Infinis Energy Holdings Ltd v HM Treasury & Anor

Under EU law, a long-standing tax exemption does not create a protected expectation that it will continue or be withdrawn only after notice. The claimant must show a precise, unconditional and unambiguous assurance by an authorised public authority. The same standard applies to legislative and administrative measures. A prudent and circumspect operator’s ability to foresee change informs whether any assurance was sufficiently precise, but is not a separate, more lenient test. Immediate withdrawal of a fiscal measure may satisfy proportionality where it pursues legitimate public objectives, competing interests have been considered, less onerous alternatives are unsuitable, and other support remains. Courts should be slow to second-guess Parliament’s macro-economic assessment.

Infinis challenged the withdrawal of the renewable source electricity exemption from the Climate Change Levy. The withdrawal was announced on 8 July 2015 and implemented from 1 August 2015, with existing Levy Exemption Certificates preserved during a transitional period. The measure was given temporary statutory effect by a House of Commons resolution under section 1 of the Provisional Collection of Taxes Act 1968 and was later enacted by section 49 of the Finance (No 2) Act 2015, amending paragraph 19 of Schedule 6 to the Finance Act 2000.

Jay J dismissed Infinis’s and Drax Power Ltd’s judicial review claim: [2016] EWHC 228 (Admin). Infinis alone appealed, alleging breaches of EU principles of legal certainty, foreseeability, legitimate expectations and proportionality, and of Article 1 Protocol 1. The central questions were whether a protected expectation or notice period arose, and whether immediate implementation was disproportionate.

1. Appeal dismissed. The judgment was delivered as the judgment of the court.
2. The EU principles of legal certainty, foreseeability and protection of legitimate expectations apply uniformly to administrative and legislative measures. In the context of a national tax regime, a protected expectation requires a precise, unconditional and unambiguous assurance, by words or conduct, from the relevant public authority. A prudent and circumspect operator’s ability to foresee a change informs whether an assurance was sufficiently precise; it is not a distinct, more permissive test. An operator cannot generally expect a discretionary fiscal regime to continue or to be changed only after notice.
3. The court agreed with the conclusion that no such assurance had been given. The exemption’s long duration, prior practice, business modelling and other renewable-energy schemes did not amount to an assurance that the exemption would continue or that a particular notice period would precede its withdrawal. Plantanol GmbH & Co. KG v Hauptzollamt Darmstadt [2009] ECR I-08343 was consistent with the established approach and concerned materially different circumstances, including an arguable assurance in the legislation as to the scheme’s expiry.
4. Proportionality required consideration of suitability and necessity, including whether the objective could be achieved by a less onerous measure. The withdrawal pursued legitimate fiscal and energy-policy objectives. The evidence supported the assessment that the measure was not rushed or politically conceived without regard to its merits. Removing only foreign generators could have created State aid difficulties and unacceptable delay. The exemption was a diminishing and relatively small part of a wider package of renewable-energy support, existing certificates remained valid, and the affected interests had been considered.
5. Parliament had a wide margin in balancing fiscal, macro-economic and policy considerations. The court should be slow to second-guess that assessment. Reduced income caused by a tax change, without evidence of particular losses or liabilities that notice would have avoided, carried little weight in the proportionality analysis.
6. The court did not decide the Article 1 Protocol 1 issue. It proceeded on the common ground that the relevant Charter rights were materially similar, and that failure under Article 17 of the Charter would defeat the Article 1 Protocol 1 claim.

1. Court of Appeal (Civil Division) dismissed Infinis’s appeal against the dismissal of its judicial review claim.
2. Administrative Court Jay J dismissed the claim brought by Infinis and Drax Power Ltd: [2016] EWHC 228 (Admin).