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

Where substantially identical challenges to tax legislation are already proceeding before the specialist tribunal, the tribunal is ordinarily the appropriate forum to determine the issue in the first instance. This is particularly so where the tribunal appeal concerns an actual withholding, while judicial review proceedings are hypothetical and permission has not been granted. The Administrative Court may stay, rather than dismiss, the judicial review where the claimants are not parties to the tribunal proceedings and future directions may be required. The court may defer questions of prematurity, alternative remedy, jurisdiction and arguability until the stay is lifted. Expedition and interim relief should generally be refused where no withholding or assessment presently requires restraint.

The claimants, parties to the Franked Investment Income Group Litigation, sought permission to challenge the Restitution Interest Tax Provisions introduced in October 2015. They alleged incompatibility with EU law and Convention rights, and sought interim relief and expedition.

Parallel proceedings were pending before the First-tier Tribunal in an appeal by BAT concerning an actual withholding under the provisions. The court was also referred to Six Continents Ltd v CIR and HMRC [2016] EWHC 169 (Ch), in which Henderson J had concluded that the First-tier Tribunal was the appropriate forum for a similar challenge.

The central issues were the appropriate forum and whether the judicial review should be stayed or dismissed before permission and substantive merits were determined.

1. Appropriate forum. The First-tier Tribunal was the appropriate forum, at least in the first instance, to determine the legality of the Restitution Interest Tax Provisions. The BAT appeal raised materially the same legal grounds as the judicial review and was further advanced. It concerned an actual withholding, enabling the tribunal to consider the statutory provisions against concrete facts and to address any EU or Convention issue, including whether a compliant construction was available.
2. The specialist tax jurisdiction had practical advantages. The tribunal was familiar with the underlying Franked Investment Income litigation and could determine the issues without first resolving the Administrative Court’s separate questions concerning prematurity, alternative remedy, standing and jurisdiction. The difference between the remedies available in the tribunal and those sought by judicial review was not material.
3. The court’s conclusion was consistent with the approach taken by Henderson J in Six Continents Ltd v CIR and HMRC [2016] EWHC 169 (Ch), where the First-tier Tribunal was also identified as the appropriate forum.
4. Case management and permission. The claim was stayed pending the outcome of the BAT appeal in the First-tier Tribunal or further order. The court made no order on permission. It declined to determine the unresolved arguments on prematurity, alternative remedy and jurisdiction, leaving them open if the claim was revived after the tribunal proceedings.
5. The applications for expedition and interim relief were dismissed. Expedition was inappropriate given the parallel and likely protracted litigation. Interim relief was inappropriate because neither claimant was then subject to a withholding or assessment requiring restraint.