CGI Group (Europe) Ltd v HM Revenue and Customs
| Jurisdiction | UK Non-devolved |
| Judgment Date | 20 August 2010 |
| Neutral Citation | [2010] UKFTT 396 (TC) ,[2010] UKFTT 224 (TC) |
| Date | 20 August 2010 |
| Court | First-tier Tribunal (Tax Chamber) |
[2010] TC 00525
[2010] UKFTT 224 (TC)
Charles Hellier (Chairman)
Kevin Prosser QC for the Applicant,
Philippa Whipple QC for the Respondents
Procedure - Whether to allow amendment to statement of case - Principle of legitimate expectation - Jurisdiction of tribunal - The appellant made application to add a new ground of appeal and sought directions for the service of additional evidence to support it - The new ground of appeal was that the appellant had legitimate expectation that it could rely on assurances in para. 3.2 of VAT Notice 700/34/2005 concerning the joint employment of staff - The application was made following the High Court judgment in Oxfam v R & C CommrsVAT[2010] BVC 108, in which it was held that the doctrine of legitimate expectation could properly have been raised before the tribunal and that the Value Added Tax Act 1994 section 83 subsec-or-para 1Value Added Tax Act 1994, s. 83(1)(c) gave the tribunal jurisdiction to resolve the issue of legitimate expectation - It was the view of the present tribunal that to the extent that the doctrine of legitimate expectation can affect the determination of the VAT chargeable it was within the jurisdiction of the tribunal - A legitimate expectation that tax would not be payable gave rise to the question of whether, in seeking that tax, the commissioners were acting unlawfully for the purposes of the Human Rights Act 1998 section 6Human Rights Act 1998, s. 6 - If they were, the appellant was permitted by Human Rights Act 1998 section 7 subsec-or-para 1s. 7(1)(b) to rely on such unlawfulness in the proceedings before the tribunal - Held, that there was at least a case which if put before the tribunal could lead to a remedy within its jurisdiction - It was, therefore, within the powers of the tribunal to hear argument and evidence and to make directions in relation to the relevant issues - The tribunal emphasised that it did not conclude that the appellant had a legitimate expectation, that such expectation was protected or that the commissioners had acted unlawfully - Rather, it found that those matters were properly within its jurisdiction - Application to amend the grounds of appeal allowed.
The appellant seeks to add a new ground of appeal to its existing grounds of appeal and seeks directions for the service of additional evidence to support that ground of appeal at the hearing which is set for July 2010. The hearing is listed for five days and Mr Prosser was confident that the additional evidence and arguments could be dealt with in the allotted time.
The appellant's new ground of appeal is that it had a legitimate expectation that it could rely upon the assurances which it says are contained in paragraph 3.2 of the Respondents' Notice 700/34 ("para 3.2"). Para 3.2 is referred to in the appellant's existing notice of appeal but no express argument is advanced on the basis of legitimate expectation.
The application was made following the judgement of Sales J in Oxfam v R & C CommrsVAT[2010] BVC 108; 2009 EWHC 3078 Ch in which Sales J said that Oxfam's claim based on public law principles and the doctrine of legitimate expectation could properly have been raised before the tribunal and that Value Added Tax Act 1994 section 83 subsec-or-para 1section 83(1)(c) VATA 1994 gave the tribunal in that case the jurisdiction to resolve the issue of legitimate expectation. Mr Prosser says that Oxfam is authority for the tribunal to consider the legitimate expectation argument in this appeal; Miss Whipple says that it is not.
In his judgement, at [78], Sales J indicated that HMRC had agreed with his conclusion. Miss Whipple made it clear that the commissioners did not agree and regarded Sales J's comment as having been recorded in error.
Two streams flow together in the developing law of legitimate expectation. The first is that derived from English common law, and the second that derived from article 1 of the first Protocol to the Convention for the protection of Human Rights as given effect in the Human Rights Act 1998.
The differences between those two streams were explored by the Court of Appeal in Josie Rowland v The Environment Agency [2003] EWCA Civ 1885. At [66 - 68] Peter Gibson LJ summarised the English common law doctrine: a denial by a public authority of a representation made by it which gave rise to a legitimate expectation in another person may amount to an abuse of power, but for an expectation to be legitimate the party seeking to invoke it must show that it is within the powers of the authority. It is through the High Court remedy of judicial review that the protection of such legitimate expectations has normally been enforced.
