JJ Management Consulting LLP v The Commissioners for HM Revenue and Customs

JurisdictionEngland & Wales
JudgeLady Justice Simler DBE,Popplewell LJ
Judgment Date22 June 2020
Neutral Citation[2020] EWCA Civ 784
CourtCourt of Appeal (Civil Division)
Docket NumberCase No: C1/2019/2379
Date22 June 2020

[2020] EWCA Civ 784

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM

MR JUSTICE NUGEE

[2019] EWHC 2006 (Admin)

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Lady Justice Simler DBE

and

Lord Justice Popplewell

Case No: C1/2019/2379

Between:
1. JJ Management Consulting LLP
2. Bisson Consultants Limited
3. Intereurope Foods Limited
4. Mr Bryn Robertson
5. Overseas Imports SL
6. Overseas Supermercados Unipessoal LDA
Appellants
and
The Commissioners for her Majesty's Revenue and Customs
Respondents

Mr Philip Moser QC and Mr David Bedenham (instructed by Memery Crystal LLP) for the Appellant

Ms Aparna Nathan QC and Mr Tom Richards (instructed by HMRC) for the Respondents

Hearing date 9 June 2020

APPROVED JUDGMENT

Lady Justice Simler DBE

Introduction

1

Since 2016, Her Majesty's Revenue and Customs (“HMRC”) have been investigating the tax affairs of Mr Bryn Robertson, a successful businessman who is both resident and domiciled in England, and operates a successful chain of supermarkets in Spain and Portugal, through corporate vehicles incorporated both in the UK and in Spain and Portugal.

2

The investigation is not being conducted pursuant to HMRC's enquiry powers provided for in section 9A of the Taxes Management Act 1970 (“ TMA 1970”), and indeed, the relevant time limits for opening such enquiries had largely passed when HMRC started the investigation in 2016. Nor have HMRC pursued powers contained in schedule 36 Finance Act 2008 (“ FA 2008”) to obtain information and/or documents from the appellants. In those circumstances, the appellants challenged the lawfulness of the ongoing investigation by judicial review, contending, among other things, that HMRC had (and have) no power to conduct it so that it has no lawful basis, and further, it is irrational and disproportionate. The appellants invited the court to quash the investigation, order return of material obtained in the course of the investigation (as “fruits of the poisoned tree”), and require HMRC to notify third parties that any documentation/information previously requested pursuant to it is no longer required.

3

The judicial review challenge was rejected by Nugee J on all grounds (which ranged wider than those now pursued on this appeal). The appellants' appeal (with leave granted by the judge) advances three grounds in support of the contention that the judge erred in law:

i) The judge was wrong to find as he did, that the general power in section 9(1) Commissioners for Revenue and Customs Act 2005 empowers HMRC to conduct “informal investigations”.

ii) The judge was wrong to find that judicial review of HMRC's power to conduct “informal investigations” is only available in wholly exceptional circumstances.

iii) Even if there is a high (or exceptional) threshold for the court to intervene, the judge was wrong to find that the circumstances of this case did not meet that threshold.

4

The parties to the appeal are represented as follows: Mr Philip Moser QC and Mr David Bedenham for the appellants; and Ms Aparna Nathan QC and Mr Tom Richards for HMRC. I am grateful to them and their legal teams for the clarity and concision of their submissions.

5

For the reasons developed below, I consider that Nugee J was right to dismiss the application for judicial review for the reasons he gave. Accordingly if Popplewell LJ agrees, the appeal should be dismissed.

The Statutory Provisions

6

I start by setting out the relevant statutory provisions in their current version.

7

HMRC were established as the successor body (to the Commissioners of Inland Revenue following the repeal of the Inland Revenue Regulation Act 1890, and to the Commissioners for Customs and Excise) with responsibility for the collection and management of tax, duties and national insurance contributions by the Commissioners for Revenue and Customs Act 2005 (“CRCA 2005”). Section 1 provides for the appointment of the Commissioners by Her Majesty; section 2 for the appointment by the Commissioners of staff known as officers of Revenue and Customs; and section 4 for the Commissioners and the officers together to be referred to as “Her Majesty's Revenue and Customs” or “HMRC”.

8

The statutory functions of the Commissioners of HMRC are provided for by section 5 CRCA 2005 as follows:

“5 Commissioners' initial functions

(1) The Commissioners shall be responsible for—

(a) the collection and management of revenue for which the Commissioners of Inland Revenue were responsible before the commencement of this section,

(b) the collection and management of revenue for which the Commissioners of Customs and Excise were responsible before the commencement of this section, and

(c) the payment and management of tax credits for which the Commissioners of Inland Revenue were responsible before the commencement of this section.

