JJ Manangement LLP v The Commissioners for HM Revenue and Customs
| Jurisdiction | England & Wales |
| Judge | Mr Justice Nugee |
| Judgment Date | 25 July 2019 |
| Neutral Citation | [2019] EWHC 2006 (Admin) |
| Court | Queen's Bench Division (Administrative Court) |
| Docket Number | Claim No: CO/4828/2018 |
| Date | 25 July 2019 |
[2019] EWHC 2006 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Rolls Building, Royal Courts of Justice
Fetter Lane, EC4A 1NL
Mr Justice Nugee
Claim No: CO/4828/2018
The Queen on the application of
Mr Philip Moser QC and Mr David Bedenham (instructed by Memery Crystal LLP) for the Claimants
Ms Aparna Nathan QC and Mr Tom Richards (instructed by the General Counsel and Solicitor to HM Revenue and Customs) for the First Defendants
Hearing dates: 16 and 17 July 2019
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
The 4 th Claimant ( “Mr Robertson”) is a successful businessman who lives in Essex. He is both UK resident and UK domiciled. The other Claimants are corporate entities in which he is beneficially interested. In the early 1990s he opened a supermarket in Tenerife importing UK food to sell to the expat community. Since then, the business has grown significantly and he now operates, through corporate vehicles, over 20 stores in Spain (including the Canaries and the Balearics) and Portugal. The 5 th Claimant ( “Overseas Imports”) is incorporated in Spain and concerned in the operation of the business in Spain; the 6 th Claimant ( “Supermercados”) is incorporated in Portugal and concerned in the operation of the business in Portugal. The 1 st to 3 rd Claimants, JJ Management Consulting LLP ( “JJ”), Boisson Consultants Ltd ( “Boisson”) and Intereurope Foods Ltd ( “Intereurope”), are each incorporated in the UK.
Since at least June 2016, Her Majesty's Commissioners for Revenue and Customs ( “HMRC”) have been investigating Mr Robertson's tax affairs. This has included making requests to the taxing authorities in Spain and Portugal. In this application for judicial review Mr Robertson and the other Claimants challenge the lawfulness of HMRC's investigation. Permission to proceed against HMRC on the grounds pleaded against them was granted by Holman J on 1 February 2019. There are four of these, which in summary are as follows:
(1) Ground 1
Ground 1 is that there is no lawful basis for HMRC's investigation and that it is ultra vires.
(2) Ground 2A
Ground 2A is that HMRC have acted to deprive the Claimants of access to justice.
(3) Ground 2B
Ground 2B asks the Court to exercise a supervisory jurisdiction over HMRC's irrational and disproportionate decision to investigate all of Mr Robertson's tax affairs.
(4) Ground 3
Ground 3 is that the requests made to the Spanish and Portuguese taxing authorities are unlawful.
The claim form also included three grounds of challenge (Grounds 4 to 6) to decisions of the First-tier Tribunal ( “FTT”). Holman J ordered that these grounds be stayed (permission to appeal to the Upper Tribunal having been given); I am not concerned with them and the FTT has taken no part in this hearing.
Statutory provisions
It is convenient to set out the relevant statutory provisions at the outset. There are three sets of provisions relied on by one or other of the parties. First, there are the general statutory functions of HMRC, found in the Commissioners for Revenue and Customs Act 2005 ( “CRCA 2005”). Second, there are the provisions relating to tax returns in the Taxes Management Act 1970 ( “ TMA 1970”). Third, there are the provisions relating to information notices in sch 36 to the Finance Act 2008 ( “ FA 2008”). In each case I will give the current version of the statutes: taxation statutes are regularly amended but although HMRC's investigation has extended over the last three years, it has not been suggested that it is necessary to consider any other than the current version. I will also have to refer to an EU Directive on tax co-operation and the relevant double taxation treaties between the UK and Spain and Portugal respectively, but it is more convenient to do that when dealing with Ground 3.
First, CRCA 2005. This established the Commissioners for Her Majesty's Revenue and Customs to succeed to the functions of both the Commissioners of Inland Revenue and the Commissioners of Customs and Excise. s. 1 provides for the appointment of the Commissioners by Her Majesty; s. 2 for the appointment by the Commissioners of staff, to be known as officers of Revenue and Customs; and s. 4 for the Commissioners and the officers together to be referred to as “Her Majesty's Revenue and Customs” or HMRC.
The Commissioners' functions are provided for by s. 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.”
It may be noted here that the Commissioners of Inland Revenue were created as a statutory body by the Inland Revenue Regulation Act 1890 ( “IRRA 1890”), which remained in force until its repeal by CRCA 2005, and that s. 13(1) of that Act provided:
“ 13 Commissioners to keep accounts
(1) The Commissioners shall collect and cause to be collected every part of inland revenue, and all money under their care and management, and shall keep distinct accounts thereof at their chief office.”
This remained in force until the coming into force of s. 5 CRCA 2005 on 18 April 2005.
s. 5 CRCA 2005 is supplemented by s. 9 CRCA 2005, which provides for the Commissioners' ancillary powers as follows:
“ 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 in s. 5(3) and s. 9(2) to s. 35 can be ignored, s. 35 (which was concerned with certain functions in relation to criminal proceedings) having been repealed in 2014.
There is an interpretation section in s. 51 CRCA 2005. This includes a definition of “function” in s. 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)…”
Next, TMA 1970. This deals with the processes of assessing and collecting direct taxes such as income tax (as opposed to the various taxing statutes which contain the substantive charging provisions). As enacted, s. 1 provided that income tax, corporation tax and capital gains tax should be under the “care and management” of the Commissioners of Inland Revenue; the phrase “care and management” has a long history (dating back to at least s. 13(1) IRRA 1890). In its current form s. 1 TMA 1970 provides as follows:
“ 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.”
Part II TMA 1970 (ss. 7 to 12D) deals with tax returns. s. 8 provides that a person may be required by notice to make a return for the purpose of establishing the amounts in which he is chargeable to income tax or capital gains tax. s. 8(2) provides:
“(2) Every return under this section shall include a declaration by the person making the return to the effect that the return is to the best of his knowledge correct and complete.”
s. 9 (as first introduced in 1996) deals with self-assessment. It provides that a tax return under s. 8 has to include a self-assessment, that is to say an assessment of the amounts in which the person making the return is chargeable to income tax and capital gains tax, and of the amount payable. s. 9A deals with the opening of an enquiry into a tax return by HMRC. So far as relevant it provides as follows:
“ 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...
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