Boulting & Anor, R (On the Application Of) v Revenue And Customs

The claimants sought permission for judicial review of HMRC's decision of 9 October 2019 to treat an advance clearance given on 22 October 2014 as void under section 1045(6) of the Corporation Tax Act 2010 and to assess the first claimant to income tax rather than capital gains tax. The central legal issue was whether the particulars provided for clearance fully and accurately disclosed facts material to HMRC's decision, principally the valuation of the shares and whether the purchase was "wholly or mainly for the purpose of benefiting" the company's trade within section 1033. The court accepted that valuation could be material and that the clearance regime is governed by sections 1033, 1044 and 1045 of the Corporation Tax Act 2010, but concluded that the true substance of the dispute — the correct tax treatment hinging on valuation and related factual matters — was for determination by the specialist statutory route, namely an appeal to the First-tier Tribunal (Tax Chamber). Permission for judicial review was refused because a suitable alternative remedy existed.

This was a rolled up permission hearing for judicial review brought by John Walter Boulting and PSC Training and Development Group Limited challenging HMRC's decision to treat an advance clearance (22 October 2014) as void and to assess Mr Boulting to income tax rather than capital gains tax.

Background and parties:

• The company purchased 8% of Mr Boulting's shares in 2014. Accountants applied for HMRC clearance under the statutory advance clearance scheme in the Corporation Tax Act 2010. HMRC's clearance team does not itself determine market valuation.
• HMRC later opened an enquiry and, by a closure notice dated 9 October 2019, treated the clearance as void under section 1045(6) on the basis that the company had not fully and accurately disclosed material facts — specifically that the valuation relied on by the company overstated market value by a large margin — and assessed the sale proceeds as income.

Nature of the claim and relief sought:

• The claimants applied for judicial review permission to challenge HMRC's decision to void the clearance and the consequent tax assessment, advancing grounds including error of law, irrationality, breach of legitimate expectation, public law unfairness and public policy arguments.

Issues framed by the court:

1. Whether the particulars supplied to HMRC fully and accurately disclosed facts material to the clearance decision such that section 1045(6) permitted HMRC to treat the clearance as void.
2. Whether the public law grounds advanced were arguable and, if so, whether judicial review was an appropriate remedy when a statutory appeal to the First-tier Tribunal (Tax Chamber) was available.
3. Whether any delay or procedural obstacles to the Tribunal appeal made judicial review necessary.

Court's reasoning and conclusion:

• The court accepted that valuation might be material to whether the purchase met the "wholly or mainly for the purpose of benefiting" requirement in section 1033 and that expert valuation evidence could be necessary to resolve that question.
• The judge applied the principle that judicial review is ordinarily a remedy of last resort and relied on authorities directing that where Parliament has provided a statutory appeal mechanism (particularly specialist tribunals in tax cases) the court should be slow to allow judicial review to supplant it.
• As the First-tier Tribunal could determine the factual and valuation issues and provide the practical remedy sought (taxation in accordance with the clearance if successful), the court found there was a suitable alternative remedy and refused permission for judicial review. The existence of an unresolved question about an extension of time for the Tribunal appeal did not alter that conclusion.

The judge therefore refused permission to proceed by way of judicial review, leaving the statutory appeal route as the appropriate mechanism for resolving the dispute about valuation and tax treatment.

The application for permission to bring judicial review is refused. Although the court accepted that the valuation issue could be material to whether the purchase satisfied section 1033, the true substance of the dispute concerned factual matters (notably valuation) appropriate for resolution by the specialist statutory route. Accordingly, because there was a suitable alternative remedy — an appeal to the First-tier Tribunal (Tax Chamber) — judicial review, as a remedy of last resort, was not granted.