CC&C Ltd v Revenue & Customs

This appeal arises in the context of the regime which permits wholesale trading in alcoholic drinks and other dutiable goods which are held in, or moved between, excise warehouses without giving rise to an “excise duty point” and thus attracting liability for excise duty. Goods so traded are generally described as “duty-suspended goods”. The regime is governed by both EU and domestic regulations. The Warehousekeepers and Owners of Warehoused Goods Regulations 1999 (“the Regulations” – also known as “WOWGR”) provide for persons holding or buying duty-suspended goods to be approved and registered by Her Majesty’s Revenue & Customs (“HMRC”) as “registered owners”. The regime is highly prescriptive as regards the procedures and paperwork to be employed, but there is a recognised problem of dishonest traders seeking to manipulate the system in order to evade duty, typically by so-called “duplicate loads” being moved under cover of paperwork generated for legitimate movements. Registered owners are expected to use all due diligence to prevent their legitimate trade being exploited to facilitate fraudulent transactions.

The Appellant company was approved as a registered owner of duty-suspended goods in 2004. It is majority-owned by Mr Mark Feneron and his wife. Mr Feneron is a director and runs the business. 95% of its turnover is in duty-suspended goods. It employs nine people. Its most recent annual accounts showed a turnover of £9.5m.

On 8 September 2014 Mr Geoff Germaney, a Higher Officer at HMRC, wrote to the Appellant notifying it that its registration had been revoked with immediate effect. The letter stated:

You have failed to conduct reasonable due diligence checks with your customers, and failed to act on the findings of the due diligence carried out.

In addition you have regularly traded with companies linked to alcohol diversion fraud, which has resulted in regular seizures of alcohol.

An assessment for £2,0921.00 [sic] and a wrongdoing penalty WP for £7,322.00 has been issued to you following an irregular movement of duty suspended goods as described in the attached annex.

send any further information you want me to consider;

have your case reviewed by a different officer; or

have your case heard by an independent tribunal.”

On 30 September 2014 the Appellant took the third of the options described in HMRC’s letter by commencing an appeal in the First-tier Tribunal against the revocation decision. But the appeal before us arises from separate proceedings which it commenced in the Administrative Court the following day. The aim of the proceedings is not so much to challenge the revocation decision as to obtain interim relief pending the determination of the appeal to the Tribunal. Indeed section 3 of the Claim Form, which is supposed to identify the decision sought to be reviewed, is completed as follows:

No prior notice of the proceedings had been given to HMRC. Foskett J ordered that they should lodge a statement indicating their position in relation to the application for interim relief and that that application be listed for hearing on 9 October. HMRC complied with that direction, and the matter came on before HH Judge Keyser QC, sitting as a Deputy High Court Judge, on the date directed. He refused relief and also refused permission to apply for judicial review. He did however give permission to appeal to this Court.

On 16 October 2014 the Appellant lodged an Appellant’s Notice. There was regrettably some delay in obtaining a transcript of Judge Keyser’s judgment – though in truth that could have been got round by submitting counsel’s note – but eventually an order for expedition was made and we heard the appeal on 13 November. Mr Geraint Jones QC, leading Mr Charles Irvine, appeared for the Appellant. Mr Timothy Brennan QC appeared for HMRC, leading Ms Marika Lemos. On 14 November the parties were notified that the appeal would be dismissed, with reasons to follow. These are my reasons for that decision.

The Regulations are made under powers conferred by sections 100G and 100H of the Customs and Excise Management Act 1979. Section 100G reads (so far as material) as follows:

The structure of the Regulations can be summarised for present purposes as follows:

The notice published in accordance with regulation 18 (1) current at the date of the revocation of the Appellant’s registration is Excise Notice 196. Section 2 of the notice states, inter alia:

I turn to the remedies available to a registered owner who wishes to challenge a decision to revoke his registration. Sections 13A-16 of the Finance Act 1994, which are headed “Customs and excise reviews and appeals”, give rights to persons affected by “relevant decisions”. That term is defined in section 13A (2). Heads (a)-(i) under that sub-section identify decisions about liability to duty or associated payments, but head (j) incorporates Schedule 5 of the Act, which covers a very wide variety of types of decision – described in section 16 (8) as decisions relating to “ancillary matters” – in the customs and excise field. Paragraph 2 of the Schedule lists decisions arising in connection with the 1979 Act: these are again very various in character, but they include, at sub-paragraph (1) (p), “any decision for the purposes of section 100G … as to whether or not … any person is to be, or to continue to be, approved and registered …”.

