Fluid System Technologies (Scotland) Limited & Anor, R (on the application of) v The Commissioners for HMRC

The Disguised Remuneration Repayment Scheme’s “no power to recover” condition concerns the amount claimed under the settlement, not merely the existence of a determination for the relevant year. A pending appeal may nevertheless give HMRC power to recover an uplifted amount where HMRC could issue a statutory-review “view of the matter” putting it in a position to recover that amount. The reasonable-disclosure condition must be satisfied from the relevant tax returns themselves. Information supplied separately by scheme promoters under DOTAS cannot be incorporated by reference. The returns must identify the loan or quasi-loan, its recipient, the arrangements giving rise to it, and sufficient information to make apparent a reasonable case for tax liability.

These conjoined judicial review claims challenged HMRC decisions refusing repayment under the Disguised Remuneration Repayment Scheme. The claims arose from settlements entered into to avoid the Loan Charge, concerning PAYE and National Insurance contributions referable to employee loan and quasi-loan arrangements.

The claimants argued that HMRC lacked power to recover amounts exceeding earlier Regulation 80 determinations or section 8 National Insurance decisions. They also argued that their corporation tax and self-assessment returns contained reasonable disclosure under section 20(5) of the Finance Act 2020. The central issues were the meaning of “no power to recover” and “reasonable disclosure”, and whether HMRC’s decisions applying those conditions were lawful.

1. Outcome. The claims for judicial review were dismissed and the requested quashing and mandatory orders were refused. The Tribunal accepted that a limited error had been made in the reasoning concerning Fluid Scotland’s disclosure, but relief was refused because the outcome would inevitably have been the same.
2. No power to recover. DRRS §4.5.1 is a deeming provision and must be read consistently with sections 20 and 21 of the Finance Act 2020. The reference to a Regulation 80 determination means a determination for the amount in question, not a determination for any amount relating to the year. HMRC could not rely on a lower determination to retain a larger settlement amount (§§67–85).
3. Where a taxpayer has appealed a Regulation 80 determination to HMRC, HMRC may offer a statutory review and issue a “view of the matter” stating a different amount. That process can put HMRC in a position to recover the uplifted amount, even though the final result may depend on the taxpayer, a review, or the First-tier Tribunal. The “view of the matter” remains confined to the matter covered by the determination. It cannot extend to different employees. A determination referring generally to an EBT or EFRBS scheme may, however, encompass additional contributions under that scheme (§§86–106).
4. The same practical approach applies to National Insurance contributions. HMRC’s ability to vary a section 8 decision and apply under CPR r. 17.4(2) to amend existing county court proceedings can constitute a power to recover, although permission to amend remains for the court (§§107–110).
5. Reasonable disclosure. The statutory test is exhaustive. The relevant information must be identifiable from one or more tax returns, although HMRC may draw obvious inferences. It is not required to join separate pieces of information from outside the returns. DOTAS AAG forms are not incorporated into a taxpayer’s return merely because the return gives a scheme reference number (§§122–148).
6. The disclosure must identify the particular loan or quasi-loan, including its amount and date; identify its recipient; identify the arrangements and transactions giving rise to it; and provide sufficient information to make apparent that a reasonable case could be made that the amount was taxable. The information need not be exhaustive, but a mere reference to an EFRBS, sub-trust, or debt is insufficient (§§141–148, 158–170, 177–185).
7. Fluid Scotland’s reviewer applied too high a formulation by referring to a “clear indication” or high probability of tax liability. The statutory test required only a reasonable case. Nevertheless, the returns failed independently to identify the relevant quasi-loan, date, recipient, arrangements, or tax basis, so the error could not have affected the result. Airedale’s disclosures were likewise plainly inadequate (§§157–172, 173–185).

• High Court: Permission for judicial review was granted by Foster J on 21 December 2023 in the Fluid claims and by Sheldon J on 16 April 2024 in the Airedale claim. The proceedings were then transferred to the Upper Tribunal.
• Upper Tribunal (Tax and Chancery Chamber): The conjoined claims were dismissed and relief refused: [2025] UKUT 278 (TCC).