(2) The Commissioners shall also have all the other functions which before the commencement of this section vested in—

(a) the Commissioners of Inland Revenue (or in a Commissioner), or

(b) the Commissioners of Customs and Excise (or in a Commissioner).

(3) This section is subject to section 35.

(4) In this Act “revenue” includes taxes, duties and national insurance contributions.”.

9

Section 5 CRCA 2005 is supplemented by section 9 CRCA 2005 which provides for ancillary powers defined in the following terms:

“9 Ancillary powers

(1) The Commissioners may do anything which they think—

(a) necessary or expedient in connection with the exercise of their functions, or

(b) incidental or conducive to the exercise of their functions.

(2) This section is subject to section 35.”

The references to these provisions being subject to section 35 (see section 5(3) and section 9(2) above) can be ignored for present purposes (not least because this section was repealed in 2014).

10

The interpretation provisions in section 51 CRCA 2005 include a definition of “function” in section 51(2)(a) as follows:

“(2) In this Act—

(a) “function” means any power or duty (including a power or duty that is ancillary to another power or duty)…”

11

The TMA 1970 (amended following the introduction of self-assessment with effect from tax year 1996/97 consequent on changes introduced by the Finance Act 1994) deals with the processes for self-assessment, assessment and the collection and management of direct taxes such as income tax and capital gains tax. In its current form, section 1 TMA 1970 provides:

“1 Responsibility for certain taxes

The Commissioners for Her Majesty's Revenue and Customs shall be responsible for the collection and management of—

(a) income tax,

(b) corporation tax, and

(c) capital gains tax.”

12

Part II TMA 1970 (sections 7 to 12D) deals with tax returns. By section 8 most individual taxpayers are required to submit a tax return together with a self-assessment of the amount chargeable and the amount payable. If HMRC are not satisfied that a self-assessment return under section 8 is correct there is power contained in section 9A to open an enquiry into the return (upon giving notice of an intention to do so). The power can also be (and is also) exercised to conduct random checks on tax returns, and does not require a reasoned basis for its exercise. So far as relevant, section 9A provides:

“9A Notice of enquiry

(1) An officer of the Board may enquire into a return under section 8 or 8A of this Act if he gives notice of his intention to do so (“notice of enquiry”)–

(a) to the person whose return it is (“the taxpayer”),

(b) within the time allowed.

(2) The time allowed is–

(a) if the return was delivered on or before the filing date, up to the end of the period of twelve months after the day on which the return was delivered;

(b) if the return was delivered after the filing date, up to and including the quarter day next following the first anniversary of the day on which the return was delivered;

(c) if the return is amended under section 9ZA of this Act, up to and including the quarter day next following the first anniversary of the day on which the amendment was made.

For this purpose the quarter days are 31st January, 30th April, 31st July and 31st October.

(3) A return which has been the subject of one notice of enquiry may not be the subject of another, except one given in consequence of an amendment (or another amendment) of the return under section 9ZA of this Act.

(4) An enquiry extends to—

(a) anything contained in the return, or required to be contained in the return, including any claim or election included in the return,…”

13

Accordingly and as Mr Moser QC for the appellants emphasises, the unrestricted right to open a section 9A enquiry is limited by the strict time-limit within which such an enquiry may be opened (normally up to 12 months from the filing date for the return) and once the period expires, the return is final subject only to a discovery assessment. Moreover, a return which has been the subject of one notice of enquiry within the relevant period, may not generally be the subject of another notice of enquiry under section 9A.

14

Further protection is available to the taxpayer whose return is the subject of an enquiry under section 9A in the provisions relating to closure notices in section 28A TMA 1970. Closure notices bring an enquiry to an end (with a statement of the HMRC officer's conclusions). Sections 28A(4)-(6) permit the taxpayer to apply to the First-tier Tribunal (“the FTT”) for a direction requiring the HMRC officer to bring the enquiry to an end within a specified period by issuing a partial or final closure notice. The FTT is required to give the direction applied for “ unless satisfied that there are reasonable grounds for not issuing the … closure notice within a specified period”. Section 28A provides as follows:

“28A Completion of enquiry into personal or trustee return

(1) This section applies in relation to an enquiry under section 9A(1) of...

To continue reading

Request your trial
1 cases
  • Donald Duane O'Connor v The Commissioner of Police
    • Trinidad & Tobago
    • High Court (Trinidad and Tobago)
    • 15 November 2022
    ...7 [2022] UKPC 26 8 Long v Police Service Commission (Trinidad and Tobago) [2018] UKPC 32 9 [2007] 1 WLR 780 10 [1992] BCLC 938 11 [2020] 3 WLR 545 12 [2010] UKPC 6, 77 WIR 436, 13 High Court Action No. S-1301 of 2005 14 Claim No. CV2020-00510 15 [1984] 1 ALL ER 58 16 The Constitution ......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT