GMGRM North Ltd & Ors, R (On the Application Of) v Ritchie (Revenue And Customs) & Anor

Where legislation gives HMRC discretion to admit late group relief claims, HMRC may operate a published policy but must retain the statutory discretion. The policy’s general criterion concerning reasons beyond the company’s control does not cover a claim made necessary solely by events occurring after the time limit. Otherwise later changes of circumstance could undermine finality. The residual criterion requires consideration of the overall circumstances, including the reason for delay, its extent, the consequences for the company and any unusual features. The size of a potential repayment is not, by itself, a relevant factor. A decision relying on the availability of internal and external professional resources and applying those criteria was neither irrational nor unfair.

The appellants sought judicial review of HMRC’s refusal to allow late withdrawals of corporation tax group relief claims for accounting periods ending on 31 March 2007 and 31 March 2008. The changes were sought after the sale of the business generated terminal losses. Stewart J refused permission to apply for judicial review on 20 December 2013. The Court of Appeal considered whether HMRC had misconstrued Statement of Practice 5/01, failed to apply its criteria, or acted irrationally or unfairly in refusing an extension under paragraph 74(2) of Schedule 18 to the Finance Act 1998.

The renewed application for permission to appeal was refused.

1. Paragraph 74(2) of Schedule 18 to the Finance Act 1998 confers an unqualified discretion to allow a group relief claim to be made or withdrawn after the ordinary statutory time limit. Statement of Practice 5/01 guides the exercise of that discretion but does not replace it.
2. The policy’s paragraph 10 criterion concerning reasons beyond the company’s control does not apply merely because the event creating the need for a late claim occurred after the time limit. Its examples concern circumstances existing by the expiry date whose financial consequences were then unknown or unquantified for good reason. Treating every subsequent event as a qualifying reason would deprive the statutory time limits of finality.
3. For 2008, HMRC were entitled to find that the possibility of a trade and asset sale and of terminal losses had been identified before the deadline. The availability of a finance team, tax team and independent advisers meant that the appellants could have acted in time. That assessment was not irrational or unfair.
4. Paragraph 12 permits consideration of the overall circumstances where a case falls outside paragraph 10. The decision letter could properly take into account that the late claims had been prepared without undue delay. It was unnecessary for the letter to state expressly whether that factor operated for or against the appellants where its favourable significance was apparent.
5. The consequences for the company if the claim were refused could be relevant, including effects on solvency or the business. The size of the proposed repayment, however, was not relevant merely as an amount, since that would discriminate between large and small taxpayers. It was rational to reject the 2007 claim under paragraph 12 after rejecting the 2008 claim, because no additional relevant feature supported the earlier claim.

• Court of Appeal (Civil Division): in [2014] EWCA Civ 844, Sir Stanley Burnton refused the renewed application for permission to appeal.
• High Court of Justice, Queen’s Bench Division, Administrative Court: Stewart J refused permission to apply for judicial review on 20 December 2013.