ABC Ltd & Anor v HM Revenue and Customs

Mr Coppel QC submitted that section 9 of the 2005 Act confers wide incidental powers upon HMRC; and the definition of the word “functions” is also broad. He accepted that there could be no question of automatic temporary approval (equivalent to an automatic stay in legal proceedings pending appeal) but that any decision would depend upon the circumstances. Those necessarily would include a consideration of the limited basis upon which the F-tT may allow an appeal and the nature of the reasons and evidence supporting the refusal. The argument then proceeds by the following steps to the conclusion that temporary approval may be granted under this section:

Mr Coppel QC was not enthusiastic to explore the alternative of time limited approval under section 88C itself (with or without further conditions) for the simple reason that if it were refused the appeal against that refusal would be to the F-tT under the same statutory provisions as govern the substantive refusal.

Mr Eadie QC submitted that the claimants are inviting HMRC, through the use of section 9 of the 2005 Act, to act in a way which is in contradiction to the statutory scheme. Having concluded that persons are not fit and proper for the purpose of wholesaling alcohol, to assert publicly that they are would subvert the statute. He accepted that the section 88C time limited approval route was theoretically open but that in practical terms it would run up against the same objection: HMRC would have concluded that the persons were not fit and proper for an unconditional approval. It would be almost impossible to envisage that a conditional approval could be given.

Both Andrew Baker J and William Davis J dealt with the section 9 argument summarily. They accepted the submissions advanced below by Ms Mannion that the temporary approval would undermine the statutory scheme because it would involve HMRC pretending to approve the claimants as fit and proper when that was not their view. They were right to do so.

Parliament introduced Part 6A of the 1979 Act to deal with the mischief of loss of revenue in the wholesale alcohol market and to remove unfair competition from those who do not abide by the rules. Wholesale activity became regulated in a way not identical with, but similar to, the regulation of those who are able to trade without the payment of duty. Authorisation by HMRC is akin to being granted a licence to trade. Parliament entrusted the primary judgements of whether a person is a fit and proper person to trade in wholesale alcohol to HMRC. Section 88C is premised on the basis that only those considered by HMRC to be fit and proper persons should be able to trade in wholesale alcohol. The Scheme was completed by creating mirror image criminal offences. It became an offence to trade as a wholesaler without approval from HMRC and an offence to purchase from a wholesaler who one knows or ought to have known was not approved. This last aspect of the Scheme is underpinned by the public register of approved persons maintained by HMRC which makes it easy for someone buying alcohol from a wholesaler to discover their status. A person will not appear on that register (save following an order of a court) unless HMRC have concluded that the person is fit and proper. It generally contains a statement of the concluded view of HMRC.

Parliament made express provision for extant traders to continue to trade lawfully after the introduction of the Scheme pending the disposal of their application. As we have seen, section 54(13) of the 2015 Act provides that “an application is ‘disposed of’” when it is determined by HMRC, rather than after any ensuing appeal. No express power was conferred on HMRC to delay the consequences of a failure to gain approval. The only material power identified by the parties is regulation 10 of the 2015 Regulations which enables HMRC to “prescribe descriptions of sales that are excluded sales for the purposes of Part 6A of the Act”. That is the power upon which HMRC now rely for paragraph 4.5 of EN 2002 to allow trading to continue after the refusal. It operates by taking out of the Scheme the wholesale trading in question. We were not told how that information is conveyed to the public. A similar mechanism, at least in theory, could have been used to exclude sales by wholesalers pending the outcome of appeals to the F-tT. Yet it is no surprise that no such blanket exclusion has been made. There will be some whose appeals are, in truth, hopeless given the limited basis upon which the F-tT may intervene. What amounts to an automatic stay on the effects of the decision pending appeal would not be justified. Whether something more subtle could have been introduced using this regulation through EN 2002 is not something on which we heard argument. In any event, there is no challenge to a decision of HMRC regarding the use of their powers under this provision, nor is it easy to see how there could be.

It is part of the claimants’ argument that the 30 days’ grace (sometimes with an extension) operated by HMRC before the introduction of this mechanism on 27 March 2017 was a manifestation of their use, albeit without realising it, of a power under section 9 of the 2005 Act. Andrew Baker J doubted whether there was any power in HMRC to disapply the statutory scheme for 30 days (or longer) despite the obvious sense in having some such mechanism. Mr Eadie QC submitted that it certainly cannot be found in section 9. With that I agree.