Persons affected by relevant decisions are entitled to both (a) a “review” of the decision in question, under sections 15A-15F of the Act, and (b) an appeal to the First-tier Tribunal, under section 16. Those provisions are complex but I need for present purposes only draw attention to certain points. I take the review and appeal routes separately.

Review. Where HMRC notifies a person of a relevant decision it must at the same time offer them a review of the decision (section 15A). They may accept that offer within 30 days, unless they have in the meantime brought an appeal under section 16; and if they do so HMRC are obliged to conduct a review (section 15C). The nature and extent of the review “are to be such as appear appropriate to HMRC in the circumstances” (section 15F (2)), and it must be concluded within 45 days (section 15F (6)).

Appeal. An appeal against a relevant decision must be brought within 30 days of the notification (section 16 (1B)) or, if a review has been sought, within 30 days of the conclusion of the review (section 16 (1C)). The powers of the Tribunal differ according to whether the decision is as to “an ancillary matter”, which, as noted above, covers – subject to a few immaterial exceptions – all decisions falling within the scope of Schedule 5 and thus the decision with which we are concerned in this case (section 16 (8)). As regards ancillary matters the relevant powers are as set out at section 16 (4), which reads as follows:

I should make three points about the provisions of section 16 (4).

First, the Tribunal’s powers are only exercisable where the decision is one which could not reasonably have been arrived at. I will refer to this by way of shorthand as the “unreasonableness test”. That was described in the submissions before us as providing for a “quasi-judicial review” standard. That may be true in a sense, but it is capable of being misleading for reasons which will become apparent in due course. Whatever label is used, the fact that the criterion for the Tribunal’s intervention is formulated in terms of unreasonableness reflects the fact that the management of the excise system is a matter for the administrative discretion of HMRC. The decision whether a registered owner remains a fit and proper person to trade in duty-suspended goods is a good example of the kind of decision which the HMRC are peculiarly well-fitted to judge, since it requires what is necessarily to some extent a subjective – albeit evidence-based – assessment of such matters as the attitude of the trader and its principal employees to due diligence issues and their sensitivity to the risk of becoming involved, albeit unintentionally, in unlawful activities.

Secondly, even where HMRC’s decision is found to have been unreasonable, the Tribunal’s powers are limited to taking one or more of the steps identified under heads (a)-(c). Those do not include a power to quash the original decision (though it may be that in some circumstances the power under head (a) would have much the same effect in practice). This is in contrast to the position where the decision relates to a “non-ancillary” matter – see section 16 (5). This careful calibration of the powers of the Tribunal plainly represents a deliberate balance between the HMRC’s need to take effective management decisions in relation to excise matters and the interests of those affected by such decisions.

Thirdly, the Tribunal is given no power to suspend the effect of a challenged decision pending the outcome of the appeal. Nor, I should say, is any such power contained in the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009.

We were not taken in any detail through the sequence of events leading to the revocation, but the broad outline seems to have been as follows. HMRC asked the Appellant for a number of files as part of a “due diligence check” on 28 May 2013. As part of that exercise they identified a suspect transaction which passed through the Appellant’s account at Seabrook warehouse. That led to the making of a “Commissioners’ Direction” restricting its dealings through that warehouse. Mr Feneron responded giving his side of the story and Mr Germaney considered matters further. The Direction was in due course lifted, but on 7 August 2013 Mr Germaney e-mailed Mr Feneron to tell him that he proposed to issue an assessment and impose a wrongdoing penalty. He added:

Notice of revocation was, as I have said, given by letter from HMRC dated 8 September 2014. The introduction to the annex, which gives the detailed reasons for the decision, reads as follows:

(1) “Due Diligence Failings”. This begins:

(2) “Movement Irregularities”. This section begins:

(3) “Errors in EMCS Declarations”. This section criticises failures by the Appellant to require its suppliers to correct erroneous movement declarations made by them. It relies on the incident in March 2013 which gave rise to the assessment. The consignor in that case was Tower Logistics.

