Webinar takeaways – Judicial Review

Judicial Review is a bit of a black box for those who do not see it day in, day out. Constantine Christofi, Senior Associate at RPC LLP routinely deals with Tax Tribunal and Judicial Review cases and took this opportunity to shine light on the subject (solely in relation to tax).

What is Judicial Review

Judicial Review (JR) is essentially where the High Court reviews HMRC’s exercise of power to ensure that the department is acting in accordance with the law. JR is a last resort and may sometimes be undertaken in conjunction with an appeal to Tribunal. Application for JR can be made by anyone who has “sufficient interest in the matter to which the application relates” (Senior Courts Act 1981, s31(3)) so the number of possible applicants is potentially very high.

JR is for cases that cannot be heard by the Tax Tribunal and only where there is no alternative remedy. Constantine briefly discussed Boulting; where a taxpayer had received statutory clearance for a transaction and later on, once the transaction had been carried out and the tax declared, HMRC asserted that the clearance no longer applied. The High Court refused Mr Boulting’s application to go to Judicial Review and RPC comment on the decision as follows:

“The claimants argued that there was no alternative remedy available. Where HMRC acted unfairly in refusing to abide by a ruling it has issued, the correct course is to seek a judicial review of that decision. The fact that Mr Boulting was challenging the substantive merits of a decision by way of statutory appeal was not a good ground for refusing permission to bring the judicial review claim in circumstances where it was claimed HMRC had acted contrary to public law requirements. If permission was not granted, there would be no other means by which the claimants could challenge the legality of HMRC’s decision to void the clearance. The lawfulness of that decision was inherently a matter of public law and the FTT did not have jurisdiction to determine issues of public law. 

In the view of the court, the issue of the valuation of the shares was central to the dispute and could appropriately be dealt with by way of the statutory appeal, rather than by way of judicial review. The appeal to the FTT would give Mr Boulting the remedy he sought if he succeeded, which was to be taxed in accordance with the clearance. Accordingly, the court refused permission on the basis that there was a suitable alternative remedy available”

Main grounds for Judicial Review

The main grounds for JR tend to be

• HMRC acting beyond the powers conferred on them by legislation
• Irrationality – where HMRC’s decision is (Wednesbury)unreasonable or irrational
• Non-compliance with Human Rights. Where cases are brought regarding human rights and tax, this is usually in relation to interference with personal possessions. Constantine commented that Human Rights tends to be of less relevance for tax cases.
• Legitimate expectation – this is essentially where HMRC say one thing, giving the expectation of being treated in a particular way, and then treat the taxpayer in another way. Legitimate expectation is one of the most common grounds for bringing a case to JR, though it is difficult to establish. HMRC routinely assert that each individual has a principal expectation to be taxed according to the law regardless of HMRC’s guidance or promises.

Procedural points

When bringing a case to Judicial Review, it is essential that the applicant abides by strict time limits. A claim must be filed promptly or within three months of when the grounds of the claim arose. The possible remedies that can be obtained are:

• a quashing order, which sets aside the decision being appealed;
• a declaration stating the rights of the parties.

Any remedy from Judicial Review is discretionary meaning that the judges will decide whether or not there to order a remedy, even when the claimant might be right.

Further reading

Among others, Constantine suggested the following cases:

• R(oao Aozora GMAC Investment Limited) v HMRC [2019] EWCA Civ 1643 – on detrimental reliance
• R(oao Locke) v HMRC [2019] EWCA Civ 1909 – a challenge to anti avoidance legislation
• R(oao Haworth) v HMRC [2021] UKSC 25 – a challenge to anti avoidance legislation

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