Section 9 of the 2005 is in wide terms and has two components. First HMRC may do anything necessary or expedient in connection with the exercise of their functions. Secondly, they may do anything incidental or conducive to the exercise of their functions. “Functions” means any power or duty, including a power or duty that is ancillary to another power or duty. Mr Coppel QC seeks to expand the material functions in question beyond the grant or refusal of approval for the purposes of the Scheme to include the function of being a party to an appeal.

It is common ground that a power to do things incidental to statutory functions must be construed in the context of the statute as a whole: see Lord Templeman in Hazell v Hammersmith and Fulham LBC [1992] 2 AC 1 at 31D to E. Although the Scheme is found in a different statute that does not diminish the need to construe section 9 of the 2005 Act in the context of the statutory scheme in which the function in question is located. Hazell was concerned with section 111 of the Local Government Act 1972 which put in statutory form the long-standing common law rule that corporations had implied power to do anything which was ancillary to the discharge of their statutory functions: Lord Templeman at 29 B to F. At first instance in the Divisional Court [1990] 2 WLR 17 at paragraph 36, Woolf LJ (as he then was), in a passage quoted with approval in McCarthy & Stone (Developments) Ltd v Richmond Upon Thames London Borough Council [1992] 2 AC 48 by Lord Lowry at 68H – 69A, said:

“The critical part of the subsection are the words ‘calculated to facilitate, or is conducive or incidental to, the discharge of any of their functions.’ Before the subsection can authorise an activity which is not otherwise authorised there must be some other underlying function which can be authorised, to the discharge of which, the activity will facilitate or be conducive or be incidental.”

The underlying function engaged in this case is the function of determining applications for approval under the Scheme. The ancillary power contended for by the claimants arises only if the application is refused; and that brings with it a conclusion by HMRC that the applicant is not a fit and proper person to conduct a wholesale alcohol business. It would be contrary to the statutory scheme for HMRC then to pretend that the persons concerned are fit and proper by approving them until the appeal process was over. How could HMRC conclude that it was necessary or expedient in connection with their function of determining applications for approval, to grant approval to a person under the Scheme who they had just determined was not fit and proper? How could it be incidental or conducive to the exercise of that function? The Scheme unequivocally contemplates that those who are not fit and proper should not continue trading. The claimants’ case would require HMRC to state on the register something that contradicts the view they have formed. The claimants seek to circumvent this impediment by arguing that the function in question is that of participating in an appeal. I do not accept that HMRC’s participation (if they choose to participate) as respondent to a statutory appeal can affect the conclusion. To use the section 9 power in the way suggested by the claimants would be inconsistent with the statutory scheme.

I turn to section 88C itself.

The question whether HMRC may grant conditional approval pending appeal through section 88C proceeds in the context of a decision that the person concerned is not fit and proper for unconditional approval. The question becomes whether they may approve a person as fit and proper for a limited period with or without further conditions.

Section 88C(6) defines an approved person as a person approved under section 88C. Mr Eadie QC readily accepted that subsections (2) and (3) “hang together”, as he put it. That is to say that the two subsections do not pose disjunctive questions. It is feasible for persons to fail to satisfy HMRC that they are fit and proper to conduct a wholesale alcohol business without conditions, but to satisfy them that they are fit and proper subject to conditions. It is not a question simply of whether, in the abstract, a person is fit and proper. The question will be considered in the context of the business run by the applicant. Nonetheless, he submitted that a temporary approval lasting a finite period could not be a proper basis to use the combined operation of the two subsections, because there would have been no relevant change of circumstance relating to fitness since the general decision was made. Mr Eadie QC accepted that the statute envisaged an approval being given for a limited time but only, as he put it, if HMRC were satisfied on day one that the person concerned was fit and proper.

