In Glencore Energy UK v HMRC [2017] EWHC 1476 (29 June 2017), the High Court found that judicial review was not an available remedy to contest the validity of a charging notice issued under FA 2015 s 95.
HMRC had issued a charging notice imposing a charge for diverted profits and Glencore sought judicial review of the notice.
The High Court first observed that judicial review is a remedy of last resort, which should only be granted in exceptional circumstances if an alternative remedy exists. Such an alternative existed in this case under FA 2015 s 101; a statutory remedy involving a review and an appeal to the FTT. The court added that tribunals do not have a judicial jurisdiction but that does not strip them of the duty to resolve disputes which have a public law element, if that falls within the proper ambit of their statutory jurisdiction.
Glencore contended that the review process was neither judicial nor independent but the court found that it was capable of amounting to an alternative remedy. It had been created by Parliament as a form of mandatory mediation following a fixed timetable and, although it was not impartial, HMRC was under a duty to act in good faith. There was ample case law accepting non-judicial alternatives as effective alternative remedies (see De Smith’s Judicial Review (7th ed.) at paras 16 to 21).
The court also dismissed the argument that s 101 only concerned the quantum of the tax but not the actual liability, as ‘it would make no sense’ if the taxpayer was forced to go into the review without being able to argue that no tax was payable at all. Furthermore, it was intended that a failed review would lead to an appeal and it was accepted that the FTT would have jurisdiction on both liability and quantum. Finally, it would have been illogical for the taxpayer to have to wait for the review period to end before being able to appeal on liability.
The court then considered each of the grounds for judicial review put forward by Glencore and found that each of them fell within the jurisdiction of the FTT. First, Glencore contended that the FTT had wrongly applied the statutory test, as it had only had ‘reasons to believe’ that the tests for diverted profits tax were met, instead of ‘considering’ that this was the case. The court thought that to argue that the review process would not suffice to contemplate the distinction put forward by Glencore ‘elevated to Olympian heights form over substance’. Similarly, HMRC’s alleged failure to consider representations and to give reasons could be remedied as part of the review process.
The court also rejected the submission that there would be some overriding public benefit in the points of law being determined by the High Court. In this case, the public law points were too intertwined with factual issues to make them of wide significance and they were not in any event of such broad significance as to warrant granting permission for judicial review.
In a related decision ([2017] EWHC 1587), the High Court also found that it had no power to grant permission to appeal its decision to refuse permission to apply for judicial review under CPR 52.8 (which applies specifically to such circumstances), so that the only course open to Glencore was to apply to the Court of Appeal.
Why it matters: The High Court accepted that Parliament had been ‘singularly inconsistent’ in its choice of language to describe the scope of the jurisdictions of specialist tribunals and that the scope of the relevant statutory language was not always clear or unambiguous. In this case, it thought that the grounds for judicial review had been ‘carefully crafted in public law garb’ but they concealed the real dispute between the parties and ‘a determination of those public law issues would almost certainly leave the true issues unresolved’.
In Glencore Energy UK v HMRC [2017] EWHC 1476 (29 June 2017), the High Court found that judicial review was not an available remedy to contest the validity of a charging notice issued under FA 2015 s 95.
HMRC had issued a charging notice imposing a charge for diverted profits and Glencore sought judicial review of the notice.
The High Court first observed that judicial review is a remedy of last resort, which should only be granted in exceptional circumstances if an alternative remedy exists. Such an alternative existed in this case under FA 2015 s 101; a statutory remedy involving a review and an appeal to the FTT. The court added that tribunals do not have a judicial jurisdiction but that does not strip them of the duty to resolve disputes which have a public law element, if that falls within the proper ambit of their statutory jurisdiction.
Glencore contended that the review process was neither judicial nor independent but the court found that it was capable of amounting to an alternative remedy. It had been created by Parliament as a form of mandatory mediation following a fixed timetable and, although it was not impartial, HMRC was under a duty to act in good faith. There was ample case law accepting non-judicial alternatives as effective alternative remedies (see De Smith’s Judicial Review (7th ed.) at paras 16 to 21).
The court also dismissed the argument that s 101 only concerned the quantum of the tax but not the actual liability, as ‘it would make no sense’ if the taxpayer was forced to go into the review without being able to argue that no tax was payable at all. Furthermore, it was intended that a failed review would lead to an appeal and it was accepted that the FTT would have jurisdiction on both liability and quantum. Finally, it would have been illogical for the taxpayer to have to wait for the review period to end before being able to appeal on liability.
The court then considered each of the grounds for judicial review put forward by Glencore and found that each of them fell within the jurisdiction of the FTT. First, Glencore contended that the FTT had wrongly applied the statutory test, as it had only had ‘reasons to believe’ that the tests for diverted profits tax were met, instead of ‘considering’ that this was the case. The court thought that to argue that the review process would not suffice to contemplate the distinction put forward by Glencore ‘elevated to Olympian heights form over substance’. Similarly, HMRC’s alleged failure to consider representations and to give reasons could be remedied as part of the review process.
The court also rejected the submission that there would be some overriding public benefit in the points of law being determined by the High Court. In this case, the public law points were too intertwined with factual issues to make them of wide significance and they were not in any event of such broad significance as to warrant granting permission for judicial review.
In a related decision ([2017] EWHC 1587), the High Court also found that it had no power to grant permission to appeal its decision to refuse permission to apply for judicial review under CPR 52.8 (which applies specifically to such circumstances), so that the only course open to Glencore was to apply to the Court of Appeal.
Why it matters: The High Court accepted that Parliament had been ‘singularly inconsistent’ in its choice of language to describe the scope of the jurisdictions of specialist tribunals and that the scope of the relevant statutory language was not always clear or unambiguous. In this case, it thought that the grounds for judicial review had been ‘carefully crafted in public law garb’ but they concealed the real dispute between the parties and ‘a determination of those public law issues would almost certainly leave the true issues unresolved’.
