The Bampton Property Group Ltd & Ors v King (HM Revenue & Customs officer) & Ors

Where an HMRC officer exercises the statutory discretion to admit a late group-relief claim, fairness does not ordinarily require a detailed statement of reasons. It is sufficient that the decision, read with the applicable published policy, shows that no exceptional circumstances justified extending time.

HMRC may apply its late-claims policy to the group as a whole and may treat an accounting error by the group’s advisers as an oversight. The policy’s general and exceptional circumstances provisions are not mutually exclusive. The fact that losses were acquired principally to obtain tax relief is a relevant consideration when deciding whether to admit a late claim. HMRC is not generally under a positive duty to identify errors so that a taxpayer can maximise relief.

The claimants, subsidiaries of Daejan Holdings plc, sought judicial review of HMRC’s refusal to admit late claims for consortium group relief under paragraph 74(2) of Schedule 18 to the Finance Act 1998. The claims corrected errors in the apportionment of losses between group companies.

They alleged inadequate reasons, breach of legitimate expectation, failure to consider relevant matters and reliance on irrelevant matters, and irrationality. The central issues were whether HMRC had lawfully applied Statement of Practice 5/01 and whether the refusal of extra time was unlawful.

1. Application dismissed. None of the four grounds of challenge was established.
2. Paragraph 74(2) of Schedule 18 to the Finance Act 1998 conferred a discretion on an HMRC officer to admit a claim made after the statutory time limit. The provision did not contain an express requirement to give reasons, and no mandatory duty to give reasons should be implied. Fairness did not require more in this case because the applicable policy was known, the claimants had argued for an extension, and the refusal necessarily conveyed that no exceptional circumstances justified it. The advice supplied by the HMRC technical specialist could be read with the decision letter.
3. The claimants had a legitimate expectation that any late claim would be considered under Statement of Practice 5/01, but no legitimate expectation that a late claim would be accepted or considered free from the statutory time bar. HMRC’s earlier correspondence was qualified and did not clearly represent that future claims would be admitted. Its conduct did not amount to an abuse of power.
4. For group relief, HMRC was entitled to treat the relevant group as a whole when applying the policy’s reference to oversight or negligence by the claimant company or its agent. The distinction between the parent company and subsidiary claimants did not prevent consideration of the advisers’ error.
5. The policy did not create an absolute separation between paragraphs 10–11 and paragraph 12. An oversight could be considered as part of the overall circumstances under paragraph 12, alongside the lateness of the claim and its consequences.
6. Tax avoidance was a relevant consideration. Paragraph 12 expressly contemplated consideration of whether a late claim formed part of an arrangement whose main purpose, or one of its main purposes, was tax avoidance. The weight given to that factor was for HMRC. The fact that the underlying arrangements were lawful did not make the factor irrelevant when deciding whether to extend time.
7. The factual allegations that HMRC deliberately withheld information until the time limit expired were rejected. The decision was not irrational merely because another view could have been taken.