Dickinson & Ors, R (on the application of) v HM Revenue & Customs

The exercise of a statutory power by a public authority may constitute an abuse of power where it defeats a clear promise and is conspicuously unfair. The court must assess all relevant private and public interests in the round. A clear promise ordinarily requires compelling justification before departure, but macro-political policy and legislative change may materially reduce its weight. The authority must take the promise into account and must not adopt a blanket approach. In the accelerated payment regime, Parliament deliberately changed the statutory basis on which disputed tax was held pending appeal. Where the statutory conditions and arguability requirements are met, that change may outweigh the promise and prevent a finding of substantive abuse, even though the authority’s failure to consider the promise may be procedurally unlawful.

The claimants challenged accelerated payment notices issued under Chapter 3 of the Finance Act 2014. Their underlying income-tax liabilities arose from disputed discovery assessments concerning interest-free loans received through a DOTAS arrangement. Payment had previously been postponed under section 55 of the Taxes Management Act 1970 by express agreements with HMRC pending appeals to the First-tier Tribunal.

The claim was confined to abuse of power, based on legitimate expectation, fairness and natural justice. The central question was whether HMRC could lawfully resile from its express promises by issuing accelerated payment notices.

1. Claim dismissed. The claimants established clear and expressly directed promises that payment of the disputed tax would be postponed while their appeals were considered. HMRC nevertheless failed to take those promises into account when deciding to issue the notices. That approach was unlawful and conspicuously unfair as a matter of procedure.
2. The governing public-law approach required the court to assess all relevant circumstances and weigh competing private and public interests. Relevant factors included the clarity and context of the promise, the claimant’s reliance or detriment, the public authority’s reasons for departure, macro-political policy, delay, administrative responsibility and the interests of good administration. Detriment was not essential, although it was often present in successful cases.
3. The accelerated payment regime gave HMRC a power, rather than a duty, to issue notices. The statutory scheme deliberately changed the former position under section 55 of the Taxes Management Act 1970, so that postponement was no longer determinative of where disputed tax should lie pending an appeal. The existence of a postponement agreement therefore remained relevant, but its weight was materially reduced.
4. Parliament’s policy did not justify treating all DOTAS arrangements alike. Registration under DOTAS did not establish that a scheme was ineffective or unlawful, and HMRC remained required to exercise its discretion consistently with public-law principles.
5. On the particular facts, HMRC’s alternative arguments outweighed the claimants’ case. The tax and discovery disputes were reasonably arguable, the statutory conditions for the notices were met, the claimants had entered an arrangement with an underlying tax-avoidance purpose, and Parliament had deliberately altered the statutory treatment of disputed tax. The notices therefore did not produce substantive conspicuous unfairness amounting to an abuse of power.
6. The claim was dismissed. The court did not determine the underlying taxability or discovery disputes, which remained for the First-tier Tribunal.