We were not provided with any examples of approvals being granted on a time-limited basis or subject to other limitations or conditions. It is possible to envisage that HMRC might have well-founded concerns about the operation of a business at one of is locations, but not others. A condition limiting trading to specified sites might follow. They might consider the involvement of a particular proprietor, director or senior employee as critical to the grant of approval. By contrast, they might consider the involvement of a particular person to be inimical to the grant of approval. They might limit the period of approval to coincide with the known plans for retirement of an individual of significance in the business. They might limit the period to enable systems to be improved about which there is some concern. They might insist on the production of regular information to meet underlying concerns about record keeping and the like.

A conclusion that a person is not fit and proper for unconditional approval does not preclude conditional approval of that person. In my view HMRC have power under section 88C(3) to grant a temporary approval pending appeal if they conclude that a person is fit and proper for that limited period, perhaps with additional conditions. That is a possible conclusion thagt might be reached even if a general approval is being denied. In substance, if not in form, that is what HMRC were doing before 27 March when they purported to grant 30 days or more grace. The focus of a decision would remain whether the person was fit and proper but for the more limited purpose. Hardship and the impact on appeal rights would be extraneous considerations. Section 88C does not confer upon HMRC a broad discretionary power of approval but it is possible that they could conclude that a person is fit and proper for a limited time to continue trading. To the extent that HMRC apprehended that they had no power to do what was asked of them by the claimant, in my view they erred.

Mr Eadie QC warned that even if this power existed, it is theoretical and unlikely to be exercised in favour of an applicant who has failed to satisfy HMRC on the broader basis. That is as may be, but it is a power which the claimants were entitled to expect HMRC to consider using. This issue only came into focus during the appeal. It was mentioned briefly by Mr Coppel QC before Andrew Baker J who considered that it could not operate after the decision on the wider basis had been made: see paragraph 35(2). But there is nothing in the statutory scheme relied upon by HMRC which excludes the possibility of what amounts to an ancillary application for temporary approval in the face of a refusal of the general application.

Mr Eadie QC further warned that were HMRC to accede to a request of this nature all impetus to determine an appeal expeditiously would be lost. He submitted that an appellant would have an incentive to slow things down because the position after the appeal could not improve upon the position in the interim.

That is a legitimate concern which the F-tT would be astute to guard against. The timescales involved in the introduction of the scheme have been unfortunate. As I have indicated, the original intention of Parliament was that the Scheme would operate from 1 January 2016. That slipped to 1 April 2016. Then a year was allowed before the introduction of section 88F prohibiting the purchase of wholesale alcohol save from an approved wholesaler. No doubt the expectation was that HMRC would make their decisions rather more quickly than occurred in these (and some other) cases and that any appeals would be heard quickly. We have no detail of the steps taken to expedite the appeals in these cases, but it is to be hoped that when faced with credible evidence that a business will fail whilst awaiting an appeal, and equally that jobs will be lost, the F-tT would be able to accommodate swift appeals. To the extent that delay in hearing an appeal might render it academic or otherwise ineffective in vindicating the position of the appellant, any appellate body must strive, within the limits of its powers and resources, to resolve the appeal quickly. To the extent that the claimants suggest that delay in the appellate process imperils their A1P1 rights on account of the irreparable damage that will occur whilst waiting for the appeal, or their rights under article 6 ECHR to an effective judicial determination of the question whether they may continue to trade, the procedures in the F-tT itself should generally provide a remedy.

CC & C provides the background to this part of the claims. The case concerned the trade in duty-suspended goods. Those who trade in duty-suspended goods must be approved as fit and proper persons and registered by HMRC. Such registration may be revoked. The claimant company had been approved since 2004 with about 95% of its turnover being in duty-suspended goods. In September 2015 its registration was revoked with immediate effect. The claimant appealed to the F-tT. A review option was also available as in the cases before us. The claimant also issued proceedings in the Administrative Court seeking judicial review of the revocation decision, but the real purpose was to seek interim relief pending the appeal to the F-tT. The claimant argued that the High Court had jurisdiction to grant an injunction under section 37(1) of the 1981 Act. That provides:

“The High Court may by order (whether interlocutory or final) grant an injunction … in all cases in which it appears to the court to be just and convenient to do so.”

