Reflections on Judicial Review in Tax

Judicial Review is an area of law which requires restraint on the part of the courts. Unlike statutory appeals which endow the court with the right to resolve disputes between parties, reviews assess the integrity of decisions against which the legislature has not provided a statutory right of appeal. From a constitutional perspective, it is notable that Parliament has saw fit that the court should be the arbiter in the former, but that the authority to arrive at decisions in the latter should reside with a public body. As such, courts should be cautious in the case of reviews so as not to undermine the wishes of Parliament. In the case of expertly constituted public authorities, the case for judicial restraint is particularly powerful.

In two recent papers, both now available on SSRN, I take a look at recent actions on the part of HMRC in the area of judicial review. In a paper to be published in the April edition of Public Law (find here), I assess HMRC’s actions against the background of the dispute between common law constitutionalists and modified ultra vires theorists. In brief, I argue that in exceptional circumstances HMRC does not feel bound by the ultra vires hurdle so as not to effectuate substantive legitimate expectations. Such an exceptional state of affairs would arise in the case of significant unfairness to the taxpayer. This runs counter to the longstanding notion that there cannot be a legitimate expectation if it requires the public body to act beyond its powers. Tax aficionados may recall the controversial Al-Fayed case in this regard.

In a second paper published in the March issue of British Tax Review (find here), I look at the recent High Court decision in R (Hely-Hutchinson v HMRC). The question for the court was whether HMRC could frustrate a legitimate expectation in circumstances which would lead to significant unfairness to the taxpayer. The court balanced the duty of fairness against the duty to collect taxes and held in favour of the taxpayer. A limitation in the judgment however lies in the failure to specifically acknowledge the ultra vires point highlighted in the Public Law article. The case is under appeal and no doubt this problem will be visited in the Court of Appeal.


About taxatlincolnox

Tax law academic. With this blog, I seek merely to contribute to the debate. All thoughts are mine, of course.
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