The stream which derives from HRA 1998 arises in the following way. Article 1 of the Convention confers a right to the peaceful enjoyment of possessions subject to the right of the state inter alia to secure the payment of taxes. In Pine Valley Developments v Ireland1991 14 EHRR 319, the ECHR found that a legitimate expectation relating to property may constitute a possession. The protection of a legitimate expectation may thus fall within article 1 of the protocal to the Convention. By section 6 HRA it may be unlawful for a public authority to act in a way incompatible with that right, and a person may, where the authority so acts unlawfully, by section 7 bring proceedings to enforce that right or rely upon it in legal proceedings.
The legitimate expectation right which arises in this way is different from that which arises under the common law in two relevant respects. First, it may arise notwithstanding the fact that it was beyond the powers of the authority to make the representation or realise the expectations (see Pine Valley and [85] of Rowland) (and although it may not entitle the claimant to a realisation which is beyond the authority's powers it may entitled him to a relief which is within its powers).
Second, Human Rights Act 1998 section 7 subsec-or-para 1section 7(1)(b) expressly permits a person to rely upon Convention rights in any legal proceedings. That will include proceedings before this tribunal. Human Rights Act 1998 section 8Section 8 HRA requires the court or tribunal to grant such relief or remedy within its powers as it considers appropriate.
In Oxfam v R & C CommrsVAT[2010] BVC 108; 2009 EWHC 3078 Ch Sales J said that it was within the jurisdiction of this tribunal to address claims of legitimate expectation in relation to an appeal under Value Added Tax Act 1994 section 83 subsec-or-para 1section 83(1)(c) VATA (an appeal with respect to the amount of input tax which may be credited to a person).
It is clear that, although he does not distinguish between the two streams, Sales J had both in mind. That is because he relies upon two House of Lords authorities in reaching his judgement. The first, Wandsworth LBC v Winder[1985] AC 461 was decided before the enactment of the HRA and deals with legitimate expectation without reference to that Act. The second, Doherty v Birmingham City Council [2008] UHHL 57, deals with HRA principles. It may be that Sales J had the HRA source of the doctrine uppermost in his mind, because, as Philip Sales QC, he appeared as counsel for the Secretary of State for Communities and Local Government in Doherty.
In this decision I shall follow the path along which I was led by Mr Prosser and Miss Whipple and consider the authorities on the jurisdiction of the tribunal in chronological order. Only the last three of these however were decided after the enactment of the HRA.
I use the term "supervisory review jurisdiction" in this decision to indicate a jurisdiction in which the tribunal is required to consider whether an action or decision of the commissioners was unreasonable in the sense of encompassing a failure to consider relevant matters, the consideration of irrelevant matters, the making of a mistake of law, or the making of a decision which in the circumstances no reasonable body of commissioners could make. The phrase "supervisory jurisdiction" is used in some of the authorities with the wider connotation of a jurisdiction under which the conduct of the Commissioners may be interfered with. The supervisory review jurisdiction to which I refer is not as wide as a more general supervisory jurisdiction but has the effect (though not the form) of a subset of that wider jurisdiction
In C & E Commrs v J. H. Corbitt (Numismatists) LtdVAT(1980) 1 BVC 330 the question was whether, in relation to an appeal against an assessment which depended upon a prior exercise of a discretion by the Commissioners, the tribunal had power under the then equivalent of Value Added Tax Act 1994 section 83section 83 VATA to review the exercise of the discretion. The House of Lords held that the form in which the discretion was given precluded such review, but Lord Lane said that there was another aspect of the matter, namely that if the Act was intended to give a supervisory jurisdiction clear words would be expected, and the drafting of (what was later expanded to) section 83 VATA by inference negated the existence of a "general supervisory jurisdiction".
Mr Prosser argues that Lord Lane's statement was obiter dictum, and that that was recognised by Sales J at [73 to 76] in Oxfam. Whether or not it was obiter, it seems to me that the reasoning by which the house of Lords reached its conclusion on section 83 is binding and that reasoning requires close attention to the words of the particular appeal provision. The particularity of the headings in section 83 indicates strongly to me that no general supervisory jurisdiction is intended.
In Oxfam Sales J says that whilst section 83 does not confer a general supervisory jurisdiction it is a non sequitur to say that the tribunal has no power to apply public law principles relevant to an appeal...
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