The claimant argued that where registration was revoked with immediate effect the High Court should be able to grant an injunction pending both a review and appeal to avoid the risk of serious injustice, especially if the business would be ruined waiting for an appeal to be heard. On the assumption that there was jurisdiction, the claimant argued that it should be exercised on Cyanamid principles (American Cyanamid Co v Ethicon Ltd [1975] AC 396). At first instance the judge had accepted that the court had jurisdiction to grant an injunction but refused to grant it. In the appeal the claimant’s case was that it had an arguable prospect of success in its appeal and, in consequence, on a straightforward balance of convenience test an injunction should be granted. HMRC did not dispute that the court had jurisdiction to grant an injunction (just as here Mr Eadie QC does not) but contended that it could only be just and convenient to grant an injunction in cases of capriciousness, bad faith or other outrageous behaviour on the part of HMRC.

Underhill LJ, with whom Lewison LJ (adding a short judgment of his own) and Arden LJ agreed, gave the lead judgment. His “starting point” (paragraph 39) was that Parliament had enacted a self-contained scheme that included the revocation of registration by HMRC of a duty-suspended trader, with an alternative remedy available in the F-tT. Through citation from the judgment of Lord Jauncey of Tullichettle in Hartley Development Inc v Commissioner of Inland Revenue [1996] 1 WLR 727, at 735F-736D he set out the principle that judicial review of a decision for which Parliament had provided a statutory appeal is normally not available. Lord Jauncey recognised exceptions, for example, abuse of power or unfairness which might justify the intervention of the court notwithstanding the alternative remedy. The meaning of “fairness” in this context was taken from the discussion of Lord Templeman in R v Inland Revenue Commissioners, Ex parte Preston [1985] AC 835 at pages 862 -867. Having noted that the claimant’s aim was to achieve interim relief pending the appeal Underhill LJ continued:

41.

… 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.

42.

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.

43.

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.

44.

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.”

Before turning to Mr Coppel QC’s arguments it is as well to seek to distil the ratio of this decision. In my view, it has the following components:

The judgment is striking for the absence of any discussion of the ECHR. That is explained in footnote 3, where Underhill LJ raises the possibility of A1PI and the Human Rights Act 1998 providing another route to the grant of interim relief, but the claimant was not disposed to argue the point because “it was doubtful whether registration would fall within the scope of” A1P1. There was no reference to the possibility that article 6 ECHR might provide a route on the basis that the appeal would be ineffective given the delay.

Mr Coppel QC submitted that CC & C applies only to decisions relating to revocation of registration to trade in duty-suspended goods and so is distinguishable from decisions relating to registration to trade in duty-paid alcohol. Furthermore, he submits that it was decided per incuriam the decisions of the House of Lords in Channel Tunnel Group v Balfour Beatty Construction [1993] AC 334 and The Siskina [1979] AC 210.

In support of the first argument Mr Coppel QC refers to the observation by Underhill LJ in paragraph 42 that trading in duty-suspended alcohol is a “privilege”, a description found in the statute itself. That is correct as a matter of language but it does not provide any basis for distinguishing the reasoning in CC & C when considering the Scheme with which these claims are concerned. In material respects, they are the same – to trade in the alcohol concerned a person must be approved as fit and proper and be registered. The review and appeal rights are the same. The potential harsh consequences for a person whose registration is revoked are the same as are the consequences for those who, before the entry into force of the Scheme, traded before approval was required but who fail in their bids for registration. The reasoning, in my opinion, applies with equal force to the Scheme for approval of wholesalers of duty-paid alcohol.

A decision of the Court of Appeal is not binding if it was given per incuriam: see Young v Bristol Aeroplane Co Ltd [1944] KB 718 at 726, 729, 730 per Lord Greene MR. In Morelle Ltd v Wakeling [1955] 2 QB 379 at 406 Lord Evershed MR explained what that meant:

“As a general rule the only cases in which decisions should be held to have been given per incuriam are those of a decision given in ignorance or forgetfulness of some inconsistent statutory provision or of some authority binding on the court concerned: so that in such cases some part of the decision or some step in the reasoning on which it is based is found, on that account, to be demonstrably wrong. This definition is not necessarily exhaustive, but cases not strictly within it which can properly be held to have been decided per incuriam must, in our judgment, consistently with the stare decisis rule which is an essential feature of our law, be, in the language of Lord Greene MR, of the rarest occurrence.”

