Carvill v Commissioners of Inland Revenue
| Jurisdiction | England & Wales |
| Judge | Mr Justice McCOMBE,MR JUSTICE MCCOMBE |
| Judgment Date | 29 July 2003 |
| Neutral Citation | [2003] EWHC 1852 (Admin) |
| Docket Number | Case No: CO/3312/2001 |
| Court | Queen's Bench Division (Administrative Court) |
| Date | 29 July 2003 |
[2003] EWHC 1852 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION
ADMINISTRATIVE COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr Justice Mccombe
Case No: CO/3312/2001
Miss E Gloster QC & Mr G Goodfellow QC (instructed by Slaughter & May) for the claimant
Mr R Singh QC & Mr H McKay (instructed by the Solicitor of Inland Revenue) for the defendant
This is an application for Judicial Review brought on the application of Mr. Rory Kerr Carvill ("Mr. Carvill") against the Commissioners of Inland Revenue ("the Revenue"). Mr. Carvill asks for the review of the Revenue's refusal to repay the sum of �4,537,342.80 in respect of income tax and statutory interest said to have been wrongly paid to them by Mr. Carvill for the years of assessment 1987�88 to 1992�93 inclusive. It is said that the decision is recorded in a letter of 21 May 2001 from a Mr. Waterson of the Revenue Solicitor's Office to a Mr. John Kavanagh of Messrs. Tuson and Partners Limited ("Tusons"). The Revenue say that the relevant decision was actually made on or about 28 July 2000. No point was taken by the Revenue at the hearing before me that the claim is brought out of time. However, if the decision was taken at the earlier date then it is common ground that no point can arise under the Human Rights Act 1998. If, however, the later date applies then a point under the 1998 Act may arise. I return to this in due course.
In short, the problem is that by a decision made on 8 December 1994 by a Commissioner for the special purposes of the Income Tax Acts (Mr. T.H.K Everett) an appeal by Mr. Carvill against assessments made under Section 739 of the Income and Corporation Taxes Act (" ICTA") 1988 was dismissed. Following that decision, Mr. Carvill paid the tax so assessed. Similar assessments were raised against Mr. Carvill in later years of assessment, namely 1993/4 to 1995/6 inclusive. Mr. Carvill appealed against those assessments also. Those appeals were heard before a different Commissioner, Dr. J. Avery-Jones CBE, who allowed the appeals by a written decision of 20 March 2000. Both appeals were concerned with the same underlying transactions but the evidence surrounding them, which was before Mr. Everett and Dr. Avery-Jones respectively, was different. In subsequent years although relevant income has arisen, the Revenue have not assessed Mr. Carvill to tax upon it under Section 739. Mr. Carvill says that Dr. Avery-Jones's decision was right and that of Mr. Everett was wrong and the Revenue should repay to him the tax paid under the original assessments. The years of assessment covered by Mr. Everett's decisions have been called "the Earlier Years"; those covered by Dr. Avery-Jones's decisions have been called "the Later Years" and the years thereafter have been called "the Future Years". I adopt those terms in this judgment. I shall call Mr. Everett's decision "the First Decision" and Dr. Avery-Jones's decision "the Second Decision".
On 7 June 2000, Tusons, taxation consultants for Mr. Carvill, wrote to the Revenue stating that they assumed that arrangements would shortly be made for the tax paid in respect of the Earlier Years (and interest) to be repaid, together with repayment supplement. On 19 June 2000 the Revenue asked for an explanation of why such an assumption was being made. Correspondence ensued and it became clear that the Revenue did not accept any such obligation to repay the tax paid in respect of the Earlier Years. As already indicated there is a dispute about when the decision not to repay was made.
It may be that Mr. Carvill considered that repayment had been refused at latest by 28 March 2001 when he began proceedings against the Revenue in the Chancery Division claiming repayment of the tax for the Earlier Years and interest. On the other hand it, may be that the proceedings so issued were designed initially as protection against any limitation point. There is no need to say more about this. The claim began in the Chancery Division has been called (and is called here) "the Restitution Claim". The Claim Form in these proceedings was issued on 20 August 2001. That claim has been and is called "the Judicial Review Claim". By an Order of Mr. Justice Burton dated 11 January 2002, 14 preliminary issues were ordered to be determined in both sets of proceedings. Those preliminary issues came before Mr. Justice Hart between 11 and 14 June 2002 and were resolved (so far as that learned judge considered appropriate) by a judgment delivered on 24 July 2002. As a result, the Restitution Claim was struck out by an Order drawn up on 17 September 2002. The remainder of the Judicial Review Claim is now before me.