It is striking that the best part of eighteen months passed between the occurrence of the latest of the matters relied on in the annex (most in fact go back to 2011 and 2012) and the making, or in any event the notification, of HMRC’s decision to revoke, and over a year from the date when Mr Germaney told the Appellant that he would be making recommendations to the “central review team”. (The interval before the raising of the assessment is also only slightly shorter.) Mr Brennan was unable to offer any explanation for this delay; but since Mr Jones did not take any point on it as such I need not do more than register some surprise that it should have taken so long to reach a decision. (Footnote: ¹)

It is convenient to record at this point that the assessment which was finally issued on 24 July 2014 was withdrawn by HMRC on 10 October, the day following the hearing before Judge Keyser. We were not told the reason for the withdrawal; but Mr Jones suggested, without demur from Mr Brennan, that it was the result of a very recent decision of the First-tier Tribunal (Tax Chamber) which undermined the legal basis on which the assessment had been issued. (Footnote: ²) Mr Jones said that HMRC must have been aware at the time of the hearing that the assessment was about to be withdrawn, and that Judge Keyser ought to have been so informed. On the face of it, there is some force in that criticism; but since it is not material to any of the issues which we have to decide we did not canvass it with Mr Brennan, and it would be wrong to express a view about it.

It is convenient to set out here the Appellant’s case as to the approach which the Court should take to an application of this kind. I will deal later with how that approach should be applied on the particular facts of the case.

As regards the jurisdiction to grant relief of the kind sought, Mr Jones relied on the general jurisdiction of the High Court under section 37 (1) of the Senior Courts Act 1981 to grant injunctive relief “in all cases in which it appears to the court to be just and convenient to do so”. He submitted that where a trader in duty-suspended goods has had his registration revoked that jurisdiction ought to be exercisable, in an appropriate case, so as to stay the effect of that decision until he has had the opportunity to exercise his options of review or appeal under the 1994 Act: that would necessarily involve requiring HMRC to restore the trader’s registration (subject to such conditions as might be appropriate) pending the outcome of such review and/or appeal. Otherwise there was a real risk of serious injustice. Whether either option was taken or both, it would inevitably take many weeks, probably many months, to reach a conclusion. If the trader decides to seek a review first he may not get a decision for six weeks; and if that is unsatisfactory he then has to appeal. As for the appeal route, that depends on how quickly the Tribunal can arrange a hearing: in the present case the Appellant was initially told that that would take many months, though in the event it proved possible to fix a two-day hearing for December 9-10. But even a delay of three months is likely to be devastating, since the trader cannot continue to trade pending a decision; and it is no comfort to succeed on an appeal when the business has been ruined in the meantime. He might indeed not even be able to fund representation at the appeal if the business has become insolvent. There is no route by which the trader can be compensated for a wrong decision, save in the very exceptional case where he can prove misfeasance in public office. (Footnote: ³)

The power to make an order for “interim re-registration” of the kind sought by the Appellant has been discussed in two recent cases in the High Court. In the first, R (Southern Drinks Ltd) v HM Revenue & Customs [2012] EWHC 940 (Admin), Holman J was willing to assume that the Court had jurisdiction to make such an order; and in the second, R (San Marco Ltd) v HM Revenue & Customs [2013] EWHC 3218 (Admin), Dingemans J explicitly accepted that it did – though in both cases relief was refused on the facts. (Footnote: ⁴) I will return below to Dingemans J’s approach to the exercise of the jurisdiction, which Mr Jones did not endorse; but he is entitled to rely on the San Marco case at least as clear authority at first instance that the Court has jurisdiction to grant relief of the kind sought here.

