Easyway Umbrella Limited, R (on the application of) v HMRC

A statutory right to make representations may define the entire content of the fairness obligation. Where the statute provides the relevant procedural protection, the common law does not add a separate or wider duty of fairness.

For a statutory anti-avoidance notice, suspicion is a lower threshold than proof. Evidence suggesting that remuneration is paid at or near the minimum wage while the balance is paid without deductions may rationally support suspicion of relevant arrangements, including arrangements that defer tax.

Where a procedural breach is arguable, permission may nevertheless be refused if it is highly likely that the outcome would not have been substantially different. An A1P1 challenge also requires an arguable possession and must address the proportionality of the statutory regime, not merely its individual application.

The claimant, an umbrella company, challenged HMRC’s publication of a notice under section 86 of the Finance Act 2022. The notice stated that employees received part of their remuneration without deductions of income tax or national insurance.

The claimant argued that it had not received the statutory notification or opportunity to make representations, that HMRC had given inadequate reasons, that the decision was irrational for want of sufficient enquiry, and that publication breached Article 1 of the First Protocol to the European Convention on Human Rights. HMRC disputed non-receipt and relied on the low threshold of suspicion and the statutory test restricting permission where the outcome would probably have been unchanged.

The court considered whether permission should be granted and whether interim relief should remove the notice pending a substantive hearing.

1. Permission and procedural fairness. There was a triable issue whether the claimant had rebutted the deemed-service presumption and had been denied the opportunity to make representations required by section 86(5) of the Finance Act 2022. However, the statutory right to make representations occupied the relevant field. There was no additional common-law duty of fairness operating beyond that statutory content.
2. Reasons. The notice-warning letter contained sufficient information and reasoning to enable cogent representations. There was no statutory duty to provide further reasons in the later letter or to consider explanations advanced only after proceedings had begun. Permission was refused on this ground.
3. Rationality and suspicion. Section 86 required suspicion, not proof. The evidence that professional employees were recorded as receiving pay at or near the minimum wage, while the balance was paid without tax or national insurance deductions, rationally supported suspicion of relevant arrangements. Section 234(3) included tax deferral as a tax advantage. The claimant’s contention that later bonus payments would be taxable did not answer that point.
4. A1P1. The claimant’s business activities and future business opportunities were not an arguable possession. In any event, an A1P1 challenge would have to show that the statutory regime itself was disproportionate. The legislature had balanced employee and employer interests, including through the right to make representations. Permission was refused.
5. Section 31(3D). Assuming the procedural breach, it was highly likely that the outcome would not have been substantially different. The claimant’s likely representations would not have displaced the statutory basis for suspecting tax deferral. Permission was therefore refused on the only arguable ground.
6. Interim relief did not arise after refusal of permission. If considered, it would have been refused because the suspicion was not shown to be ill-founded, the statutory purpose protected the public, and the balance of harm favoured retaining the notice.

First-instance judicial review permission decision. No appellate history is stated in the judgment.