Imperial Chemical Industries Ltd & Anor, R (on the application of) v HM Treasury & Anor

The Claimants sought judicial review of the Restitution Interest Tax Provisions (RITP), introduced by resolution under the Provisional Collection of Taxes Act 1968 and enacted in Part 8C of the Corporation Tax Act 2010 as amended by the Finance (No 2) Act 2015. The RITP impose a 45% corporation tax on defined restitution interest with no set-offs, create a withholding mechanism and provide for assessments and appeals to the First-tier Tribunal (Tax Chamber).

The Claimants advanced multiple grounds including breaches of EU law (principle of effectiveness and Article 47(1) CFREU), legal certainty, non-retroactivity, legitimate expectations, interference with judicial proceedings and separation of powers (Article 6 ECHR and Article 47(2) CFREU), and incompatibility with Article 1 Protocol 1 and Article 14 ECHR.

The court’s decision turned on case management and forum: because parallel proceedings raising essentially identical legal issues were already before the First-tier Tribunal (the BAT appeals) and those appeals were further advanced, the Administrative Court stayed this judicial review. The judge concluded the FTT was the appropriate first forum to determine lawfulness, citing risk of inconsistent outcomes, duplication of resources and prematurity of a hypothetical judicial review. The applications for expedition and interim relief were dismissed and no order was made on permission.

Background and parties: This is a first-instance judicial review by Imperial Chemical Industries Ltd and FCE Bank PLC challenging the lawfulness of the Restitution Interest Tax Provisions (RITP). The RITP were brought into effect on 26 October 2015 and are contained in Part 8C of the Corporation Tax Act 2010, as amended by the Finance (No 2) Act 2015. The claim arises against the long-running Franked Investment Income Group Litigation Order (FII GLO); both Claimants are participants in that litigation and have received interim compound interest payments which may become subject to the RITP.

Nature of the claim and relief sought: The Claimants sought declarations that the RITP are unlawful under EU law and the European Convention on Human Rights, a reference to the Court of Justice of the European Union if necessary, and interim relief including a stay of the RITP. The substantive grounds included alleged breaches of Article 47(1) CFREU, legal certainty, non-retroactivity, separation of powers/Article 6 ECHR, Article 1 Protocol 1 ECHR and Article 14 ECHR.

Procedural posture and parallel proceedings: When the claim reached the Administrative Court it emerged that substantially identical challenges to the RITP were pending in other fora, notably consolidated appeals brought by BAT to the First-tier Tribunal (Tax Chamber) dealing with an actual withholding, and related proceedings such as Prudential’s judicial review and applications in the Chancery Division. The BAT FTT appeals were further advanced and contained grounds which matched, verbatim in part, the grounds advanced before the Administrative Court.

Issues framed and court’s reasoning: The court framed the principal case-management issue as whether the Administrative Court or the FTT was the appropriate forum. The judge concluded the FTT was the appropriate first forum for several reasons: the FTT was already seised of BAT’s appeal which was further advanced; BAT’s appeal concerned a real withholding rather than a hypothetical dispute; the FTT is a specialist tax tribunal with relevant expertise; allowing multiple concurrent proceedings risked inconsistent outcomes and waste; and threshold issues of prematurity and alternative remedy (availability of appeal to the FTT) militated against the Administrative Court proceeding. The Claimants’ failure to disclose the existence of parallel proceedings earlier was noted as a deficiency in candour to the court.

Disposition: The Administrative Court stayed this judicial review pending the outcome of the BAT appeal to the FTT or until further order. The application for expedition and for interim relief were dismissed and no order was made on permission; the court invited the parties to liaise as to future steps and noted Prudential might seek a similar stay.

This first-instance judicial review was stayed pending the outcome of the BAT appeal in the First-tier Tribunal (Tax Chamber) or until further order. The court reasoned that the FTT was the appropriate forum because the BAT appeal was further advanced, raised substantially identical grounds (including on retrospectivity), concerned an actual withholding (not hypothetical facts), and because permitting parallel proceedings risked inconsistent conclusions and duplication of resources. The applications for expedition and interim relief were dismissed and no decision was made on permission.