If the Court has jurisdiction, it is the Appellant’s case that the Court should approach its exercise on an essentially Cyanamid basis – that is, by considering first whether the appeal to the Tribunal is arguable and then the balance of the risk of injustice as between the scenario in which relief is granted but the appeal fails and that in which relief is denied but the appeal succeeds: I will refer to this as the “balance of injustice” test. It makes no difference that the relief is mandatory in character: Mr Jones referred to Leisure Data v Bell [1988] FSR 367, and in particular to the observations of Dillon LJ at p. 372 and of Neill LJ at pp. 375-6.

I will come back to the Appellant’s case on the arguability of its appeal; but as regards the balance of injustice Mr Jones submitted that that was plainly in its favour. It is true that if an injunction is granted but the appeal fails, the result will be that the Appellant would have been permitted to trade in duty-suspended goods for a few more weeks or months, notwithstanding HMRC’s ex hypothesi reasonable judgment that it was not a “fit and proper person” to conduct such trade; and there would accordingly be a risk that its inadequate attitude to due diligence might enable one or more fraudulent traders to evade duty during that period. But that was no more than a risk, and even if it occurred it would only be indirectly the responsibility of the Appellant, since it was no part of HMRC’s case that it was itself knowingly involved in fraudulent trading. Such a loss was not remotely comparable to the damage that would be done to the Appellant’s business if an injunction were wrongly withheld, for which – unlike in the case of an ordinary civil claim – it could not be compensated by an award of damages. The Appellant’s evidence, in the form of an affidavit from Mr Feneron supported by its accounts for the year ending 31 March 2013, was that it could not survive several weeks’ loss of trading. (It might have been expected that more up-to-date information would have been available, but in truth Mr Jones’s argument does not depend on demonstrating that a prolonged period of de-registration would lead to insolvency: the injustice comes from the risk of substantial irrecoverable loss even if the trader is by one means or another enabled to survive.)

Judge Keyser directed himself in accordance with the judgment of Dingemans J in the San Marco case to which I have referred above. The argument in that case appears to have centred on whether it was right for the Court to order interim relief which was mandatory in character. As to that, Dingemans J applied the principles enunciated in Zockoll Group Ltd v Mercury Communications Ltd [1997] EWCA Civ 237, [1998] 1 FSR 354. In that case Phillips LJ reviewed the case-law (including Leisure Data v Bell, to which Mr Jones attached particular weight) and endorsed the summary of the relevant principles given by Chadwick J in Nottingham Building Society v Eurodynamics Systems [1993] FSR 468, at p. 474. This reads as follows:

Judge Keyser recorded Mr Jones’s submission that the approach taken by Dingemans J in San Marco was flawed because he appeared to have decided the case on the basis of the third of the principles enunciated in Zockoll and had failed to go on, in accordance with the fourth principle, to consider the balance of injustice; he had thus had failed to take into account the special considerations in a case of this kind, where the trader has no prospect of compensation for the damage done if his appeal is successful. As to that submission, Judge Keyser said this:

Judge Keyser then proceeded to review, albeit fairly briefly, the circumstances leading to the decision to revoke the Appellant’s registration. He concluded, at para. 24 of his judgment:

I should say at this point that the Judge’s reasoning, right or wrong, was impressively clear and thoughtful given that his judgment had to be delivered ex tempore immediately after the conclusion of the argument.

On the appeal Mr Jones advanced essentially the arguments that I have identified above. He submitted that the Judge should have applied the straightforward test of the balance of injustice without the qualifications which he introduced at paras. 17-18 of his judgment. On that basis, provided the Appellant had an arguable prospect of success on the appeal, the balance plainly favoured the grant of relief – again, for the reasons which I have already set out.

As regards the Appellant’s prospects of success on the appeal, Mr Jones expressly disavowed any challenge based on procedural unfairness. Rather, his case was that the matters relied on by HMRC in the annex to the decision letter were, in the light of the explanations which they had already received, incapable of supporting a reasonable conclusion that the Appellant was not a fit and proper person. As regards the first of what he described as the three “pillars” of HMRC’s grounds as stated in the annex, that case is elaborated in his skeleton argument (albeit not in great detail), but nothing is said about the second pillar. As regards the third pillar, the skeleton argument relies on HMRC’s withdrawal of the assessment and penalty. Mr Jones repeated the latter point in his oral submissions. He also made a limited number of further points of, with respect, no great cogency, such as that Mr Feneron had delegated all responsibility for due diligence to another employee. But his eventual position was that he did not propose himself to articulate a challenge to HMRC’s reasons: he threw down the forensic gauntlet to Mr Brennan to show the Court on what material the conclusions in the annex could be justified.

