Glint Pay Services Ltd, R (on the application of) v The Commissioners for HMRC

A legitimate expectation in a taxation case requires a representation by HMRC which is clear, unambiguous and devoid of relevant qualification. The representation must apply to the claimant’s circumstances, viewed in its factual and statutory context.

Taxpayers ordinarily expect to be taxed according to statute. Departure from that position requires unfairness at a very high level. An industry memorandum concerning wholesale market transactions did not clearly promise zero-rating for retail gold supplies where no LBMA member was party to, or performed a clearing role in, the transactions. The resulting public law challenge failed.

Glint supplied gold bullion to retail customers through an electronic payments platform. The gold remained in vaults operated by a company connected with the London Bullion Market Association, but Glint and its customers were not LBMA members and the members were not parties to the customer transactions.

HMRC decided that the supplies were exempt from VAT under Group 15 of Schedule 9 to the Value Added Tax Act 1994, rather than zero-rated under the Value Added Tax (Terminal Markets) Order 1973. After withdrawing its appeal to the First-tier Tribunal, Glint brought judicial review proceedings, alleging legitimate expectation and irrationality based on a memorandum of understanding between HMRC and bullion-market bodies.

1. Claim dismissed. The claim for judicial review was dismissed with costs.
2. For a legitimate expectation to arise, HMRC’s words or conduct must cause an expectation of treatment in a particular way and must be clear, unambiguous and devoid of relevant qualification. In a taxation context, the starting expectation is that the taxpayer will be taxed according to statute. The meaning and effect of HMRC material depend on its factual context, including HMRC’s position and the scope of the material. These principles were drawn from R v Inland Revenue Comrs, Ex p MFK Underwriting Agents Ltd [1990] 1 WLR 1545, R (on the application of Hely-Hutchinson) v Revenue and Customs Commissioners [2017] EWCA Civ 1075 and R (on the application of Aozora GMAC Investment Ltd) v Revenue and Customs Commissioner [2019] EWHC Civ 1643.
3. The memorandum did not make a qualifying representation to Glint. Its purpose and terms concerned transactions undertaken by members on the wholesale bullion markets. Although it referred to transactions between non-members where metal was under a member’s physical control, it qualified that position by requiring members to be within the supply chain. The memorandum contemplated a member, particularly a clearing member, being a party to the transaction and transferring the interest in the metal. StoneX and Brink’s were not parties to Glint’s retail transactions, did not hold title to the gold transferred, and did not clear or record those transactions.
4. The later webinar and email exchange did not cure the deficiency. The webinar did not refer to gold, and the email evidence was ambiguous and hearsay. In any event, frustrating any expectation would not be conspicuously unfair or an abuse of power. The public interest in collecting VAT according to law, together with Glint’s failure to seek clarification from HMRC, weighed decisively against that conclusion.
5. Glint accepted that, in VAT law, its supplies were exempt. Having failed on legitimate expectation, it could not maintain the irrationality challenge.