In R (VVB Engineering Services) v HMRC [2017] EWHC 506, a judgment handed down on 16 March 2017, it was noted that there are currently 4,116 applicants or potential applicants seeking interim relief from accelerated payment notices (APNs) or partner payment notices (PPNs). APNs and PPNs require taxpayers to pay disputed tax, or national insurance, upfront prior to any appeal hearing provided that certain conditions are satisfied. Several cases where the claimants sought to challenge these instruments have already failed before the Administrative Court. In the most recent case, R (Dickinson) v HMRC [2017] EWHC 1705 (reported at page 5), an element which differentiated it from the other APN challenges was that HMRC had previously agreed (by virtue of a postponement agreement) not to seek the tax purported to be due until after the outcome of the appeal. This agreement took place before the APN legislation was introduced. The problem however for the claimants is that FA 2014 s 214 specifically envisages a situation where a postponement agreement is already in place and allows nevertheless HMRC to issue an APN. The court’s task accordingly was to resolve whether it was an abuse of power for HMRC to resile from its express promise not to enforce the payment of the tax pending the resolution of the disputes relating to the validity of its assessments?
The claimants’ argument in the case was that HMRC had abused its power by issuing the APNs, considering all the circumstances of the case. HMRC’s response effectively revolved around ‘macro-political’ issues of policy; in other words, that the claimants were ultimately seeking to challenge a political choice made by Parliament when it expressly provided the body with the power to issue APNs in such circumstances. The court rejected in part HMRC’s argument. The fact that there is a macro political issue at stake does not trump all other considerations. That there might be express provision for HMRC to issue APNs when the statutory conditions are satisfied does not mean that there are no further restrictions upon the use of the power, such as, for instance, the need to consider the purpose of the legislation, or indeed the fact that there had been a postponement agreement. However, the court accepted that Parliament had expressly and deliberately ‘changed the goal posts’ with respect to where the disputed tax should lie pending an appeal. On that basis, ultimately, the court found that HMRC was using the power to issue an APN for the purposes provided by Parliament.
The case highlights that although Parliament has endowed HMRC with a power to issue APNs provided that certain statutory conditions are satisfied, there are also other implied considerations which must be taken into account when exercising the power. This too was found in the case of R (Vital Nut) v HMRC [2016] EWHC 1797, wherein Charles J found that a necessary implied condition was that the relevant HMRC officer regarded the underlying tax scheme as ineffective. The case is also important for highlighting how HMRC has until now interpreted its power to issue APNs. For instance, HMRC gave ‘no consideration’ to the postponement agreement when deciding whether to exercise the power to issue APNs in this case – a concession which the judge found ‘surprising’, as he held that it was indeed a factor which needed to be weighed in a decision to issue an APN. Indeed, this is surprising generally given that a public authority must ensure it takes into account all relevant considerations when exercising a discretionary power. Further, the court noted that HMRC’s approach to APNs appeared to have as its logical conclusion that in all cases relating to DOTAS arrangements, HMRC has a duty (or save in exceptional circumstances has a duty), rather than a power, to issue APNs where the statutory conditions have been satisfied.
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Dickinson and accelerated payment notices
In R (VVB Engineering Services) v HMRC [2017] EWHC 506, a judgment handed down on 16 March 2017, it was noted that there are currently 4,116 applicants or potential applicants seeking interim relief from accelerated payment notices (APNs) or partner payment notices (PPNs). APNs and PPNs require taxpayers to pay disputed tax, or national insurance, upfront prior to any appeal hearing provided that certain conditions are satisfied. Several cases where the claimants sought to challenge these instruments have already failed before the Administrative Court. In the most recent case, R (Dickinson) v HMRC [2017] EWHC 1705 (reported at page 5), an element which differentiated it from the other APN challenges was that HMRC had previously agreed (by virtue of a postponement agreement) not to seek the tax purported to be due until after the outcome of the appeal. This agreement took place before the APN legislation was introduced. The problem however for the claimants is that FA 2014 s 214 specifically envisages a situation where a postponement agreement is already in place and allows nevertheless HMRC to issue an APN. The court’s task accordingly was to resolve whether it was an abuse of power for HMRC to resile from its express promise not to enforce the payment of the tax pending the resolution of the disputes relating to the validity of its assessments?
The claimants’ argument in the case was that HMRC had abused its power by issuing the APNs, considering all the circumstances of the case. HMRC’s response effectively revolved around ‘macro-political’ issues of policy; in other words, that the claimants were ultimately seeking to challenge a political choice made by Parliament when it expressly provided the body with the power to issue APNs in such circumstances. The court rejected in part HMRC’s argument. The fact that there is a macro political issue at stake does not trump all other considerations. That there might be express provision for HMRC to issue APNs when the statutory conditions are satisfied does not mean that there are no further restrictions upon the use of the power, such as, for instance, the need to consider the purpose of the legislation, or indeed the fact that there had been a postponement agreement. However, the court accepted that Parliament had expressly and deliberately ‘changed the goal posts’ with respect to where the disputed tax should lie pending an appeal. On that basis, ultimately, the court found that HMRC was using the power to issue an APN for the purposes provided by Parliament.
The case highlights that although Parliament has endowed HMRC with a power to issue APNs provided that certain statutory conditions are satisfied, there are also other implied considerations which must be taken into account when exercising the power. This too was found in the case of R (Vital Nut) v HMRC [2016] EWHC 1797, wherein Charles J found that a necessary implied condition was that the relevant HMRC officer regarded the underlying tax scheme as ineffective. The case is also important for highlighting how HMRC has until now interpreted its power to issue APNs. For instance, HMRC gave ‘no consideration’ to the postponement agreement when deciding whether to exercise the power to issue APNs in this case – a concession which the judge found ‘surprising’, as he held that it was indeed a factor which needed to be weighed in a decision to issue an APN. Indeed, this is surprising generally given that a public authority must ensure it takes into account all relevant considerations when exercising a discretionary power. Further, the court noted that HMRC’s approach to APNs appeared to have as its logical conclusion that in all cases relating to DOTAS arrangements, HMRC has a duty (or save in exceptional circumstances has a duty), rather than a power, to issue APNs where the statutory conditions have been satisfied.
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