Wallace v Revenue And Customs

A statutory regime may exclude a common-law restitutionary claim where, construed as a whole, Parliament intended the statutory remedy to be exclusive. The question is whether coexistence of the common-law remedy is compatible with the statutory scheme, rather than whether the two remedies differ in some respects. Under the post-2010 regime for recovering overpaid income tax, Schedule 1AB to the Taxes Management Act 1970 provides the applicable route to relief. Paragraph 1(6), read with paragraphs 1(1) and 1(2), uses sufficiently clear language to exclude a common-law claim for repayment of tax within the scheme. A taxpayer cannot avoid that exclusion by relying on the date on which he formed the belief that tax was not due. The claim was therefore liable to be struck out under CPR 3.4(2)(a).

HMRC applied under CPR 3.4(2)(a) to strike out a claim for £215,519.60, brought as money had and received, representing alleged overpayments of income tax. For the purpose of the application, HMRC accepted that the tax had been overpaid because of a causative mistake by the claimant or his adviser.

The issue was whether the post-1 April 2010 statutory regime in section 33 and Schedule 1AB to the Taxes Management Act 1970 permitted a parallel common-law restitutionary claim. The claimant argued that the regime’s subjective belief requirement and the wording of paragraph 1(6) did not exclude the claim. HMRC relied on the reasoning concerning the former regime in Monro v Revenue and Customs Commissioners and on the statutory-exclusivity approach in R (Child Poverty Action Group) v Secretary of State for Work and Pensions.

1. Application granted. The claim disclosed no reasonable grounds and was struck out under CPR 3.4(2)(a). The court had no jurisdiction to entertain it.

2. The test is one of statutory construction. The court had to determine whether, viewed as a whole, the new regime was incompatible with the coexistence of a common-law remedy. The mere existence of differences between statutory and common-law remedies was not decisive.

3. The reasoning of the Court of Appeal in Monro v Revenue and Customs Commissioners was binding as to the old regime and provided a powerful analytical basis for the new regime. The new regime was a parallel statutory universe providing special rights and remedies, and the policy considerations regulating tax repayment claims remained applicable.

4. Paragraph 1(1) of Schedule 1AB establishes a three-stage structure: the taxpayer must believe that tax paid or assessed was not due; the taxpayer may claim repayment or discharge; and the Commissioners must determine whether an exclusionary case applies. The belief requirement concerns entitlement to make a claim. It does not postpone the statutory limitation period or permit the claimant to evade paragraph 1(6).

5. Paragraph 1(6) provides that the Commissioners are not liable to give relief for a case within paragraph 1(1)(a) or (b) except under Schedule 1AB, Schedule 1A or another relevant statutory provision. “Relief” concerns the outcome sought, not the legal form of the cause of action, and includes repayment equivalent to the tax allegedly overpaid. The provision therefore excludes the common-law claim in this case.

6. The claimant believed, when issuing the proceedings, that the tax was not due and therefore fell within paragraph 1(1)(a). The statutory four-year period had expired. The claim could not be revived by recasting it as restitution.