Summary
A claim seeking only declarations that primary tax legislation is incompatible with EU law is a public law challenge. It must generally be brought by judicial review, and commencing it under CPR Part 8 is an abuse of process.
The existence of EU law rights does not require an immediate, free-standing judicial declaration where an effective statutory appeal route exists. A taxpayer may challenge compatibility before the specialist tax tribunal once the statutory machinery permits an appeal. The proper remedy is not to stay an abusive Part 8 claim while judicial review or future damages proceedings are explored.
Factual background
The respondents brought linked Part 8 claims concerning the compatibility of the Loan Charge legislation with EU law and the ECHR. They sought declaratory relief but no damages or other restitutionary remedy.
Master Dagnall held that the claims raised public law issues which should have been brought by judicial review under CPR Part 54. He stayed the claims rather than striking them out, partly because of concerns about the judicial review time limit and the possible effect on future Francovich damages claims. HMRC appealed. The central issues were whether the claims were an abuse of process and whether the statutory tax appeal route provided an effective remedy.
Held
- Ground 1 allowed. The Part 8 claims challenged the validity of primary tax legislation and sought declaratory relief only. They asserted no private-law right, breach of duty or claim for damages. They therefore fell within the exclusivity principle in O’Reilly v Mackman and should have been brought by judicial review under CPR Part 54. The claims were an abuse of process.
- The possibility that the Administrative Court might enforce the three-month time limit did not justify retaining or staying the Part 8 claims. The Administrative Court could determine any extension application using its case-management powers, consistently with the EU law principle of effectiveness. Any refusal of permission or extension had its own procedural remedies.
- Ground 2 also allowed. The Autologic principle applied. The tax tribunal had jurisdiction and the duty to give effect to directly enforceable EU law. The statutory arrangements, including enquiries, closure notices, assessments and appeals, gave the respondents effective means of bringing the compatibility issues before the Tribunal.
- The principle of effectiveness did not require domestic law to provide an immediate, free-standing determination of compatibility before any concrete tax dispute or assessment. Unibet was consistent with the availability of indirect but effective remedies. Fransson concerned the powers of a court when EU law fell to be applied, not the timing of a determination. Hoechst did not require taxpayers to obtain an immediate ruling in these circumstances.
- The court would not grant declaratory relief merely to provide guidance on how taxpayers should arrange their affairs where there was no real and specific dispute. The Part 8 claims were therefore not saved by the respondents’ asserted uncertainty or possible future Francovich claims.
- The recusal application was rejected. The fair-minded and informed observer would not regard the judge’s historic appointment as Standing Counsel to the Inland Revenue, while practising at the independent Bar, as creating a real possibility of bias. Disclosure was unnecessary.
- The appeals succeeded. The judge’s provisional view was that the Part 8 claims should be struck out as an abuse of process, subject to consequential submissions and a draft order.
The court’s approach to earlier authorities
Available to signed-in members.
Appellate history
- High Court (King’s Bench Division) — [2024] EWHC 2009 (KB): HMRC’s appeals allowed. The stay was held erroneous in principle and the Part 8 claims were liable to be struck out as an abuse of process.
- High Court, before Master Dagnall — The claims were held to raise public law issues suitable for judicial review, but were stayed rather than struck out.
- Administrative Court — Permission for related judicial review claims was refused by Foster J and, on renewal, by Swift J. Males LJ refused permission to appeal on 15 June 2023.
Key cases cited
17 authorities cited.
- Autologic Holdings plc and others (Respondents) v. Her Majesty's Commissioners of Inland Revenue (Appellants)BNP Paribas UK Holdings Limited and others (Respondents) v. Her Majesty's Commissioners of Inland Revenue (Appellants)The Future Network plc and others (Respondents) v. Her Majesty's Commissioners of Inland Revenue (Appellants)Perkins Engines Company Limited and others (Respondents) v. Her Majesty's Commissioners of Inland Revenue (Appellants)HJ Heinz Company Inc and others (Respondents) v. Her Majesty's Commissioners of Inland Revenue (Appellants)British Telecommunications plc and others (Respondents) v. Her Majesty's Commissioners of Inland Revenue (Appellants)(Conjoined Appeals) [2005] UKHL 54
- Magill v Porter and Magill v Weeks [2001] UKHL 67
- The Secretary of State for Transport v Arriva Rail East Midlands Ltd ("Arriva") [2019] EWCA Civ 2259
- Knibbs & Ors v Revenue And Customs [2019] EWCA Civ 1719
- North Dorset District Council v Trim (Rev 2) [2010] EWCA Civ 1446
- Taylor v Lawrence [2002] EWCA Civ 90
- R v Spear (John) (R v Saunby (David), R v Boyd (David Morton), R v Hastie (Philip)) [2001] EWCA Crim 2
- Locabail (UK) Ltd v Bayfield Properties Ltd (Locabail (UK) Ltd v Waldorf Investment Corpn, R v Bristol Betting and Gaming Licensing Committee, Ex parte O’Callaghan, Timmins v Gormley, Williams v HM Inspector of Taxes) [2000] QB 451
- Le Roux Zeeman & Ors v HM Revenue and Customs [2020] EWHC 794 (Admin)
- Stagecoach East Midlands Trains Ltd & Ors v The Secretary of State for Transport [2019] EWHC 2047 (TCC)
- Phonographic Performance Ltd v Department of Trade and Industry & Anor [2004] EWHC 1795 (Ch)
- Finucane v Inland Revenue Commissioners (2021) SLT 665
- Åklagaren v Åkerberg Fransson [2013] CN 287
- Revenue and Customs v Marks and Spencer plc [2012] 1 CMLR 937
- Unibet (London) Ltd v Justitiekanslern [2007] 2 CMLR 30
- Metallgesellschaft Ltd v Inland Revenue Comrs (Hoechst AG v Inland Revenue Comrs) [2001] Ch 620
- O’Reilly v Mackman (Derbyshire v Mackman, Dougan v Mackman, Millbanks v Home Office) [1983] 2 AC 237
Sign in to see how the court treated each authority. A free account is enough.
Cases citing this case
Available to signed-in members.