GMGRM North Ltd & Ors, R (on the application of) v Ritchie (HM Revenue and Customs Officer) & Anor

Statutory time limits for group relief claims cannot generally be reopened merely because later commercial events make an earlier tax election disadvantageous. HMRC’s policy permits late claims where circumstances beyond the taxpayer’s control prevented a timely claim, and contains a broader safety-valve discretion where refusal would be unreasonable in the overall circumstances. That discretion requires consideration of all relevant factors, including the reason for delay, its length, the consequences of refusal and unusual features. The absence of tax avoidance is not itself a positive reason to admit a late claim. A refusal is unlawful only if it falls outside the range of reasonable decisions.

The claimants sought permission to judicially review HMRC’s refusal to permit late withdrawals and replacement claims for corporation tax group relief. The claims concerned accounting periods ending 31 March 2007 and 31 March 2008. After the sale of North’s trade, the claimants wished to use terminal loss relief and rearrange group relief claims within the corporate group.

They argued that HMRC had misinterpreted and misapplied paragraphs 10 and 12 of Statement of Practice 5/01, and that refusal was unreasonable. The central issues were whether subsequent events could constitute exceptional reasons for reopening settled claims, and whether HMRC had properly exercised its broader discretion.

1. Permission refused. The claimants had not shown an arguable basis for judicial review.
2. Paragraph 74 of Schedule 18 to the Finance Act 1998 imposed statutory time limits, subject to HMRC’s discretion under paragraph 74(2). Those provisions did not indicate that a later cessation of trade, followed by a desire to obtain terminal loss relief, justified reopening group relief decisions made when the relevant time limits were current.
3. Paragraph 10 of Statement of Practice 5/01 was directed principally to claims which could not have been made within time because of circumstances beyond the company’s control. It did not extend to revising voluntary relief decisions because subsequent events made them economically unattractive. Such a construction would undermine the statutory time limits.
4. Paragraph 12 operated as a safety valve, consistent with the explanation in R (Bampton Property Group Ltd) v King and HMRC [2012] EWCA Civ 1744. The listed criteria were non-exhaustive. HMRC was entitled to consider the reasons for delay, the extent of delay, the consequences of refusal and unusual features, while applying the overall circumstances test.
5. The absence of a tax-avoidance purpose was not itself a positive factor requiring the discretion to be exercised. HMRC had considered the relevant matters and its refusal was not Wednesbury unreasonable.