OWD Ltd trading as Birmingham Cash and Carry (In Liquidation) and another v Commissioners for Her Majesty’s Revenue and Customs

The Finance Act 2015 created the Alcohol Wholesaler Registration Scheme (AWRS) by inserting Part 6A into the Alcoholic Liquor Duties Act 1979 (ALDA) and required wholesalers of duty-paid alcohol to be approved under section 88C ALDA. The Supreme Court held that where HMRC have concluded that a person is not a fit and proper person to carry on the controlled activity, section 88C does not permit HMRC to grant temporary approval pending an appeal to the First-tier Tribunal. Nor can HMRC rely on the ancillary powers in section 9 of the Commissioners for Revenue and Customs Act 2005 to provide such temporary approval; to do so would be inconsistent with the statutory scheme and with the statutory requirement that approval under ALDA be given only where HMRC are satisfied that the person is fit and proper.

The court accepted that the High Court retains power under section 37 of the Senior Courts Act 1981 to grant injunctive relief in exceptional cases to protect effective access to justice under article 6 ECHR where, absent relief, an appellate remedy would be rendered illusory. However, the court declined to determine in the present case any definitive, general form that such an order should take and emphasised that relief of that kind will be rare and fact-sensitive.

Subsidiary findings included that earlier HMRC practice of allowing a winding-down period or the use of guidance such as EN2002 did not demonstrate a statutory power to grant temporary approval pending appeal, and that considerations of hardship or preservation of an appellant's appeal rights are not relevant to the statutory fitness assessment under section 88C.

Background and parties: OWD, Hollandwest and Budge Brands were wholesalers of duty-paid alcohol who, after the introduction of the AWRS, required approval under section 88C ALDA to continue trading. HMRC refused their applications on the basis that they were not fit and proper persons. The wholesalers appealed to the First-tier Tribunal and sought from HMRC permission to continue trading pending those appeals; permission was refused and the wholesalers brought judicial review proceedings in the High Court seeking orders to permit them to trade until the FTT appeals were determined. The High Court refused relief; the Court of Appeal granted limited relief by remitting the question to HMRC on the basis that temporary approval was possible under section 88C. Both HMRC and the wholesalers appealed aspects of the Court of Appeal’s decision to the Supreme Court (on appeal from [2017] EWCA Civ 956).

Nature of the applications/relief sought: the wholesalers sought (i) temporary approval from HMRC to continue trading pending FTT appeals, and (ii) alternatively injunctive relief from the High Court to preserve their businesses pending appeal so that their statutory appeals would not be rendered illusory.

Issues framed by the court: (i) whether section 88C ALDA permits HMRC to grant temporary approval pending an appeal to the FTT; (ii) whether HMRC may instead rely on section 9 of the Commissioners for Revenue and Customs Act 2005 to grant such temporary approval; and (iii) if HMRC have no such power or decline to exercise it, what interim relief the High Court can legitimately grant to prevent an appeal becoming nugatory.

Reasoning and conclusions: on statutory construction the court emphasised that section 88C conditions approval on HMRC being satisfied that the person is a fit and proper person, and that the statutory scheme includes a register (section 88D) and criminal offences (section 88G) which render any ad hoc use of ancillary powers incompatible with the scheme. The court concluded that where HMRC have reached the view that a person is not fit and proper even for a limited period, section 88C does not permit a temporary approval pending appeal. The court also held that section 9 of the 2005 Act cannot be used to achieve what Parliament did not provide for in Part 6A; using ancillary powers to permit trading by persons deemed unfit would undermine the statutory scheme and public protection embedded in it.

On interim judicial relief, the court confirmed the approach in CC & C Ltd v Revenue and Customs Commissioners: the High Court has jurisdiction under section 37 of the Senior Courts Act 1981 to grant injunctive relief in exceptional circumstances, including where there is compelling evidence that, absent relief, the statutory appeal would be rendered illusory and article 6 ECHR rights would be violated. The Supreme Court, however, did not authoritatively determine the precise form of an appropriate order and stated that it would be rare for such relief to be granted. The court allowed HMRC’s appeal insofar as the Court of Appeal had remitted the question to HMRC, and dismissed the wholesalers’ appeal against the Court of Appeal’s conclusion on section 9.

Wider comment: the court noted that if Parliament wishes to avoid any potential incompatibility with the ECHR in this narrow class of cases, legislative amendment might be appropriate to provide a limited suspensory power to the FTT or High Court.

This was an appeal from the Court of Appeal. The Supreme Court allowed HMRC’s appeal in relation to the Court of Appeal’s order remitting to HMRC the question whether temporary approval could be given under section 88C ALDA, holding that section 88C does not permit HMRC to grant temporary approval where they have concluded a person is not fit and proper even for a limited period. The court dismissed the wholesalers’ appeal on the alternative ground that section 9 of the Commissioners for Revenue and Customs Act 2005 does not provide a power to grant such temporary approval. The court nevertheless confirmed that the High Court retains power under section 37 of the Senior Courts Act 1981 to grant injunctive relief in exceptional circumstances to protect effective access to justice under article 6 ECHR, but did not decide the general form such relief should take in future cases.

First-tier Tribunal appeals by the wholesalers from HMRC decisions refusing approval under section 88C ALDA; judicial review in the High Court (refused); Court of Appeal [2017] EWCA Civ 956 remitted part of the matter to HMRC (holding temporary approval possible under section 88C but not under section 9), and granted limited relief which was unsatisfactory to the parties; both HMRC and the wholesalers appealed to the Supreme Court ([2019] UKSC 30).