 55 of the Taxes Management Act 1970. He applied for a stay of the recovery action. HMRC applied for summary judgment under CPR Part 24. The central issues were whether the High Court could stay recovery while the statutory procedures remained pending and whether Mr Rogers had an arguable defence based on abuse of statutory power.

1. Stay. The statutory procedure for challenging an assessment is ordinarily exclusive. Authorities such as Commissioners of Inland Revenue v Pearlberg [1953] All ER 388 and Lamb v IRC [2005] EWHC 592; [2006] STC 393 did not determine whether the High Court could exercise its case-management jurisdiction to stay a recovery action while an appeal or section 55 process remained pending.
2. The court could grant a stay in support of the pending appeal against the postponement decision. The relevant approach was analogous to an application for a stay of execution pending appeal. The court had to balance the prejudice to each side, taking account where appropriate of the prospects of success and all other relevant circumstances. The possibility of bankruptcy and irreparable harm to the taxpayer, together with the absence of equivalent prejudice to HMRC, justified a stay.
3. A change in legal advice could constitute a change of circumstances for section 55 purposes. Whether the advice was correct was a separate question from whether it was capable of amounting to a change of circumstances. The appeal therefore had a realistic prospect of success.
4. Summary judgment. Applying the test stated in Three Rivers v Bank of England No 3 [2001] UKHL 16, summary judgment required there to be no realistic prospect of defending the claim and no other compelling reason for trial.
5. HMRC had discretion to enforce a statutory debt while an appeal was pending, but that discretion was a public law power and could not be exercised abusively. The exceptional possibility of resisting recovery proceedings on that basis, recognised in Inland Revenue Commissioners v Aken [1990] STC 497, was arguable on the facts. HMRC also owed a duty to exercise due care and diligence and form a bona fide belief as to the tax chargeable, as indicated by R v The Bloomsbury Income Commissioner [1915] 3 KB 768.
6. The dispute over the valuation of the shares and the possible existence of further assets meant that Mr Rogers’s defence was arguable. Summary judgment was dismissed. The action was stayed, without precluding a later application after the statutory procedures had concluded.

First-instance decision. The judgment records pending proceedings concerning the appeal against the General Commissioners’ section 55 decision and the substantive appeal against the tax assessment.