Jersey Choice Ltd v Her Majesty's Treasury

A charge resulting from the withdrawal of VAT relief remains a measure of internal taxation. Its selective application does not convert it into a customs duty, a charge having equivalent effect, or a quantitative restriction for the purposes of the free movement of goods provisions of the TFEU. Those provisions therefore cannot be used to challenge the VAT measure. The principles of fiscal neutrality, equal treatment and proportionality are unavailable unless the relevant free movement provisions are engaged. A later damages claim may also be an abuse of process where it seeks to reopen the lawfulness of legislation already determined in earlier judicial review proceedings, particularly where the same defendant was involved, the issue was available earlier, and reopening it would undermine the earlier determination.

Jersey Choice Ltd, a Jersey mail-order seller of horticultural products, claimed damages from Her Majesty’s Treasury for alleged breach of EU law following the withdrawal of low value consignment relief from goods sent by mail order from the Channel Islands under section 199(3) of the Finance Act 2012.

The Treasury applied to strike out the claim or obtain summary judgment. It relied on the earlier judicial review decision in R (Jersey) v HMRC and R (Guernsey) v HM Treasury, in which the proposed legislation had been held lawful. The central issues were whether articles 28, 30 and 34 TFEU applied to the VAT measure and, alternatively, whether the claim was an abusive collateral challenge to the earlier decision.

1. Claim struck out. The claim disclosed no reasonable grounds under CPR 3.4(2)(a). Summary judgment would also have been available under CPR 24.2.
2. The withdrawal of low value consignment relief was a measure concerning internal taxation. VAT on imports was expressly addressed by the VAT legislation made under article 113 TFEU. The charge therefore remained distinct from customs duties, charges having equivalent effect, quantitative restrictions and measures having equivalent effect, which articles 28, 30 and 34 prohibit.
3. The fact that relief was withdrawn selectively for goods from the Channel Islands did not alter the character of the charge. It remained a VAT liability rather than a charge imposed by reason of goods crossing a frontier. Articles 28, 30 and 34 could not operate as a gateway for challenging a VAT measure.
4. The principles of fiscal neutrality, non-discrimination or equal treatment and proportionality could not assist unless articles 28, 30 or 34 were engaged. The claim therefore had no real prospect of establishing the individual EU-law right required for a damages claim.
5. Alternatively, the claim was an abuse of process under CPR 3.4(2)(b). Although Jersey Choice was not a claimant in the earlier judicial review, the issue was materially the same: whether the legislation was unlawful under EU law. The alternative argument based on the free movement provisions was available when the earlier challenge was brought and should have been raised then.
6. The earlier proceedings involved the appropriate territorial governments, the same defendant, the same financial consequences and a determination intended to settle the legality of the legislation before it was enacted and operated. Allowing later claims by affected traders would undermine that determination, vex the Treasury again and bring the administration of justice into disrepute. The claim form and particulars of claim were accordingly struck out.