Dickinson & Ors, R (on the application of) v HM Revenue & Customs

MR JUSTICE ANDREW BAKER: In this case, the claimants seek a judicial review of accelerated payment notices issued to them by the defendant HMRC. Those accelerated payment notices were issued on the basis that a scheme in which the claimants had participated was a notifiable tax avoidance scheme under the Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) Regulations 2004. As the judicial review proceedings are a challenge to accelerated payment notices only, they are not ultimately determinative of the claimant taxpayer's proper tax liabilities in relation to monies received by them through the operation of the scheme. The impact of the accelerated payment notices is fundamentally one of cash flow, at all events in circumstances such as these where the underlying liability to tax on the basis of which the accelerated payment notices are issued would be challenged by the taxpayer leading in due course it may be to proceedings before the First-tier Tribunal (Tax Chamber).

Permission for the judicial review was granted by King J on 5 July 2016 but only upon a specific basis, namely (to paraphrase) that those claimants who were able to assert a specific case of broken legitimate expectations generated by specific assurances or agreement could proceed, by reference to that complaint. That in part was a reflection of the failure of other taxpayers in litigation that came before the courts before this case raising more wide-ranging challenges to the propriety of the use of the APN regime. The substantive hearing of the judicial review claim is set for two days in just over two weeks' time, on 14 and 15 March this year.

The claimants (i.e., as I understand it, all of the claimants whether or not they were otherwise live claimants with the legitimate expectation claim to pursue) now seek permission to re-amend the statement of facts and grounds in the case. The proposed re-amendment seeks to raise much more fundamentally a challenge to the lawfulness of the use of APNs in relation to the scheme in the present case on an argument that it was not properly notifiable in the first place.

That is (and the claimants do not shrink from this) a completely new ground, entirely independent of any of the grounds for a judicial review previously raised in the case, whether the more wide-ranging challenges that have fallen away in the light of the previous litigation in other cases or the more specific ground of challenge that had survived that litigation and for which permission had been granted by King J. Indeed in a sense its differentness, its independence and its fundamental nature are emphasised by the claimants in their submission that if a properly arguable case upon the new ground is there to be pursued, the court should be most cautious about shutting it out, going as it does to the primary lawfulness of the APNs issued in this case.

For a case of this kind, i.e. an application to raise a new and fundamentally different ground of proposed challenge independent of existing grounds for which permission has been granted, it seems to me as a matter of approach as follows:

The important point is that claimants must not assume, in my judgment, when raising very late in the day completely new grounds that it will be sufficient for the grant of permission merely to persuade the court that as now presented to it the new ground raises an arguable case on the merits. Here, in my judgment, there is in substance no real explanation in evidence for the lateness of the raising of the new ground. The question whether the scheme was notifiable at all was raised at the outset in correspondence. The suggestion that there is doubt as to whether it needed to be notified is even referred to in the statement of facts and grounds as originally submitted to the court. However, of course (or we would not be here today), that was not developed into any affirmative case that the doubt, if there was any doubt, was to be resolved in favour of the view that the scheme was not notifiable and that the ground for judicial review arose upon that basis.

AML, the sponsor of the scheme and the employing group of the individual taxpayer claimants, actively supported the litigation when originally brought, and its managing director and a consultant involved in the setting-up of the scheme both provided evidence. The latter specifically referred to but did not develop the suggestion that there may be a question mark over notifiability.

Although it was said in argument, in my view there is no evidence for the proposition that the claimants themselves were not at all times in possession of sufficient evidence as to the detailed terms and operation of the scheme to enable them to be advised, and if so advised to develop a ground of challenge accordingly, whether the scheme had indeed been notifiable. Neither is it in evidence that if indeed the claimants did not have sufficient information of that type in their own possession, they could not obtain the same readily from AML or from RMS Tenon, the financial advisory group that was also involved. Nor is there any evidence of any efforts made to consider what was said to be the question or doubt over notifiability, or as to any efforts made to obtain the information necessary to consider the point, or of any decision made by the claimants about the issue. In short, it is simply not shown to the court by any evidence that this was other than an informed and properly advised decision not to take the point.

It has in fact arisen, it would seem, because documents I will refer to shortly have been disclosed by HMRC without accepting that they were under any obligation to disclose them in circumstances where this issue of notifiability had not been raised by the claim. The claimants were, it seems, seeking what has turned out to be disclosure of those documents in correspondence in or by about June of last year, at around the time when they were restating and narrowing their statement of facts and grounds to limit them in the light of the previous litigation I have referred to. The documents in question were produced, as I understand it, in October of last year, following which the claimants promptly intimated a desire to re-amend, asking for consent by mid November, although only finally issuing their application by application notice on 24 January 2017.

It is said that the earlier in time of the two documents that HMRC did produce, a meeting note or minute from June of 2006 of a meeting between HMRC and representatives of RMS Tenon, indicated for the first time to the claimants that HMRC itself may have been in doubt as to whether the scheme was notifiable. I shall come on to whether that is indeed what the document indicates. Even if it does, it seems to me that does not begin to explain the claimants' failure to take the point, if it was properly there to be taken, long before production of that material.

