Biffin Ltd and Others v HM Commissioners for Revenue and Customs
| Jurisdiction | England & Wales |
| Judge | Mr Peter Marquand |
| Judgment Date | 13 October 2016 |
| Neutral Citation | [2016] EWHC 2926 (Admin) |
| Docket Number | CO/4867/2016 |
| Court | Queen's Bench Division (Administrative Court) |
| Date | 13 October 2016 |
[2016] EWHC 2926 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
THE ADMINISTRATIVE COURT
Royal Courts of Justice
Strand
London WC2A 2LL
Mr Peter Marquand
(Sitting as a Deputy High Court Judge)
CO/4867/2016
Mr Ben Elliott (instructed by PricewaterhouseCoopers) appeared on behalf of the Claimants
Mr M Paulin (instructed by the Government Legal Department) appeared on behalf of the Defendant
This is an application by the Claimants for an interim injunction prohibiting Her Majesty's Commissioners for Revenue and Customs, "HMRC", from commencing enforcement action against the three Claimants in respect of alleged tax liabilities that are the subject of appeal and postponement applications before the Tax Tribunal. This application has been made on notice filed and served on 29 September 2016 and I heard the parties' submissions on 5 October 2016.
Mr Taylor and Mr McFarlane are the directors and ultimate owners of Biffin Ltd. These three Claimants have been subject to an HMRC enquiry since 2007 and those enquiries are not yet concluded. The centre of the dispute concerns the tax consequences of the purchase and sale of land in Lancashire. The sums in dispute are substantial and amount to £10,900,000.
The Claimants have brought proceedings by way of judicial review in England and in Scotland. In the proceedings in London before me, the Claimants challenge the following decisions of the Defendant:
1. An amendment of Biffin Ltd's corporation tax return for the year ending 31 December 2008 by issuing amendment notices on 23 June 2016.
2. An amendment to Mr Taylor and Mr McFarlane's tax returns over the years ended 5 April 2005 and 2010 by notices dated 29 June 2016, which are known as "jeopardy amendments".
3. A refusal to agree postponement of tax demanded under the jeopardy amendments and certain discovery assessments ("the postponement decisions"). Those refusals were issued on 29 June 2016 and 13 July 2016 in relation to Biffin Ltd and 29 June and 14 July in relation to Mr McFarlane and Mr Taylor.
4. To commence insolvency proceedings against Biffin Ltd as communicated in a warning letter of 5 July 2016.
5. To commence enforcement proceedings against Mr McFarlane and Mr Taylor following warning notices dated 13 and 14 September 2016.
To summarise the position, the Defendant in the course of its investigation, decided that the three Claimants have underpaid tax. A demand has been made for that tax and now enforcement proceedings have been threatened. I am not concerned with the application for permission to apply for judicial review, which will follow in due course. Nor am I dealing with the substantive matter, but only with the question of whether or not I should exercise my discretion and order interim relief to prevent the enforcement proceedings from taking place for the time being.
On the morning of the hearing on 5 October 2016, the Defendant raised the issue of whether a High Court in London had jurisdiction as, on the Defendant's case, the decisions being challenged had been made in Scotland. Therefore, there are two broad issues to be decided. First, does the court in London have jurisdiction and, secondly, if it does, the question of interim relief sought. I have had the benefit of skeleton arguments from Mr Ben Elliott on behalf of the Claimants and Mr Michael Paulin on behalf of the Defendant. I have also considered the judicial review claim form, the Claimants' statement of grounds and the witness statements of Mr Eric Taylor, one of the Claimants, dated 4 October 2016 and Jonathan Preshaw dated 23 September 2016. Mr Preshaw is a tax director in the practice of PricewaterhouseCoopers ("PwC") who was acting on behalf of the Claimants in relation to the issues with the Defendant. The statement runs to 68 paragraphs and deals mainly with the substantive dispute between the parties. I have also had a statement dated 5 October 2016 from Mr George Mason, an officer of the Defendant.
Background facts
According to Mr Taylor's statement, both and he Mr McFarlane are domiciled in Scotland and have their primary residences in that country. Although their business activities are carried out throughout the United Kingdom, he states that "the vast majority of mine and Robert's (that is Mr McFarlane's) business interests are in England." Mr Taylor and Mr McFarlane are the ultimate owners of Biffin Ltd.