The claimants’ argument is that Underhill LJ neither mentioned, nor was referred to, the two decisions of the House of Lords (The Siskina and Channel Tunnel Group). The propositions derived from those cases relied upon by the claimants are, first, that the High Court has power to grant an injunction to protect the status quo until the rights of the parties are determined by another court: see The Siskina at 233 C – D. Secondly, that the existence of a statutory power to grant an interim injunction in support of a tribunal in specified circumstances does not disentitle the High Court from granting an interim injunction in other circumstances.

To my mind there are two complete answers to this submission:

The Channel Tunnel Group case concerned a dispute over payment for part of the work done on the Channel Tunnel which resulted in the defendants threatening to cease further work unless they were paid. Disputes were subject initially to a reference to a panel of experts and then to arbitration in Brussels. The plaintiffs sought an interim injunction to restrain the defendants from suspending work, without seeking to arbitrate the underlying dispute. The defendants sought a stay of the action in favour of arbitration. The Court of Appeal held that injunctive relief was not available under the Arbitration Act 1950 and that there was no power to do so under section 37 of the 1981 Act either. Moreover, even if there was such power, judicial restraint would tell against the grant of an injunction. The court granted a stay to the defendants. In dismissing the plaintiff’s appeal the House of Lords (a) upheld the stay; (b) agreed that the Arbitration Act 1950 contained no power to grant an injunction in respect of foreign arbitration proceedings but (c) there was power under section 37 of the 1981 Act to grant interim relief but because injunctive relief would largely pre-empt any decision ultimately made by the arbitrators it was not appropriate to grant relief.

Lord Mustill discussed the application of the Arbitration Act 1950: 357 B and following. Section 12(6) gave power to grant an interim injunction in aid of a domestic but not a foreign arbitration: 360B. He noted that the grant of an injunction under section 12(6) could “not be inconsistent with the spirit of the arbitration agreement or with the policy of the court to enforce such agreements” and that “the court must be careful not to meddle unduly in matters which properly belong to the arbitrator”: 360E. The power to grant an injunction in aid of a foreign arbitration absent from the Arbitration Act 1950 was expressly contemplated by section 25(3) of the Civil Jurisdiction and Judgments Act 1982. But the power had not been exercised. It was submitted that the court could not, under the cloak of section 37 of the 1981 Act, do something for which Parliament had provided but which had not yet been introduced. At 363H to 364C Lord Mustill explained why he did not agree. The fact that Parliament was contemplating the specific grant of specific powers should not deprive the court of jurisdiction under section 37. He said:

“It may be that if and when section 25 is made applicable to arbitrations, the court will have to be very cautious in the exercise of its general powers under section 37 so as not to conflict with any restraint which the legislature may have imposed in the exercise of the new and specialised powers. Meanwhile, although the existence of these new powers in reserve may well be one of the factors which lead the court to be very cautious about granting relief in the cases of the present kind, it is another thing to hold that the court should cut itself altogether off from the possibility of a remedy, and I would not be prepared to go that far.”

He added at 365B:

“The purpose of interim measures of protection … is not to encroach on the procedural powers of the arbitrators but to reinforce them, and to render more effective the decision at which the arbitrators will ultimately arrive on the substance of the dispute.”

The approach of the Court of Appeal in CC & C is not at odds with the ratio of the Channel Tunnel Group case. The court recognised a jurisdiction under section 37 of the 1981 but that it should be exercised cautiously given the statutory context governing the regulation of the wholesale alcohol trade and the appeal mechanism provided for by Parliament.

A recent example of a broadly similar approach to interim injunctive relief may be found in The National Crime Agency v N and the Royal Bank of Scotland [2017] EWCA Civ 253. N, a foreign exchange dealer, held accounts with the bank. The bank suspected that the content of some of the accounts of N constituted criminal property. In consequence, the bank froze the accounts pursuant to provisions of the Proceeds of Crime Act 2002. The bank would have been open to the possibility of prosecution had it not frozen the accounts. The statutory scheme provided a mechanism by which the bank could seek the consent of the NCA to unfreeze the accounts subject to express time scales. N disputed that the accounts contained criminal property and sought interim relief in the form of an order that the bank continue to operate the accounts. As Hamblen LJ noted (paragraph 1), that would “cut across and in effect disapply the consent regime”. Nonetheless, the court rejected a submission that it lacked jurisdiction to make such an order but accepted that the statutory procedure was highly relevant to the exercise of the court’s discretion. In paragraph 60 Hamblen LJ said:

“The public interest in the prevention of money laundering as reflected in the statutory procedure has to be weighed in the balance and in most cases is likely to be decisive. Cases justifying such intervention are likely to be exceptional, although the test is not one of exceptionality. One possible example given in argument might be demonstrable bad faith by the bank.”

