The Bampton Property Group Ltd & Ors, R (on the application of) v King (An Officer Appointed By Revenue & Customs)

When a tax authority exercises a statutory discretion to admit a late claim, the decision must be lawful, fair and based on relevant considerations. A taxpayer’s error, including an adviser’s error or an error by another company in the same group, may be attributed to the group under a late-claims policy. Enquiry guidance does not generally require the authority to identify an error noticed before an enquiry but not understood by the officials handling it. A policy reference to tax avoidance may include a lawful tax arrangement which reduces tax without the economic consequences intended by Parliament. The required reasons are context-dependent; where the issues are known, later disclosure of advice adopted by the decision-maker may cure an imperfect decision letter.

Members of a property investment group challenged HMRC’s refusal to extend time for late claims for group and consortium relief. Advisers had made errors in apportioning losses, and HMRC officials had identified an error but had not brought it to the taxpayer’s attention before the relevant deadlines. The appellants alleged inadequate reasons, failure to consider HMRC’s non-notification, improper attribution of another group company’s error, and misinterpretation of SP 5/01, including its reference to tax avoidance. Blair J rejected the challenge in [2012] EWHC 361 (Admin). The appeal concerned whether HMRC’s decision was unlawful because of inadequate reasons, unfairness, excluded relevant considerations or included irrelevant considerations.

Disposition. The appeal was unanimously dismissed. Arden LJ gave the reasons, and Kitchin LJ and Rix LJ agreed.

1. Reasons. The level of reasons required from an administrative decision-maker depends on context. Where the issues have been extensively canvassed, a concise explanation may suffice. Mr King had contemporaneously adopted Mr Jefferies’s advice as the substantial part of his reasoning. Supplying that advice later remedied any inadequacy in the decision letter.
2. Notification and fairness. Code of Practice 14 did not impose an obligation to disclose an error noticed before an enquiry where the officials conducting the enquiry did not understand its precise nature. The Charter’s reference to putting mistakes right concerned HMRC’s own errors, not errors in a taxpayer’s return. The court declined to extend the so-called venerable principle, derived from the appellate powers of tax commissioners, to HMRC’s ongoing administration. The applicable standard was fairness. On the facts, HMRC acted fairly: responsibility for the claims lay primarily with the group, there was time to correct them, the enquiries extended the available period, the responsible officer directed attention to the computations, and the decision-maker did not know of the earlier officer’s conclusion.
3. Group treatment. SP 5/01 had to be construed realistically. HMRC were entitled to treat the corporate group as a whole and to attribute the advisers’ oversight in one group company when considering another group company’s late claim.
4. Tax avoidance and paragraph 12. The policy’s reference to tax avoidance was not confined to specific statutory anti-avoidance provisions. Applying the approach in IRC v Willoughby [1997] 1 WLR 1071, the Lloyd’s loss-buying scheme could constitute tax avoidance even though the relief was used in a manner permitted by statute. Paragraph 12 of SP 5/01 was a safety valve, not an independent test detached from paragraph 11. It required consideration of whether an extension remained justified despite oversight, together with the overall circumstances.
5. Other matters. The court refused permission for a new ground because it would require further evidence and the evidence indicated that the same decision would have been made. Further witness statements answering new allegations about HMRC’s conduct were properly admitted and were immaterial in any event because the judge would have reached the same result without them. The fact that Daejan had made a timely claim remained part of the background and had been taken into account. Appeal dismissed.

• Court of Appeal (Civil Division): dismissed the appeal against the High Court’s refusal to set aside HMRC’s decision.
• High Court of Justice, Queen’s Bench Division, Administrative Court: Blair J rejected the judicial review challenge and refused to set aside HMRC’s refusal of an extension of time, [2012] EWHC 361 (Admin).