Mr Brennan did not dispute the existence of a jurisdiction of the kind recognised in the San Marco case. He also made it clear that he took no point on the mandatory character of the relief, and he accepted that the ultimate test in deciding whether such relief should be granted was the balance of injustice. But he submitted that that balance should only come down in favour of restoring a trader to the register on an interim basis where, as he put it in his skeleton argument, “there is a case of irrationality on the part of HMRC which is sufficiently strong to amount to capriciousness or bad faith [and] that case is at least strong enough to justify permission to apply for judicial review notwithstanding the availability of the statutory remedies”. In his oral submissions he said that relief should only be granted where a claimant had shown an arguable case that HMRC had behaved so “outrageously” that the Administrative Court was entitled to grant a remedy which was not provided under the statutory scheme. Such an approach was consistent with the balance of injustice test because it was necessary in striking that balance to take into account the public interest and, more particularly, the fact that Parliament – for policy reasons which it was for it to judge but which were well understandable – had intended to give HMRC a power of summary revocation which could only be challenged to a limited extent. He submitted that no arguable case had been shown of any such egregious conduct on the part of HMRC as would justify this Court in intervening. He did not pick up the gauntlet thrown down by Mr Jones by taking us through the materials underlying the conclusions in the annex.

Mr Brennan also submitted in his skeleton argument that it should count against the grant of relief that the Appellant had not taken up the offer of an informal review made in the decision letter or activated the formal review procedures. I am bound to say that this submission misses the essential point of the Appellant’s case: the injustice on which he relies consists in the risk of irreparable damage being done during the possibly lengthy period during which any review procedures – formal or informal – run their course. Mr Brennan did not pursue the submission in oral argument.

I have no doubt that the Court has jurisdiction, in the formal sense, under section 37 (1) of the 1981 Act to make an order of the kind sought. Nor do I think that the fact that the order is mandatory in character is objectionable in principle: although this aspect featured heavily in the submissions in San Marco and before Judge Keyser in this case, I do not regard it as central to the issue which we have to decide. As I have said, Mr Brennan did not take issue on either point. The question, rather, is what approach the Court should take to the exercise of that jurisdiction.

The starting-point seems to me that Parliament has enacted a self-contained scheme for challenging “relevant decisions” by HMRC in relation to (broadly) excise management issues, which covers, inter alia, decisions to revoke the registration of registered excise shippers and dealers. It is trite law that where such a scheme exists it would normally be wrong for the High Court to permit decisions of the kind which it covers to be challenged by way of judicial review. The effect of the authorities is conveniently summarised in the judgment of the Privy Council, delivered by Lord Jauncey, in Harley Development Inc v Commissioner of Inland Revenue [1996] 1 WLR 727, at pp. 736-7:

Mr Jones submitted that although the Appellant had framed its claim as one for judicial review it had not in fact been necessary to do so: the claim could have been formulated as a free-standing claim for interim relief “in aid of the Tribunal proceedings”. (Footnote: ⁵) In so far as he was relying on the difference in the form of the proceedings, I do not think that this submission assists him. The principle identified above is not peculiar to claims for judicial review but applies to any claims in the High Court the effect of which is to usurp the role of a tribunal designated by statute to determine claims of the kind in question: see the long line of cases originating with Barraclough v Brown [1897] AC 615 and culminating in Autologic Holdings plc v Inland Revenue Commissioners [2005] UKHL 54, [2006] 1 AC 118.

