M Sport Ltd, R (On the Application Of) v Her Majesty's Revenue And Customs

The Court of Appeal dismissed the appellant's challenge to a High Court judge's refusal to award costs following the withdrawal by HMRC of a follower notice and an accelerated payment notice issued under Part 4 of the Finance Act 2014. The court reaffirmed that the statutory representation procedure in sections 207 and 222 FA 2014 is an integral part of the legislative scheme and, ordinarily, judicial review should await HMRC's decision on representations (following the approach in Archer). The court held that the appellant had issued proceedings prematurely, that HMRC's later withdrawal was on the ground that section 204(6) time limits had not been met, and that the judge was entitled to make no order as to costs. The court rejected the appellant's procedural complaints about the judge's reasons and its reliance on other first-instance authority (Cockayne), and found HMRC's service of submissions under the consent order to have been timely.

Background and parties. HMRC issued to the appellant a follower notice and an accelerated payment notice on 6 March 2019 under Part 4 of the Finance Act 2014. The appellant made statutory written representations on 29 April 2019 and served a pre-action protocol letter on 17 May 2019. The appellant issued judicial review proceedings shortly after service (claim issued 5 June 2019, served 18 June 2019). HMRC responded on 1 July 2019 accepting the follower notice was out of time under section 204(6) and withdrew both notices.

Nature of the application and issues. The appellant sought costs of the aborted judicial review proceedings (claimed at that stage to be c. 129,902). The principal issues for the court were (i) whether the judge erred in refusing to award costs to the appellant, (ii) whether HMRC had breached a consent order timetable so as to trigger indemnity costs, (iii) whether the proceedings were premature in circumstances where representations under sections 207 and 222 FA 2014 were outstanding, and (iv) whether the appellant could rely on Human Rights Act grounds so as to justify issuing proceedings before HMRCs statutory response.

Courts reasoning and findings. The court held that the statutory scheme under Part 4, and in particular sections 207 and 222, normally requires taxpayers to await HMRCs response to representations before issuing judicial review. The Court of Appeal followed and applied the reasoning in Archer, treating that principle as a legitimate constraint on premature judicial review. The court rejected the appellant's attempt to distinguish Archer by reference to Human Rights Act grounds, explaining that once HMRCs response to representations is given that final decision can be challenged on any grounds, including human rights. The court found on the evidence that HMRCs submissions under the consent order had been served in time (relying on HMRCs post-room stamp) and rejected the appellant's argument that late service entitled it to indemnity costs. The court also rejected reliance on Cockayne as creating a conflict with Archer and found the judges brief reasons adequate when read with the parties' written submissions. The appeal was dismissed.

Procedural note. The court emphasised that courts should not encourage lengthy costs decisions and that a brief explanation referring to written submissions may suffice, though fuller brief reasons might have been preferable.

Appeal dismissed. The Court of Appeal held that the statutory representation procedure in Part 4 FA 2014 (sections 207 and 222) is normally to be exhausted before judicial review is issued (following Archer); the proceedings were premature, HMRCs withdrawal of the notices was based on the statutory time limit in section 204(6), HMRC's submissions under the consent order were timely, and the judge's brief reasons were adequate in context, so no order for costs in the appellant's favour should be made.

Appeal to the Court of Appeal from the decision of Upper Tribunal Judge Elizabeth Cooke sitting as a High Court judge (Administrative Court) refusing an order for costs (CO/2278/2019). Permission to appeal to the Court of Appeal was granted by Lewison LJ. The Court of Appeal decision is reported at [2021] EWCA Civ 561.