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

The statutory follower-notice and accelerated-payment regimes require careful construction where a taxpayer relies on more than one ground of appeal and an earlier judicial ruling addresses only one of them. The meaning of the particular tax advantage, the extent of the denied advantage, and the corrective action required may differ according to whether the advantage is the specific relief claimed or the ultimate result sought.

At a permission hearing, substantial unresolved construction questions are arguable and should proceed to a full hearing. A court cannot suspend or alter primary legislation by interim injunction, absent a recognised jurisdiction such as that arising under European Union law. A legitimate expectation based on the former tax regime cannot constrain Parliament after it changes the law by primary legislation.

About 340 taxpayers challenged HMRC’s use of follower notices and accelerated payment notices under Part 4 of the Finance Act 2014. They had participated in Isle of Man tax-avoidance arrangements and had appeals pending before the First-tier Tribunal.

The appeals relied both on the argument previously rejected in Huitson v HMRC and on a new argument under section 44 of the Income Tax (Earnings and Pensions) Act 2003. The claimants sought permission for judicial review on several grounds and interim relief restraining enforcement. The central issue was how the follower-notice regime operated where the previous ruling dealt with only one of several alternative grounds of appeal.

1. Permission. Permission was granted on the principal construction issues under Grounds 1 and 3. The court considered it genuinely arguable that the statutory expression particular tax advantage might mean either the specific relief or exemption claimed, or the ultimate result that no further tax was payable.
2. If the first construction applied, the earlier ruling might deny only the Isle of Man relief, leaving the section 44 argument alive. That created uncertainty over the corrective action, the amount of disputed tax, and whether an accelerated payment notice could properly be calculated without deciding the merits of the unresolved argument. If the second construction applied, abandoning one ground might not relinquish the whole denied advantage, producing potentially perverse consequences. These difficulties justified a full hearing.
3. Permission on Grounds 6 and 7, concerning Convention rights and natural justice, was stayed pending judgment in Rowe v HMRC. The court followed the approach taken in Sword Services Ltd v HMRC.
4. Permission was refused on the legitimate-expectation ground. Following Rowe v HMRC, a taxpayer could not legitimately expect the former tax position to continue after Parliament enacted contrary primary legislation. HMRC were required to act consistently with the new legislation.
5. Permission was refused on irrationality and on the argument that the earlier Huitson ruling had ceased to be final when an out-of-time extension application was made. Under section 205, finality arose when the statutory conditions were met; the later application did not undo that status.
6. Permission was granted on alleged late receipt of follower notices, receipt of accelerated payment notices before follower notices, and possible invalidity caused by inaccurate explanations of statutory time limits. Applying the approach in R v Soneji, the question was whether Parliament intended total invalidity, with prejudice relevant but not determinative.
7. Interim relief was refused. The court had no power to suspend or rewrite the operation of primary legislation. Restraining penalty assessments would not remove the statutory exposure, and the statutory appeal to the First-tier Tribunal remained available. The claimants were ordered to pay HMRC’s costs of the interim-relief application relating to the follower notices.

First-instance permission and interim-relief decision. The judgment itself records that the claimants’ related appeals were pending before the First-tier Tribunal and that the appeal in Rowe v HMRC was awaiting judgment in the Court of Appeal.