However, I understand Mr Jones’s real submission to be that what the Appellant is in substance seeking in these proceedings is not to challenge the revocation decision itself but only to obtain interim relief while the statutory appeal procedure operates: that is not, he says, going behind the procedure provided by Parliament but supplementing it. That point is more arguable, but I think it is wrong. Parliament could have provided for the First-tier Tribunal to have power to make suspensory orders pending the outcome of an appeal, but it did not do so. I do not think that it is open to the Court to provide remedies or procedures for which the statute does not provide – particularly so when, as I have pointed out above, care was obviously taken to specify precisely what the Tribunal could and could not do. Where it is intended that the powers of the Court, including the power to grant interim relief, may be deployed “in aid of” (to use Mr Jones’s phrase) another tribunal, that is typically done by express provision: see for example section 44 of the Arbitration Act 1996.

The absence of any power under the statute to suspend the effect of a relevant decision pending appeal may be capable of operating harshly in the case of decisions to revoke the registration of registered excise dealers and shippers, but it is not incomprehensible. The statute describes the right to trade in duty-suspended goods as a “privilege”, and the nature of the business is such that it is a privilege that should only be accorded to those whom HMRC believe they can trust. There would be an obvious awkwardness in the Tribunal, or indeed the Court, being able to require HMRC to continue, for an indefinite period pending the outcome of an appeal, to confer that privilege on traders who they have ceased to believe are fit and proper persons. Parliament could reasonably have regarded the loss of registration pending an appeal as simply a risk of the business which traders must accept.

I do not therefore believe that the Court is entitled to intervene to grant interim relief where the registration of a trader in duty-suspended goods is revoked simply on the basis that there is a pending appeal with a realistic chance of success. But it does not follow that there are no circumstances in which the Court may grant such relief; and, as noted above, HMRC do not in fact so contend. The correct principle seems to me to be this. If a “relevant decision” is challenged only on the basis that it is one to which HMRC could not reasonably have come the case falls squarely within section 16 of the Act, and the Court should not intervene. However, where the challenge to the decision is not simply that it is unreasonable but that it is unlawful on some other ground, then the case falls outside the statutory regime and there is nothing objectionable in the Court entertaining a claim for judicial review or, where appropriate, granting interim relief in connection with that claim. A precise definition of that additional element may be elusive and is unnecessary for present purposes. The authorities cited in Harley Development refer to “abuse of power”, “impropriety” and “unfairness”. Mr Brennan referred to cases where HMRC had behaved “capriciously” or “outrageously” or in bad faith. Those terms sufficiently indicate the territory that we are in, but I would sound a note of caution about “capricious” and “unfair”. A decision is sometimes referred to rhetorically as “capricious” where all that is meant is that it is one which could not reasonably have been reached; but in this context that is not enough, since a challenge on that basis falls within the statutory regime. As for “unfair”, I am not convinced that any allegation of procedural unfairness, however closely connected with the substantive unreasonableness alleged, will always be sufficient to justify the intervention of the Court: Mr Brennan submitted that cases of unfairness would fall within the statutory regime to the extent that the unfairness impugned the reasonableness of the decision. As I have noted above, the types of unfairness contemplated in Preston – which is the source of the use of the term in Harley Development – were of a fairly fundamental character. But since procedural unfairness is not relied on in this case I need not consider the point further.

In short, therefore, I believe that the Court may entertain a claim for judicial review of a decision to revoke the registration of a registered excise dealer and shipper, and may make an order for “interim re-registration” pending determination of that claim (subject, no doubt, to such conditions as it thinks fit), in cases where it is arguable that the decision was not simply unreasonable but was unlawful on one of the more fundamental bases identified above. Such cases will, of their nature, be exceptional. That approach may seem unfamiliar inasmuch as it involves making a distinction which it is not normally necessary to make between “mere” unreasonableness and other grounds of public law challenge of the type identified above: indeed there are plenty of observations in the authorities to the effect that the various ways of formulating such a challenge tend to blur into one another (including, famously, by Lord Greene MR in Wednesbury itself – see Associated Provincial Picture Houses Ltd v Wednesbury Corpn [1948] 1 KB 223, at p. 229). But I see no conceptual difficulty about making such a distinction where the circumstances call for it; and here it arises naturally from the way in which the jurisdiction of the Tribunal is defined in section 16 of the 1994 Act.