Biffin was incorporated in Jersey in 2003 and is based in Jersey and has its registered office there, but has been a UK tax resident since 2006. Biffin's principal place of business is in Manchester, although it has leased offices in Glasgow.
Biffin is the owner of land at Preesall in Lancashire and it is Biffin's only physical asset. This land was acquired in March 2003 from a subsidiary of ICI plc. The land was heavily contaminated and the purchaser was required to assume responsibility for all environmental obligations on site. Biffin entered into an options agreement to sell part of the land, and this option was exercised in October 2004 by Canatxx, a Canadian energy company.
The Defendant commenced enquiries into the Claimants' tax affairs in 2007, which remain ongoing. I do not need to go into the details of the outstanding dispute between the Claimants and the Defendant on the tax liabilities. However, they arise out of the sale of the land to Canatxx and the proper accounting treatment of the funds received. In addition, there are enquiries in respect of directors' loans and potential income tax and Class 1A liabilities.
There have been various people dealing with the Defendant's enquiries, but currently the matter is being dealt with by Mr George Mason, one of the Defendant's officers in HMRC's Fraud Investigation Service based in Edinburgh.
On 29 March 2016, the Defendant issued discovery assessments to Mr McFarlane and Mr Taylor for the years 2010/11 and 2011/12. A discovery assessment was issued to Biffin Ltd on 23 June 2016. The Claimants have disputed the basis upon which the assessments were made and also the underlying tax and have appealed against the assessment and requested postponement of the tax assessed.
On 23 June 2016 and 29 June 2016, the Defendant made "jeopardy amendments" to the Claimants' tax returns under the relevant legislation. The Claimants challenge the basis upon which those decisions were made and also dispute the underlying tax and have appealed against the amendments and requested postponement of the tax due.
By letters dated 29 and 30 June 2016, the Defendant refused postponement of the tax due from Mr McFarlane and Mr Taylor and, by letter dated 14 July 2016, the tax due from Biffin Ltd. The Claimants have referred their postponement applications to the Tax Tribunal. I am told that the Defendant's statement of case is due in November 2016. All of the correspondence was signed by Mr Mason on the Defendant's headed paper with its address at a PO Box in Bootle. In his witness statement, Mr Mason says that all his material decisions about which the Claimants complain were made in Scotland from his office in Edinburgh. He says that letters have a return address of Bootle as it is the preferred return address for correspondence and it is merely an administrative matter.
On 5 July 2016, a letter was sent to Biffin Ltd at its address in Glasgow making a demand for unpaid debts of £1,845,633.98. The letter states that if the debt is not paid in full within seven days, a petition to wind the company up will be presented to the Sheriff Court or the Court of Session without further warning. This letter is signed by Karthik Kolisetti, collector, and the Defendant's address is set out as Elgin House in Edinburgh.
On 13 September 2016, Mr Taylor received a letter from the Defendant seeking an unpaid debt of £4,539,953.49 and Mr McFarlane received a similar letter demanding a payment of £4,501,505.04. Both letters are from Mrs Kaur, debt collector, and entitled "Notice warning of legal proceedings". They state that if the payment is not made in full "now", proceedings will be started in the local Sheriff Court. Both letters are addressed to Mr McFarlane and Mr Taylor at addresses in Glasgow. Both of those letters have a postcode of BX5 5AB for the Defendant, although I have not been told the area to which the postcode relates.
Mr Preshaw, on behalf of the Claimants, wrote to the Defendant by letter dated 2 August 2016 objecting to the letter of 5 July 2016 [that is the letter addressed to Biffin Ltd] claiming that it was an abuse of process and complaining about the way the enquiry was being handled. That complaint was rejected by Mr Branigan on behalf of the Defendant and he indicated that enforcement proceedings would continue, stating: "It makes no logical sense not to seek payment". Mr Branigan describes himself as having operational responsibility for the case. The address given for the Defendant in this letter is in Newcastle.
By letter dated 21 September 2016, Maclay Murray and Spens LLP from their office in Glasgow wrote to Mr Mason at the Bootle address. The letter states that they are acting for Mr Taylor and Mr McFarlane and their correspondence is in relation to the letters of 13 and 14 September 2016 from Mrs Kaur. The letter refers to the appeals before the Tax Tribunal and also that the basis of the underlying debt is in dispute. It contains the following:
i. "In addition, we understand that PwC's attempts to...
To continue reading
Request your trial