Cartref Care Home Ltd & Ors, R (on the application of) v HM Revenue and Customs

Permission to appeal may be refused where challenged legislation has been materially amended and the proposed issue is academic. An appellate court should not allow a claimant to recast the case by introducing new challenges, fresh evidence or issues not determined below. An academic appeal will generally be entertained only where it raises a point of general importance, the respondent agrees or is protected against prejudice, and both sides can be fully argued. In a challenge under Human Rights Act 1998 to retrospective tax legislation, proportionality requires a fair balance between public and private interests, with the legislature allowed a wide margin of appreciation. A claimant relying on hardship must provide proper evidence of the legislation’s effect. Permission was refused on all grounds and the costs order was upheld.

The appellants challenged the Loan Charge imposed under Schedule 11 to the Finance (No. 2) Act 2017, arguing that its retrospective operation disproportionately interfered with their rights under A1P1 of the ECHR. The Administrative Court granted Cartref permission to pursue the claim but dismissed it, holding that the legislation remained within the legislature’s margin of appreciation: [2019] EWHC 3382 (Admin). Permission to appeal was refused below.

While the applications were pending, the Finance Act 2020 reduced the legislation’s retrospective reach and made other amendments. The appellants argued that issues remained concerning the amended scheme, other provisions, parliamentary material and costs. The Court of Appeal considered whether any arguable issue remained, whether an academic appeal should proceed, and whether the High Court’s costs order should be disturbed.

1. Permission refused. Lady Justice Rose, with Lord Justice Lewison agreeing, refused permission to appeal to all appellants on all grounds. The retrospectivity issue considered by the High Court had become academic because the Finance Act 2020 had materially amended Schedule 11 and the unamended legislation would no longer determine liability in the form challenged.
2. The High Court had applied the correct A1P1 proportionality approach. Retrospective taxation is not prohibited as such. It is compatible with the Convention if it strikes a fair balance between public and private interests and does not impose an unreasonable burden on the taxpayer. The legislature enjoys a wide margin of appreciation in that assessment. The judge had considered retrospectivity, closed tax years and alleged hardship, and was entitled to conclude that the legislation had a rational connection with the legitimate objective of countering disguised remuneration schemes and ensuring a fair burden of tax. The approach was consistent with MA & others v Finland [2003] 37 EHRR CD210.
3. The appellants could not reformulate the appeal to challenge the post-2020 legislation, contend that the reduced period was still excessive for close-company schemes, or raise alleged double taxation through inheritance tax or accelerated payment notices. Those matters required fresh evidence and arguments, or had not been raised in the judicial review claim or determined below. Allowing them would undermine the procedural rigour required in judicial review, including the approach emphasised in Dolan [2020] EWCA Civ 1605.
4. An academic appeal should be entertained only where it raises a point of general importance, the respondent agrees to its continuation or is fully indemnified against costs and is not otherwise prejudiced, and both sides’ arguments can be fully and properly ventilated. Those conditions, identified in Hutcheson [2012] 1 WLR 782, were not met.
5. The challenges to the APPG report and the alleged lack of hardship evidence disclosed no arguable error. The High Court was not barred by Article 9 of the Bill of Rights 1689 from considering the report, but could give it very limited weight where factual assertions and opinions were not admissible evidence. A claimant who raises hardship as a factor in proportionality must provide proper evidence of the legislation’s effect. The challenge to legislative purpose was also unarguable, and the High Court costs order stood because the appellants remained liable to the Loan Charge and had not achieved the result sought.

• Court of Appeal (Civil Division) — Permission to appeal refused on all grounds. The retrospectivity issue had become academic, proposed new issues could not be introduced for the first time on appeal, and the High Court’s costs order was not disturbed: [2020] EWCA Civ 1744.
• High Court of Justice, Queen’s Bench Division, Administrative Court — Permission for judicial review was refused to the other claimants; Cartref was permitted to proceed but its claim was dismissed. The court held that the retrospective Loan Charge remained within the legislature’s margin of appreciation: [2019] EWHC 3382 (Admin).
• Administrative Court — Permission to appeal was refused by Cockerill J on 18 December 2019.