Aston & Ors, R (on the application of) v HM Revenue & Customs

When deciding interim relief in a public law challenge to an advance payment notice, the court must assess the merits with particular care where Parliament has created a fiscal regime directed to protecting tax collection and countering tax avoidance. The balance of convenience and the public interest may outweigh hardship caused by immediate payment. A claimant must show a sufficiently realistic prospect of success on the substantive grounds. Where the statutory criteria for an advance payment notice appear satisfied, a difference between the actual circumstances and those principally contemplated by Parliament does not itself establish invalidity. Any interim relief should not ordinarily suspend associated penalty provisions.

The claimants challenged advance payment notices issued by HM Revenue & Customs in connection with arrangements involving remuneration channelled through an offshore company and received as loans. They sought permission to pursue judicial review grounds concerning legitimate expectation, vires, retrospectivity, article 1 of Protocol 1, alleged criminal charge and natural justice. Mr Justice Parker granted permission on all grounds, particularly the legitimate-expectation issue, but stayed the claim pending consideration by the Court of Appeal of related criticisms of Rowe.

The claimants also sought interim relief preventing enforcement of the notices and suspending the penalty regime. The central issue was whether the merits and balance of convenience justified such relief.

1. Permission and stay. Permission to bring the claim was granted on all proposed grounds. The claim was stayed because the Court of Appeal was considering related issues concerning Rowe, including retrospectivity and article 1 of Protocol 1.
2. Interim-relief approach. The court applied the balance of convenience in the context of a public law challenge. Because Parliament had established a specific fiscal regime to discourage artificial tax arrangements, prevent the benefit of delay and promote the collection of tax properly due, the merits required more critical examination than in an ordinary case. The claimants’ overall prospects appeared relatively low.
3. Legitimate expectation and vires. The claimants faced an uphill task in showing that section 55 did not address a case in which an assessment had been made and an appeal pursued through HMRC’s review procedures. The statutory provisions governing postponement of tax were difficult to reconcile with the proposed interpretation. The apparent satisfaction of the statutory criteria for an advance payment notice was not displaced merely because the circumstances were not those Parliament principally had in mind. The reasoning in Spath Holme supported that distinction.
4. Other grounds. The analyses in Rowe concerning retrospectivity, article 1 of Protocol 1 and natural justice were regarded as powerful and sound at this stage. The claimants were also unlikely to establish that the advance payment notice regime constituted a criminal charge within the relevant public-administration context, having regard to Ferrazzini.
5. Relief and costs. Interim relief was refused. Hardship, including substantial hardship in individual cases, did not outweigh the public interest. HMRC remained able to consider individual requests for deferment. Had relief been granted, the penalty regime would nevertheless have remained operative. Costs relating to interim relief were reserved.

This was a first-instance Administrative Court ruling on permission and interim relief. Permission was granted and the claim was stayed pending the Court of Appeal’s consideration of related issues.