Applying that approach, the answer in this case seems to me to be clear. On the limited materials so far available, Judge Keyser may have been right to acknowledge that there is an arguable case that HMRC’s decision was one to which they could not reasonably have come. But I see no basis whatever for an argument that it amounted to an abuse of power or that it was improper or taken in bad faith, and Mr Jones did not attempt to demonstrate that it did or was. Indeed, as I have explained, he did not in the end undertake in his oral submissions any particularised attack on the grounds for revocation set out in the annex; but even the points made in his skeleton argument go no further than alleging unreasonableness. The withdrawal of the assessment and wrongdoing penalty which were the main feature of HMRC’s “third pillar” does not in itself raise an arguable case of abuse – still less if, as Mr Jones himself suggested, it was the result of a subsequent decision of the First-tier Tribunal which undermined the legal basis on which the assessment was raised. As Mr Brennan pointed out, the withdrawal of the assessment did not necessarily mean that the Appellant was not still at fault in failing to require its suppliers to correct erroneous movement declarations.

My detailed reasoning does not correspond to that of the Judge, or of Dingemans J in San Marco, on which he relied to a considerable extent. We have had the benefit of fuller argument and more time for consideration. But his insistence on a “high degree of caution” and on the absence of any evidence of bad faith shows that his judicial instincts led him in the right direction and, as I would hold, to the right decision.

It is for those reasons that I decided that this appeal should be dismissed. I should, however, like to add this. The view that I have taken of the law means that HMRC’s power of revocation is indeed capable of operating harshly, essentially for the reasons advanced by Mr Jones: if they make an unreasonable decision, the trader affected by their mistake will almost certainly suffer serious uncompensatable loss, which may sometimes be fatal to his business, before it can be corrected through the review or appeal mechanisms. It is all the more important, therefore, that they take all possible care to ensure that any such decision is well-founded. The risk of error is obviously increased if the trader has not been given an opportunity to draw to HMRC’s attention, before the decision is taken, factual or other matters which they may have overlooked or mis-appreciated in their assessment of the grounds for revocation. I do not see why it should not be normal practice for a trader whose registration HMRC is contemplating revoking to be given prior notice of the intended decision, and the grounds for it, in the form of a “show cause” or “minded to” letter, with a limited time for response, before a final decision is taken. (Or the decision could be notified, but on the basis that it would not take effect for a limited period during which representations could be made.) Mr Brennan was asked in the course of oral submissions whether there was any reason why such a procedure could not be followed, but he was unable to suggest any. I could understand a concern about over-complicating the process of revocation; but in fact such a procedure would be substantially the same as the process of informal review which is already offered – with the crucial difference that it would occur before, rather than after, the decision had taken effect. I can also understand that there may be particular cases where HMRC reasonably take the view that the public interest requires the registration to be revoked without prior notice and with immediate effect; but in the light of the time taken to reach a decision in the present case it would be hard for them to maintain that that will always be so. None of this is directly pertinent to the present case because, as I have said, no case of procedural unfairness was advanced; and I need not therefore consider whether a failure to give prior notice of an intention to revoke might in an appropriate case constitute a sufficient unfairness to justify the intervention of the Court. But I would encourage HMRC to give further thought to their procedures in this regard.

I agree with the reasoning and conclusions of Underhill LJ, whose judgment I have read in draft. I add a few observations of my own.

As Underhill LJ has explained Mr Brennan accepted that the court has jurisdiction to grant the injunction claimed. But “jurisdiction” is a slippery word. As long ago as 1915 Pickford LJ pointed out in Guaranty Trust Co of New York v Hannay & Co [1915] 2 KB 536, 563 (approved by the House of Lords in Fourie v Le Roux [2007] UKHL 1, [2007] 1 WLR 320 at [25]):

Thus while I accept that the court has jurisdiction to grant the injunction in the first sense, the real question is whether the court’s settled practice means that on the facts of this case it is inappropriate to exercise the power conferred upon it by section 37 (1) of the Senior Courts Act 1981. For the reasons given by Underhill LJ I am satisfied that it is. I too would dismiss the appeal.

I agree with both judgments.