The Prudential Assurance Company Ltd, R (On the Application Of) v Revenue And Customs

A legitimate expectation requires a representation that is clear, unambiguous and unqualified. Subsequent correspondence may remove any expectation arising from earlier communications where it makes clear that statutory conditions, including applicable time limits, remain necessary. Evidence from related litigation does not create a legitimate expectation unless it contains a sufficiently clear representation directed to the relevant statutory requirement. The fact that a tax year remains open, or that other years are treated in the same litigation, does not itself amount to a representation that a valid statutory claim has been made.

The claimant renewed its application for permission to seek judicial review after Holgate J refused permission on the papers. It challenged HMRC’s refusal, in a letter dated 1 September 2016, to treat the claimant as having made a valid claim for double tax relief on overseas dividend income for the accounting period ending 31 December 2009.

The claimant relied on a legitimate expectation said to arise from HMRC’s previous practice and from statements made during related test-case litigation. The central issue was whether those materials amounted to a clear, unambiguous and unqualified representation that no separate statutory claim was required for 2009.

1. The renewed application was dismissed. The claimant had no realistic claim based on legitimate expectation.
2. A legitimate expectation could arise only from a representation that was clear, unambiguous and unqualified. HMRC’s correspondence in 2012 and 2013 made clear that filing a return and leaving an assessment open did not remove the need to comply with the statutory requirements governing the relevant relief, including applicable time limits.
3. The correspondence therefore superseded any earlier, more general statement concerning the treatment of overseas dividends. It deprived any earlier expectation of legal effect.
4. The evidence also showed that the claimant had made the requisite claims for previous years but had not done so for 2009. That factual difference reinforced the conclusion that the 2009 return could not be treated as incorporating a claim for relief.
5. Statements by HMRC’s counsel and observations made during the related test-case litigation concerned the governing legal principle. They assumed, rather than represented, that valid claims had been made for all relevant years. They did not amount to a clear representation that the claimant could rely solely on the 2009 return.
6. Without-prejudice correspondence was admissible to establish the fact that statements had been made, independently of their truth, applying the principle referred to in EMW Law LLP v Halborg [2017] EWHC 1014 (Ch).

• High Court (Administrative Court): Holgate J refused permission on the papers. Sir Ross Cranston, sitting as a Deputy Judge of the High Court, dismissed the renewed application.