VVB Engineering Services Ltd & Ors, R. (On the Applications of) v Revenue And Customs

Interim relief against enforcement of accelerated payment notices or partner payment notices is not available unconditionally. It depends on evidence establishing hardship. The relevant threshold is whether payment, even by instalments over 12 months, would prevent a corporate claimant from trading or conducting its business in its ordinary manner by making it unable to meet reasonable business expenses. The assessment requires full, current and future financial information, ordinarily including quantitative cash-flow or equivalent evidence. The public interest may favour HMRC recovering sums before a claimant’s financial position deteriorates. The approach to hardship under VAT legislation provides only limited assistance where the statutory scheme under the Finance Act 2014 contains no equivalent hardship provision.

Three judicial review claims challenged accelerated payment notices and partner payment notices issued under Part 4, Chapter 3 and Schedule 32 of the Finance Act 2014. The proceedings had been stayed pending final determination of R (on the application of Rowe and others) v HMRC, [2015] EWHC 2293 (Admin), and the claimants did not seek to vary that part of the order. They sought to vary the refusal of interim relief preventing HMRC from enforcing the notices.

The preliminary issues were whether relief should be unconditional, whether it depended on hardship, what hardship threshold applied, whether the evidence already served met that threshold, and what directions should follow.

1. Unconditional relief. The applications for interim relief were not entitled to succeed without conditions. The central question was where the balance of convenience lay. The public interest favoured HMRC enforcing the notices, given the substantial sums involved and the risk that companies presently able to pay might later be unable to do so.
2. Hardship condition. Interim relief should be granted only on condition that the claimant establishes hardship. The court rejected reliance on observations in Vital Nut, [2016] EWHC 1797 (Admin), concerning unconditional relief. The circumstances did not justify departing from the ordinary balance-of-convenience analysis.
3. Hardship threshold. The threshold stated by Sir Kenneth Parker in R (Vital Nut Co Ltd) v HMRC, [2016] EWHC 1128 (Admin), was adopted. A corporate claimant must show that payment of the notice amount, even by instalments over the following 12 months, would prevent it trading or running its business in its ordinary manner because it could not meet reasonable trading or business expenses.
4. The evidence should set out fully the corporate entity’s current and future position and be supported by proper quantitative information, typically a source-and-application-of-funds or cash-flow statement. The court rejected the submission that this requirement was too onerous or disproportionate. The VAT hardship approach discussed in Elbrook Cash and Carry Ltd v Commissioners for HM Revenue and Customs, [2016] UKFTT 0191 (TC), provided limited assistance.
5. The evidence served did not establish hardship, but the applications were not dismissed. The claimants were permitted to serve further evidence by 4pm on 7 April 2017, engage with HMRC, and have the applications re-listed if agreement on interim relief could not be reached.

• High Court (Administrative Court): On 9 November 2016, Cranston J stayed the proceedings, including permission applications, pending final determination of R (on the application of Rowe and others) v HMRC, [2015] EWHC 2293 (Admin), and refused interim relief. The present court varied the procedural position by permitting further evidence and adjourned determination of interim relief.