He continued by explaining that the balance of convenience would almost always fall in favour of the bank, given that it would be compelled by the order to risk committing a criminal offence. That might be overcome if the court could be satisfied at the interim application stage that there was no real prospect of criminal liability: paragraph 62.

That case provides another example of the application of the same broad principles.

The claimants do not suggest that HMRC have abused their power, or are guilty of impropriety or acted with unfairness in the sense discussed in CC & C. The claimants are appealing to the F-tT on the basis that HMRC could not reasonably have come to the conclusions they did. They accept that they do not fall within any of the exceptions identified as examples in that case. Mr Coppel QC submitted that if a claimant were able to establish that in the absence of interim relief there would be a risk of a violation of its convention rights, then to avoid a breach of the ECHR interim relief should issue in an appropriate case.

The convention rights relied upon by the claimants are article 6 ECHR and A1P1.

The essence of the argument under article 6 is that without interim relief the claimants can demonstrate that they will not survive to pursue an appeal given the immediate and destructive consequences for their businesses. For the purposes of A1P1, Mr Coppel QC recognised that the Strasbourg jurisprudence suggests that if a business is shut down, or ceases to be viable, in the public interest for reasons of regulation and control an argument that the regulatory action is disproportionate is unlikely to prosper. In any event, the substance of that point can be taken in the appeal: R (Ahmad) v HMRC [2015] EWHC 3954 (Admin) per Mitting J at paragraph 15. The argument he advances is different. It is not the decision to refuse approval that is in issue but the lack interim relief which is said to be a disproportionate interference with the A1P1 rights of the claimants. Whether under article 6 or A1P1 the basis of the argument is the same. By the time the appeal comes on the claimants will have ceased to be viable.

Mr Eadie QC accepted that the High Court may grant an interim injunction to vindicate the convention rights of an appellant (article 6 or A1P1) but emphasised that the first port of call must be the F-tT itself which could be expected, if at all possible, to expedite an appeal to avoid the very mischief which would be relied upon in support of injunctive relief. That must be right. Whilst accepting the possibility of injunctive relief of this nature, Mr Eadie QC was also at pains to emphasise the need for proper evidential support for an argument based upon the ECHR.

The first question when considering article 6 ECHR is whether the subject matter of the dispute concerns “civil rights and obligations”. It is not suggested on behalf of HMRC in these cases that it does not. So much is clear from Tre Traktorer Aktiebolag v Sweden (1991) 13 EHRR 309.

In that case, the applicant company had its licence to sell alcohol revoked. It complained of a violation of both article 6 and A1P1. The violation of article 6 was based upon the contention that the decision could not be reviewed by a court. There had been a background of regulatory difficulty and a prosecution of its owner for tax offences, of which she was acquitted on 27 May 1983. In the meantime, in the face of official opposition the licence had been renewed, with conditions, by an administrative board on 14 January 1983. The local Social Council appealed to the National Board of Health and Welfare (“the Welfare Board”) which quashed the decision to grant a licence and referred it back for redetermination. The administrative board then revoked the licence with immediate effect. The company shut the restaurant it ran the next day. The company nonetheless appealed asking that the revocation decision be delayed for about seven months, but the Welfare Board saw no reason to depart from the usual practice of immediate revocation. It made its decision within a month. The company then sought compensation from the Government of Sweden for the consequences of the revocation and a declaration that the administrative board had violated its convention rights.

The Strasbourg Court concluded that the dispute concerned a civil right for the purposes of article 6(1): paragraph 44. There was a violation of article 6 because neither the administrative board nor the Welfare Board on appeal was a court or tribunal. In that regard the remedy did not meet the requirements of article 6. The claimants before us have their appeals to the F-tT which satisfies this aspect of article 6. The complaint advanced by Mr Coppel QC is that the judicial proceedings in the F-tT will be ineffective.

