Airedale Chemical Company Limited, R (on the application of) v The Commissioners for HMRC

Disclosure in judicial review is ordered only where it appears necessary to resolve the matter fairly and justly. Documents are relevant to identifying the actual legal test applied by a decision-maker only if they bear on the material relied on in making the decision. The internal drafting history of guidance does not ordinarily assist with that question or with determining the correct statutory interpretation. Where a statutory test asks whether information was objectively sufficient to make a reasonable case apparent, the assessment is objective. The public authority’s internal policy, state of knowledge, or later liability and recovery decisions do not determine that question. The duty of candour does not require disclosure of material that cannot assist in resolving the issues.

The claimant sought interim disclosure in judicial review proceedings challenging HMRC’s refusal of repayment under the Disguised Remuneration Repayment Scheme. The underlying claim concerns whether HMRC misdirected itself in law and whether its refusal was unreasonable or irrational.

Two categories of documents were sought: material concerning the drafting of an HMRC Operational Note and material concerning HMRC’s policy and decisions relating to PAYE and National Insurance liabilities arising from Employer Financed Retirement Benefit Schemes. The central question was whether either category was necessary for the fair and just resolution of the judicial review.

1. Application dismissed. The test for disclosure was whether disclosure appeared necessary to resolve the matter fairly and justly, applying Tweed v Northern Ireland Parades Commission [2007] (HL(NI)) 1 AC 650.
2. The Operational Note itself was relevant because it had been relied on by the HMRC decision-maker and could assist in identifying the test actually applied. Its drafting history, earlier drafts and internal deliberations were not relevant. Nothing indicated that those materials affected the decision-maker’s reasoning. They also could not establish the correct interpretation of section 20 of the Finance Act 2020, which was a matter for the tribunal.
3. Evidence about HMRC’s policy on issuing PAYE determinations, National Insurance decision notices and recovery proceedings could not assist with the objective question under section 20(5)(d) of the Finance Act 2020. Whether information was sufficient for it to be apparent that a reasonable case could have been made that an amount was payable did not depend on HMRC’s internal policy or on how HMRC acted in other cases.
4. The reliance on R (Sensor Solutions Ltd) v HMRC [2024] EWHC 1119 (Admin) was misplaced. The reference there to HMRC’s history of challenging similar schemes was illustrative, and the reasoning did not depend on HMRC’s approach. In any event, that reasoning appeared to be obiter.
5. The documents sought would not assist either the alleged legal misdirection or the challenge based on unreasonableness and irrationality. Since disclosure was unnecessary, the tribunal did not determine the further objections concerning breadth, time or cost. The application was dismissed, and the alleged failure of candour was not established.

Permission for the judicial review was granted by the Administrative Court, after which the claim was transferred to the Upper Tribunal. This judgment determined an interim disclosure application in advance of the substantive hearing.