On each of the two appeals by Mr. Carvill against the Revenue's assessments the central issue for determination was whether Section 739 of ICTA 1988 applied. The relevant provisions of the legislation are set out in paragraph 7 of Mr. Justice Hart's judgment and I do not repeat them. Similarly, the "skeletal form" of the transactions at which the assessments were directed are set out in paragraph 9 of the same judgment. For present purposes, I gratefully adopt Mr. Justice Hart's summary.
As already stated, the Restitution Claim has been struck out and there is no appeal from that order. Accordingly, it is now clear that there is no "private law" claim available to Mr. Carvill for repayment of the tax paid for the Earlier Years. In these proceedings, however, Mr. Carvill contends that the Revenue's decision not to repay, even in the absence of any private law obligation to do so, is "irrational", "unfair" and an "abuse of power". Therefore, it is submitted that in public law, the Revenue is obliged to make the repayment sought.
The basis of this claim can be summarised by reference to paragraph 7 of the written argument by Miss Gloster QC and Mr. Goodfellow QC who appeared for Mr. Carvill.
"(1) Mr. Carvill pursues his claim for repayment of 100% of the tax and interest for the earlier Years on the basis of the disparity of treatment accorded to Mr. Carvill as compared with the Revenue's practice of repaying tax paid under assessments which have become final and conclusive when a subsequent decision reveals that those assessments may have been erroneous.
(2) Mr. Carvill pursues a claim, in the alternative of 41% of that same tax and interest on the basis of certain assumptions made in respect of the preliminary issues and, in particular, that the assessments were contrary to the Revenue's then unpublished practice and/or understanding of the law to the extent that the assessments sought charge Mr. Carvill on income which was attributable to the "Old Minority Shares", unless it can be established that Mr. Carvill processed the transfer of those shares by the relevant shareholders. In this respect, it is said that the Revenue's officers having conduct of the first appeals knew or ought to have known
a) the practice;
b) that there was no allegation that Mr. Carvill had procured the transfer of those shares;
c) that Mr. Carvill and his advisers were or were unlikely to be aware of the practice.
(3) Further, Mr. Carvill contends that the Revenue's failure at the time of the first appeals to inform Mr. Carvill of the practice mentioned in (2) above or to apply it before agreeing the income assessable at that time has resulted in inconsistent treatment of Mr. Carvill compared with other taxpayers".
In support of these claims Mr. Carvill relies upon the "care and management" powers conferred upon the Revenue under Section 1 of the Taxes Management Act 1970 (" TMA 1970"). He submits that, if there is no justification or no rational justification for the treatment of a taxpayer in the manner in which the Revenue's care and management powers are exercised towards him, that is "unfair" in the public law sense and an abuse of power. These concepts, submits Miss Gloster, are not to be applied too rigidly. Those submissions were addressed in particular in response to submissions of Mr. Rabinder Singh QC (with whom Mr. Hugh McKay appeared) for the Revenue that this Court is not a Court of Appeal on the merits of a public authority's decisions. Mr. Singh submits that this is not an area where the Revenue has an open ended discretion; its primary duty is to collect what Parliament says is payable, subject to limited powers of "care and management".
Mr. Singh took me to the summary of past authority on the ambit of the Court's powers of judicial review given by Lord Lowry in R v Secretary of State for the Home Department ex p. Brind [1991] 1 AC 696 at p. 764 � 766C. I confine myself to the quotation of the passage between 765D and H.
" �. I believe that the subject is nowhere better discussed than by Sir William Wade in chapter 12, "Abuse of Discretion," of his authoritative textbook, Administrative Law, 6 th ed. (1988), pp. 388�462. The author, with the aid of examples covering more than a century, clearly demonstrates that what we are accustomed to call Wednesbury unreasonableness is a branch of the abuse, or misuse, of power: the court's duty is not to interfere with a discretion which parliament has entrusted to a statutory body or an individual but to maintain a check on excesses in the exercise of discretion. That is why it is not enough if a judge feels able to say, like a juror or like a dissenting member of the Cabinet or fellow-councillor, "I think that is unreasonable; that is not what I would have done." It also explains the emphatic language which judges have used in order to drive home the message and the necessity...
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