As then to the merits, I agree with Ms White QC for HMRC that the claimants have not put the court in any position to say that permission for an application for judicial review should be granted. It follows from what I have just been saying about the delay and the lack of evidence explaining it that there is, in my judgment, no compelling reason in evidence why they have not done so if there were a properly arguable case with a realistic prospect of success to be raised.

I say that, in my judgment, I could not today on the material presented for the purposes of seeking permission to re-amend say that there was sufficient merit for permission for judicial review to be granted for these reasons. The primary document, and the second of the two documents disclosed as I have mentioned already, was a letter in September 2006 from Tenon to HMRC stating entirely unequivocally that the premium fee condition in paragraph 5A of schedule 1 to the 2004 regulations had not been met because fees payable by the scheme were related to the tax advantage generated or hopefully to be generated by the scheme. Although Mr Ramsay QC for the claimants raised the suggestion that because of redaction in that letter it is not clear that it in fact relates to the scheme in question, it seems to me that that is essentially a speculative submission and in substance one that I could only accept if there were reason to doubt the bona fides of the disclosure given. It seems to me there is no basis for doubting that.

That September letter was generated by the meeting in June 2006 to which I have already referred. The meeting note of that meeting indicated that, by reference to the very bare information concerning the scheme contained in the disclosure notification that had been submitted, HMRC could not see why it was that it had been notified. It does not seem to me that that casts any serious arguable doubt on the unequivocal information then provided as the follow-up to that meeting, the question having been put to Tenon why it had been notified and the letter being the answer to that question.

A solicitor's letter was produced yesterday from the claimants' solicitors providing in very generally stated terms a description of the fee arrangement in relation to the scheme which it is said now constitutes supplementary evidence to be taken into account to show that there is an arguable point here with a realistic prospect of success. It seems to me it is so generally stated as to take matters nowhere, and that is even without taking into account the doubt as to that information created by the claimants' solicitors, perfectly fairly so far as it goes, acknowledging that they have not had a chance to check it and would need to do so. The information is so general in nature as it seems to me that, whilst the claimants may be able to say that it is consistent with there having been no premium fee, it is also consistent with there having been such a fee. In the light of the unequivocal nature of the Tenon notification in September 2006 and the particular circumstances of such a late application to re-amend, it seems to me that it is very much not enough for the claimants merely now through their solicitors to provide such generally stated information and say that it is at all events consistent with the case they would wish to run. It seems to me that is as far as they could go.

In all the circumstances as it seems to me there is no serious basis raised for doubting the original information of Tenon back in September 2006.

For completeness I add that the solicitor's letter of yesterday was itself produced only some eight months or so after, as I have mentioned already, a desire to consider taking this new point was first raised by the claimants' current legal team, and I have been provided with no evidence of what efforts have been made, if any, on the claimants' side to investigate that issue and reach a conclusion upon it, unless it be by inference, there being no evidence of any other effort, that all they did in that regard was write to HMRC in the hope of getting some documents which ultimately generated the two documents I have referred to. It seems to me that that is far from sufficient to provide a satisfactory explanation of the raising of the point for the first time so late in the day and so near to the substantive hearing.

So for all those reasons I could not, in the circumstances of this case, consider granting permission for an application for judicial review on the new ground on the present evidence and there seems to me no real, in any event no compelling, explanation established by evidence as to why that is so if there really is a serious point to be taken. In those circumstances, I refuse the application to re-amend and the question of whether an adjournment would have been needed to deal with the re-amendment if allowed does not arise.

For completeness only, had that question arisen, it seems to me inevitably that an adjournment would have been required, and I say that notwithstanding both the claimants' clear and clearly stated preference to proceed on the existing date even if they had their re-amendment, and equally HMRC's strongly preferred position, even if I allowed the re-amendment, not to lose those dates if possible.

In those circumstances, and given it seems to me additionally the lack of any real explanation of the delay between, at the latest, the middle of November and today getting the application on, I may well have concluded that there was really no sufficient justification for not having brought the application on before the court last term so as to avoid any possible need to adjourn if the application were allowed. Had there in those circumstances been a sufficient case to consider a judicial review permission, I would have needed to give very anxious consideration to whether the provisionally apparent strength of the proposed new ground was sufficient to tip the balance of justice in favour of allowing the amendment even though an adjournment would be required. That is not an exercise that it is realistic to undertake because it would have depended upon a different view having been formed as to the apparent merits of the point. So I take that consideration no further. But, for the reasons I have given, the application to re-amend is refused.

MS WHITE: I am grateful, my Lord. HMRC would apply for its costs of today in any event. I suggest they be subject to detailed assessment at the conclusion of the proceedings.

MR JUSTICE ANDREW BAKER: Mr Ramsden, I do not suppose you can resist that?

MR RAMSDEN: No.

MR JUSTICE ANDREW BAKER: In circumstances where I am not asked for a summary assessment or any immediate payment, I will make that order. Thank you very much. Unless I need to deal with anything else? Because from what you have said, it sounds as if in those circumstances the matter is now ready to go in two weeks' time and I do not need to do any other incidental case management for that.

MR RAMSDEN: No, the only step is service of the defendant's outline submissions, and we do not anticipate any problem with that.

MS WHITE: My Lord, I quite agree.

MR JUSTICE ANDREW BAKER: I am grateful. Thank you very much.