The ECHR “is intended to guarantee not rights that are theoretical or illusory but rights that are practical and effective”: see Airey v Ireland (1979) 2 EHRR 305 at paragraph 24, in the context of article 6(1) referring to a series of foundational decisions of the Strasbourg Court. That principle has been considered in a range of different contexts including R (Gudanaviciene) v Director of Legal Aid Casework [2014] EWCA Civ 1622 at paragraph 46 (availability of legal aid) and R (Kiarie) v Secretary of State for the Home Department [2015] EWCA Civ 1020; [2017] UKSC between paragraphs 48 -51 (effectiveness of out of country appeal in an article 8 case).

In my opinion, a statutory appeal against a refusal of approval which is unable to provide a remedy before an appellant has been forced out of business, rendering the appeal entirely academic (or theoretical or illusory in the language of the Strasbourg Court) is capable of giving rise to a violation of article 6 which the High Court would be entitled to prevent by the grant of appropriate injunctive relief under section 37 of the 1981 Act. To that extent, the exceptions enumerated by Underhill LJ in CC&C can be expanded to include cases in which a claimant can demonstrate, to a high degree of probability, that the absence of interim relief would violate its ECHR rights. Moreover, such an injunction need not be ancillary to a claim for judicial review of any decision of HMRC, although it might be.

It is sufficient to consider the arguments advanced before us by reference to article 6 and unnecessary to explore the altogether more complicated route of A1P1 because both parties coalesced around the proposition that it is the effectiveness of the appeal that would provide the necessary factual background even if an A1P1 argument could be advanced.

It was no part of Mr Coppel’s case that interim relief should issue automatically even if a claimant could demonstrate that it would not be able to survive the wait for the appeal to be heard. He recognised that factors such as the strength of the appeal and the nature of the concern that led to the refusal to approve would be factors to weigh when considering whether to grant an injunction, itself a reflection of the fact that the Scheme exists to protect the public purse and legitimate traders.

In cases of this sort, the hierarchy of a claimant’s attempts to safeguard its position pending appeal should be:

A claimant seeking an injunction would need compelling evidence that the appeal would be ineffective. It would call for more than a narrative statement from a director of the business speaking of the dire consequences of delay. The statements should be supported by documentary financial evidence and a statement from an independent professional doing more than reformulating his client’s stated opinion. Otherwise, a judge may be cautious about taking prognostications of disaster at face value. It should not be forgotten that a trader who sees ultimate failure in the appeal would have every incentive to talk up the prospects of imminent demise of the business, in an attempt to keep going pending appeal. Equally, material would have to be deployed which provided a proper insight into the prospects of success in an appeal. There is no permission filter for an appeal to the F-tT. The High Court would not intervene in the absence of a detailed explanation of why the decision of HMRC was unreasonable. It must not be overlooked that the F-tT is not exercising its usual appellate jurisdiction in these types of case where it makes its own decision. Finally, there would have to be detailed evidence of the attempts made to secure expedition in the F-tT and the reasons why those attempts failed. Whilst the jurisdiction exists to grant interim relief in this way, its use is likely to be sparing because steps (i) and (ii) identified above should provide practical relief in cases which justify it and the circumstances in which it would be appropriate for injunctive relief to issue will be rare.

In the ABC Ltd case William Davis J considered himself bound by CC & C to refuse injunctive relief even if the claimants could show that the appeal would be rendered “nugatory”. However, at paragraph 48 he concluded that the evidence did not suggest that was inevitable. The evidence demonstrated that there was a prospect that the appeal would be rendered nugatory, no more. In the X Ltd and Y Ltd case, Andrew Baker J dealt with the strength of the evidence relating to the business prospects of the claimants in paragraphs 39 and 40. He was unpersuaded by the assertions that they would not survive the appeal process. In those circumstances, even if either judge had considered a free-standing injunction by reference to rights guaranteed by article 6 ECHR, it would have been refused.

I would quash the decisions of HMRC by which they concluded that they had no power to grant temporary approval to the claimants to trade in wholesale alcohol pending appeal and remit the question for reconsideration. I would maintain the interim relief currently in place pending reconsideration.