Cloburn Quarry Company Limited For Judicial Review Of A Decision Of Hm Revenue And Customs
| Jurisdiction | Scotland |
| Judge | Lord Boyd of Duncansby |
| Neutral Citation | [2013] CSOH 127 |
| Docket Number | P666/12 |
| Published date | 30 July 2013 |
| Court | Court of Session |
| Date | 16 July 2013 |
| OUTER HOUSE, COURT OF SESSION | |
| [2013] CSOH 127 | |
| P666/12 | OPINION OF LORD BOYD OF DUNCANSBY in the cause CLOBURN QUARRY COMPANY LIMITED, a company incorporated under the Companies Act and having its registered office at Cloburn Quarry, Pettinain, Lanark, Lanarkshire Petitioners; for Judicial Review of a decision of HM Revenue and Customs to seek a summary warrant for the enforcement of Aggregates Level for the Sheriff at Lanark : ________________ |
Petitioners: MacColl; Lindsays
Respondents: Maciver; Office of the Advocate General
17 July 2013
[1] This matter came before me in the Vacation Court on 16 July 2013 for first orders and interim orders. I heard counsel for the petitioners and for the Advocate General for Scotland representing Her Majesty's Revenue and Customs (HMRC). I considered the matter overnight and on 17 July I refused the motion for interim orders giving brief reasons for my decision. I granted leave to reclaim and was asked by parties to give a more extensive judgment.
Introduction
[2] The petitioners are the owners of Cloburn Quarry in Lanarkshire and are engaged in the commercial extraction and exploitation of aggregates. As such they are liable to pay Aggregates Levy under section 16(1) of the Finance Act 2001. The Aggregates Levy is a tax on the production of certain aggregates. Currently it is charged at £2.00 per tonne. The tax is not levied on all aggregates; there are certain exemptions. These exemptions form the root cause of the petitioners' complaint about the operation of the Aggregates Levy.
[3] On 28 November 2012 HMRC wrote to the petitioners demanding payment of £588286.12 by way of Aggregates Levy. For reasons set out below, the petitioners have not paid this demand. On 25 June 2013 HMRC obtained a summary warrant under section 128(6) of the Finance Act 2008 from the sheriff at Lanark in the sum of £749,198.76. Following thereon, on 4 July 2013 a charge for payment of the sum of £749,350.13 was served on the petitioners. The days of charge expire on 18 July. As at the date of the hearing these sums remained unpaid. The interim orders sought by the petitioners were for the interim reduction and suspension of the summary warrant and charge.
[4] The petitioners seek judicial review on three grounds. First it is said that the respondents are only entitled to a summary warrant where a sum of money is due to them. The petitioners say that no money is due on the basis that the Aggregates Levy is an unlawful state aid and contrary to European Union law. There has been no approval of the state aid by the European Commission with the result that it cannot now be levied.
[5] Secondly, in seeking the summary warrant the petitioners claim that HMRC have acted in a manner contrary to the petitioner's rights under Art 6(1) of ECHR. The summary warrant determines civil obligations and enables a court decree. There is no entitlement to make representations before the sheriff or challenge assertions made to the sheriff by HMRC. That, it is said is not right or fair. For these purposes the sheriff is not an independent tribunal as he has no discretion under the statute about whether or not to grant a warrant.
[6] Thirdly, the petitioners say it was within their reasonable expectations in the light of guidance promulgated by HMRC that they would not proceed to obtain a summary warrant where there is a legal dispute over whether the tax is due or not.
Background
[7] The opposition to the Aggregates Levy is based on the perceived advantage that is given to producers of certain types of aggregate who, by reason of certain exemptions, are not required to pay the tax. That distorts the market in their favour and it is claimed amounts to an unlawful state aid under European Law. In February 2002 the British Aggregates Association (BAA), with others, brought proceedings in the High Court in England seeking a declaration that the Aggregates Levy was contrary to what are now articles 107 and 108 TFEU. On 19 April 2002 Moses J dismissed the application for judicial review holding that the Aggregates Levy was not a state aid. He did, however, give leave to appeal to the Court of Appeal and an appeal was lodged. For the reasons set out in the next paragraph by mutual agreement these proceedings were stood out by a direction of the Court of Appeal on 21 May 2002.
[8] In December 2001 the United Kingdom government notified the Aggregates Levy to the European Commission. In April 2002 the Commission determined that the Aggregates Levy did not give rise to state aid. On 12 July 2002 the BAA lodged an application for annulment of the decision of the Commission. There then followed protracted proceedings in the European courts resulting in the decision of the General Court on 7 March 2012 annulling the Commission's decision. The Commission has not yet made a fresh decision. The petitioners aver that the most likely decision is that they will open a formal investigation under article 108(2) TFEU.
[9] Following the decision of the General Court the proceedings in the Court of Appeal have been re-activated. A substantive hearing is due to take place on
7 and 8 October 2013.
[10] Since becoming liable for payment of Aggregates Levy the petitioners have made all the returns that are required to enable a calculation of their liability by HMRC. Until 2012 they paid all sums calculated as due, albeit under protest. However I was informed that their position, and that of a number of other petitioners in other parallel judicial reviews, had altered following the decision of the General Court. It had firmed up their view that there was no proper basis for the Aggregates Levy and that it was unenforceable. They had offered to consign the sums which HMRC claimed was due on joint deposit pending resolution of the dispute. The offer had been refused.
Petitioner's Submissions
[11] Mr MacColl submitted that there is at the very least a good and arguable basis for seeking to challenge the validity of the Aggregates Levy. He referred me to an appendix to the petition which sets out in some detail the case in support of the proposition that the Levy is an unlawful state aid. He emphasised the fact that the European Commission's original decision had been quashed by the General Court. While the court had not ruled that the Aggregates Levy is an unlawful state aid it was significant that it found that in reaching their decision the Commission had erred in its assessment of the selective advantage granted to producers of certain materials that are exempt from the Aggregates Levy. He maintained that this showed the strength of the argument in the petitioners favour.
[12] The procedure before the Sheriff did not comply with article 6(1) of the ECHR which states:
"In the determination of his civil rights and obligations......everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law."
The summary warrant was granted under section 128(6) of the Finance Act 2008 which reads:
"The Sheriff must, on an application by an officer of Revenue and Customs under subsection (2), grant a summary warrant in, or as nearly as may be in, the form prescribed by Act of Sederunt."
This procedure, Mr MacColl submitted, was a determination of the petitioner's civil rights and obligations. Yet the summary warrant was obtained without the petitioners being aware that such an application was being made and without a right to make representations. In this instance the sheriff could not be said to constitute an independent and impartial tribunal as he had no discretion as to whether or not to grant the application. He noted that the position in England and Wales was very different with no procedure equivalent to section 128(6) of the 2001 Act.
[13] The case of Ferrazzini v Italy (2002) 34 EHHR 45, which the respondent founded upon for the proposition that article 6(1) was not engaged, could be distinguished on its facts; it dealt with a very different set of circumstances. He anticipated that the respondent might argue that the right of appeal under section 40 of the Finance Act 2001 might be deemed sufficient protection of the petitioner's article 6 rights. However he argued that it presupposed that there had been a decision of HMRC against which the petitioner could appeal. In his submission there had been no decision. In any event the procedure was not apt for a challenge of this nature.
[14] The petitioners had a legitimate expectation that HMRC would not seek to enforce the debt. Mr MacColl referred me to an HMRC document...
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