Glencore Energy UK Ltd v Revenue And Customs

Judicial review is ordinarily a remedy of last resort. Where legislation provides a review and appeal scheme, the court must first identify its scope by statutory construction and then examine the substance of the proposed public law challenge. A challenge dressed in public law language may be resolved through the alternative process if its true substance concerns liability, evidence, calculation or the merits of the decision. The alternative remedy need not be judicial if it is effective and appropriate in the circumstances. Under the Finance Act 2015, the diverted profits tax review is a mandatory dispute-resolution stage and extends to both liability and quantum. The First-tier Tribunal appeal provides a further adequate remedy. Permission may also be refused where it is highly likely that the outcome would not have been substantially different, particularly where the impugned decision is already being reconsidered.

HMRC issued a charging notice under the Finance Act 2015 imposing diverted profits tax of more than £21 million on Glencore Energy UK Ltd. The company alleged that HMRC had applied the wrong statutory test, failed to consider its representations, failed to give adequate reasons and adopted an irrational method of calculation.

HMRC argued that the company should use the statutory review under section 101 and, if necessary, appeal to the First-tier Tribunal under section 102. The company contended that those remedies were slow, inappropriate and ineffective. The central issue was whether the statutory review and appeal scheme supplied an adequate alternative to judicial review.

1. Permission refused. The statutory review and appeal procedures under sections 101 and 102 of the Finance Act 2015 were adequate and appropriate alternatives to judicial review.
2. The starting point was statutory construction. The court had to determine the scope of the proposed alternative jurisdiction and whether the grounds could be determined either in their pleaded public law form or according to their true substance. Relevant comparative considerations included speed, cost, fact-finding, utility, finality, the desirability of an authoritative ruling and the strength of the grounds.
3. Substance prevailed over form. Complaints about inadequate reasons, failure to consider representations and irrational calculation were, in substance, disputes about the evidence, liability and amount of diverted profits tax. Those matters could be addressed through the statutory process.
4. The section 101 review was a compulsory precursor to the appeal and constituted a form of mandatory inter partes mediation. It was intended to remedy the limitations of the summary charging procedure, narrow the issues and encourage settlement. The reference to review of the “amount” of diverted profits tax included liability as well as quantum. The taxpayer was not restricted to the limited representations permitted before the charging notice.
5. The section 102 appeal enabled the First-tier Tribunal to determine whether the taxable diverted profits had been correctly calculated and included both liability and quantum. Although the Tribunal could not determine the pleaded public law grounds in their formal language, it could resolve their substance.
6. The proposed grounds were weak as judicial review grounds, although the underlying tax disputes might have greater force in the statutory process. Judicial review would not determine whether tax was payable or its amount and would probably lead only to remittal, while the statutory review was already addressing the issues.
7. In the alternative, section 31(3C)–(3D) of the Senior Courts Act 1981 required refusal of permission. Assuming the grounds were arguable and relief were granted, the likely remedy would be reconsideration. HMRC was already reconsidering the charging notice, so the outcome would highly likely be no different.
8. The court also recognised that HMRC had an obligation to consider formal submissions in good faith. The possible public law consequences of breach of a broader duty to reconsider were academic and premature on the facts.