Glencore Energy UK Ltd, R (On the Application Of) v The Commissioners for HMRC

Judicial review is ordinarily a remedy of last resort. A statutory tax appeal on the facts and law normally provides a suitable alternative remedy, including where objections concern the initial assessment process. Judicial review requires exceptional circumstances involving a serious abuse of power or comparably fundamental impropriety or unfairness.

The mandatory review preceding an appeal against diverted profits tax does not make that remedy unsuitable merely because tax must first be paid. A charging notice must explain the factual basis for liability, but full reasons for the decision are unnecessary. Specified taxpayer representations require consideration; other representations and information may be considered at the officer’s rational discretion when making the best reasonable estimate.

Glencore Energy UK Limited, a UK oil trading company, paid its Swiss parent, Glencore International AG, 80% of its net operating profits under an agreement providing loss insurance and access to storage and transportation facilities. HMRC considered that those arrangements generated taxable diverted profits under Part 3 of the Finance Act 2015. A designated officer issued a charging notice, and the company paid more than £21 million.

The company sought judicial review before completing the statutory review and pursuing an appeal to the First-tier Tribunal. It challenged the officer’s legal test, consideration of representations, statement of reasons and calculation of two deductions. Green J refused permission because suitable alternative remedies existed and the alleged defects would not have substantially changed the outcome.

Hickinbottom LJ granted permission to appeal and to apply for judicial review, directing the Court of Appeal to determine the substantive claim. The principal question was whether the statutory review and subsequent merits appeal provided a suitable alternative remedy despite the intervening payment obligation and delay.

The application for judicial review was dismissed unanimously. Sales LJ’s reasons were adopted by Singh and Gloster LJJ. The statutory review and appeal provided a suitable alternative remedy. Independently, the grounds of challenge failed on their merits.

1. Judicial review was ordinarily a remedy of last resort. The alternative-remedy principle concerned judicial discretion rather than an ouster of jurisdiction. Courts should respect Parliament’s choice of procedures and avoid duplication, disruption and disproportionate use of judicial resources. Immediate intervention remained available where necessary to vindicate the rule of law ([54]–[57]).
2. Under In re Preston [1985] 1 AC 835, collateral judicial review of an appealable tax assessment required exceptional circumstances involving a serious abuse of power. Ordinary legal errors and procedural objections did not become exceptional merely because the tribunal could not determine the precise public law challenge to the initial notice. Enforceable promises outside the tribunal’s jurisdiction could justify intervention. Bribery and possibly a manifest failure even to attempt statutory compliance illustrated other exceptional circumstances ([58]–[64]).
3. The review under section 101 of the Finance Act 2015, followed by an unrestricted merits appeal under section 102, was suitable. Early payment and the review period reflected Parliament’s reasonable balance between tax collection and taxpayer protection, including repayment with interest. The review encouraged disclosure, agreement and narrowing of issues. Although peripheral to that conclusion, section 101(3)(b) also permitted reconsideration of liability itself and reduction of the charge to nil ([65]–[71]).
4. The charging notice showed that the officer considered the statutory conditions satisfied. Its additional use of preliminary-notice terminology did not establish application of the wrong test. The evidence also established that the representations had been considered ([73]–[80]).
5. Section 95(5)(b) required the officer to state her view of the relevant facts supporting liability. It did not require full explanations for adopting that view. The statutory information requirements and eventual merits appeal left no compelling fairness-based reason for an additional common law duty. A wider duty would undermine the intended procedure ([81]–[87]).
6. Even assuming fuller reasons were required, section 31(2A) of the Senior Courts Act 1981 required refusal of relief. The officer had proper reasons, subsequently communicated in substance, and fuller contemporaneous reasons were highly unlikely to have changed the outcome ([88]).
7. Read with section 96(2), section 94(3) identified representations requiring consideration while allowing rational discretionary consideration of other representations and information. Objections to valuation principles were not arithmetical errors, but remained reviewable for irrationality when considered. The estimates were rational on the evidence and within the available time. A nil deduction for services was permissible where adequate evidence of their provision and value was absent ([90]–[97]).

• Court of Appeal (Civil Division): In [2017] EWCA Civ 1716 , dismissed the substantive judicial review claim. It upheld the conclusion that suitable alternative remedies existed and independently rejected the substantive grounds. Hickinbottom LJ had previously granted permission to appeal and permission to apply for judicial review, retaining the claim for substantive determination in the Court of Appeal.
• High Court, Administrative Court: Green J, on 26 June 2017, refused permission to apply for judicial review because the statutory review and appeal provided suitable alternative remedies. He also relied on section 31(3C) of the Senior Courts Act 1981. No citation for that judgment was supplied.