Cameron & Ors v Revenue & Customs

A taxpayer may obtain judicial review where HMRC’s conduct gives rise to a legitimate expectation that a published concession will be applied. A representation must be clear, unambiguous and free from relevant qualification, assessed in its full factual context. Where a concession is formally published to a class of taxpayers, it remains capable of founding legitimate expectation until effectively withdrawn or altered by communication to the whole relevant class. Personal correspondence inconsistent with the publication does not necessarily make reliance unreasonable. Detrimental reliance is relevant but is not an essential precondition to relief.

The claimants were seafarers who challenged HMRC decisions disallowing claims for foreign earnings deduction or seafarer’s earnings deduction. They contended that HMRC’s published guidance, particularly the Blue Book, established a broad concession under which the day of departure from a UK berth could count as a day of absence where the voyage would take the vessel outside UK territorial waters.

HMRC relied instead on a narrower concession, under which the treatment applied only to voyages bound for a foreign port. The central issues were whether the broad concession created a legitimate expectation, whether reliance remained reasonable after HMRC officers disputed it, and whether detrimental reliance was required.

1. The claims for judicial review succeeded. The broad concession was clearly stated in HMRC publications, at the latest in the Blue Book first published in 1993. It was capable of founding a legitimate expectation and satisfied the requirements identified in R v Inland Revenue Commissioners ex parte MFK Underwriting Agencies Ltd [1989] STC 873.

2. The relevant question was whether the representation was clear, unambiguous and free from relevant qualification when the publication was read as a whole and considered from the perspective of an ordinarily sophisticated taxpayer. The publication of IR205(S), which stated the statutory midnight rule, did not revoke the broad concession.

3. HMRC had taken no effective step to notify all seafarers potentially eligible for FED or SED that the broad concession had been withdrawn, altered or superseded. Withdrawal or alteration of a concession required fair and effective notice to the whole relevant class, with reasonable time for adjustment. Correspondence with individual taxpayers or agents was insufficient for that purpose.

4. The Second Claimant’s reliance did not become unreasonable merely because HMRC officers later asserted that the broad concession had never existed. The Blue Book remained an official publication which had not been revoked or amended in a generally available communication.

5. Following R (Bancoult) v Secretary of State for Foreign & Commonwealth Affairs (No 2) [2008] UKHL 61, detrimental reliance was not essential to a legitimate-expectation claim, although it remained relevant to whether departure from the representation would constitute an abuse of power. Both claimants had in any event relied on the concession; the First Claimant had also acted to his detriment.

6. The precise form of relief and consequential matters were to be determined after further submissions or by an agreed draft order.

First-instance judicial review proceedings. No earlier decision is stated in the judgment.