Dickinson & Ors v Revenue And Customs

A clear promise by a public authority may create a substantive legitimate expectation, but fulfilment remains subject to any sufficient overriding public interest. When primary legislation changes the statutory policy underlying the promise, that change carries substantial weight in the court’s assessment of whether departure from the promise is an abuse of power.

A statutory discretion must promote its legislative purpose while remaining a genuine, case-specific discretion. A general policy is lawful only if it permits proper consideration of exceptional circumstances. Procedural unfairness in the authority’s original decision-making does not necessarily establish an abuse of power where an objective assessment of all relevant considerations provides adequate substantive justification.

The appellants challenged accelerated payment notices issued by HMRC under section 219 of the Finance Act 2014. Before that legislation was enacted, HMRC had expressly agreed under section 55 of the Taxes Management Act 1970 to postpone collection of the disputed tax until the appellants’ tribunal appeals were resolved. HMRC accepted that those agreements created substantive legitimate expectations.

Charles J dismissed the judicial review claim in [2017] EWHC 1705 (Admin). He found that HMRC’s failure to consider the agreements and the appellants’ particular circumstances was conspicuously unfair, but held that the statutory policy and other substantive considerations outweighed that unfairness. The appellants appealed. HMRC cross-appealed against the findings of unfair administration and the consequential costs order.

The central issue was whether issuing the notices notwithstanding the postponement promises amounted to an abuse of power, and whether the court could uphold the notices by reference to objective justifications that HMRC had not considered when making its decisions.

1. Both the appeal and the cross-appeal were dismissed. The postponement agreements contained clear promises and created legitimate expectations that the disputed tax would not be collected before determination of the tax appeals. Those expectations did not, however, exist independently of the statutory regime under which the promises were made.

2. The accelerated payment regime in the Finance Act 2014 was intended to apply to existing tax avoidance arrangements and pending appeals. Parliament envisaged that antecedent postponement agreements could be reviewed under the new scheme. The legislation changed the policy governing possession of disputed tax during an appeal by enabling HMRC to reverse the former cash-flow position.

3. The new legislation did not automatically abolish postponement or compel HMRC to issue a notice whenever the statutory conditions were satisfied. Issuing a notice remained a discretionary decision subject to public law principles. Earlier postponement agreements therefore remained relevant, but their weight was substantially reduced by the purpose and authority of the later primary legislation.

4. A statutory discretion must be exercised consistently with its legislative purpose. HMRC could adopt a general policy of issuing notices where the statutory conditions were met, subject to exceptional circumstances. The policy had to leave room for a conscientious, case-specific exercise of discretion. It could not be applied so rigidly that the statutory discretion became illusory.

5. The judge was entitled to assess all the circumstances after finding that HMRC’s original approach ignored good administration and was conspicuously unfair. Ending the analysis at that point would have been artificial and would probably have caused reconsideration and further delay. The statutory policy, the arguability of HMRC’s tax case and the appellants’ participation in marketed tax avoidance arrangements provided sufficient substantive justification. On the overall balance, there was no abuse of power.

6. The Court of Appeal declined to disturb the judge’s findings of poor administration and unfairness. Those findings followed a detailed evaluation of the documentary history, while HMRC’s short appellate submissions did not provide an adequate basis for reversing them. HMRC’s challenge to the associated costs order therefore also failed.

1. Court of Appeal (Civil Division): In [2018] EWCA Civ 2798, the court unanimously dismissed the taxpayers’ appeal and HMRC’s cross-appeal. It upheld both the dismissal of the judicial review claim and the order making no further award of costs below.

2. High Court, Administrative Court: Charles J dismissed the judicial review claim in [2017] EWHC 1705 (Admin). He found conspicuous unfairness in HMRC’s decision-making but held that the competing considerations established that issuing the accelerated payment notices was not an abuse of power. A supplemental judgment declined to award HMRC its remaining costs.