Jordi Carulla Font v The Commissioners for HMRC

A provisional position taken by a competent authority during a mutual agreement procedure is not necessarily a final decision. The procedure requires the competent authorities to keep an open mind and review their positions while seeking agreement.

An intermediate communication in that process is not amenable to judicial review where it has no substantive legal consequences. Judicial review is also ordinarily refused where the claimant can reject any eventual agreement and pursue the relevant tax remedies. A domestic court may have jurisdiction to interpret an incorporated treaty, but that does not make every step in negotiations reviewable.

The claimant sought permission to challenge HMRC’s September 2024 letter concerning his treaty residence under the UK-Spain Double Taxation Agreement. HMRC had previously regarded him as UK treaty resident, but during mutual agreement procedures with the Spanish competent authority it revised its provisional position.

The claimant alleged errors of law, irrationality and breach of legitimate expectation. HMRC argued that the letter was an intermediate step with no legal consequences, that the claimant had an alternative remedy, and that the matter was non-justiciable. The court determined four preliminary issues and also considered permission on the merits.

1. Outcome. Permission to apply for judicial review was refused.
2. Time. The claim was not out of time. The June 2024 email was not a final or concluded view, the later letter materially changed HMRC’s position for some years, and the claim would in any event have been extended because HMRC’s conduct made refusal of an extension unjust.
3. Mutual agreement procedure. Under Article 25 of the DTA, “justified” requires a preliminary assessment sufficient to warrant engagement with the other competent authority. It does not require HMRC to decide finally that the taxpayer is correct. During the discussion stage, HMRC and the Spanish competent authority must keep open minds and are not required to advocate the taxpayer’s preferred position. They may review their positions while endeavouring to reach agreement. Any agreement remains subject to the taxpayer’s choice whether to accept it.
4. Amenability. HMRC’s letter was an intermediate communication in an ongoing negotiation. It did not determine treaty residence, confer or restrict legal rights, or produce substantive legal consequences. It was therefore not amenable to judicial review. The court’s conclusion was not altered by the letter’s reference to HMRC’s “conclusion”.
5. Alternative remedy and foreign tax. The claimant could reject any eventual MAP agreement and retain his domestic and foreign tax remedies. Judicial review was a remedy of last resort and was inappropriate where the substance of the dispute concerned Spanish taxation and remedies before the Spanish courts. The alternative-remedy objection would therefore also have succeeded.
6. Justiciability. The court provisionally rejected a broad justiciability objection. The DTA had been incorporated into domestic law and supplied a domestic foothold. Nevertheless, not every act under the DTA would be reviewable; the claim failed on amenability and alternative-remedy principles.
7. Merits. A person has one centre of vital interests, assessed comparatively by weighing personal and economic relations. Those factors may be balanced so that the test is inconclusive. HMRC’s treatment of habitual abode and its fact-sensitive COVI assessment were rational and disclosed no arguable error of law. The previous provisional view did not create a legitimate expectation that HMRC would never revise its position during the MAP.

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