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HMRC have responsibility for collection and management

 

"The Commissioners for Her Majesty's Revenue and Customs shall be responsible for the collection and management of—

(a)     income tax,

(b)     corporation tax, and

(c)     capital gains tax." (TMA 1970, s.1)

"The Commissioners for Her Majesty's Revenue and Customs shall be responsible for the collection and management of VAT." (VATA 1994, Sch 11, para 1)

HMRC have responsibility for collection and management

Powers of care and management cannot override statutory regime

 

“It seems to me, however, that HMRC’s powers in relation to extra-statutory concessions and back duty agreements are very different from the issue in the present appeal. As I have already said, the self-assessment compliance provisions contained in the TMA dealing with returns, records, enquiries and closure notices etc comprise a carefully drafted set of interlocking provisions. In my view it is not open for HMRC to dispense with the requirement that it must serve a notice under s.8(1) in order for a taxpayer’s return to be a return “under s.8”. This is an express statutory requirement that cannot be waived by the exercise of HMRC’s discretion.” (Patel v. HMRC [2018] UKFTT 185 (TC), §112, Judge Brannan).
 

Powers of care and management cannot override statutory regime

Statutory powers must be exercised to promote the policy and objects of the Act as a whole

 

"[21]...Apart from the Convention, the company’s submission comes down to a short point: that is, given the existence of a discretion in section 66, it must in the absence of any specific restriction be treated as an unfettered discretion. That to my mind overlooks the basic principle that any statutory discretion must be exercised consistently with the objects and scope of the statutory scheme." (JP Whitter (Water Well Engineers) Ltd v. HMRC [2018] UKSC 31)

“Parliament must have conferred the discretion with the intention that it should be used to promote the policy and objects of the Act [which] must be determined by construing the Act as a whole … [I]f the Minister … so uses his discretion as to thwart or run counter to the policy and objects of the Act, then our law would be very defective if persons aggrieved were not entitled to the protection of the court.” (Padfield v Minister of Agriculture, Fisheries and Food [1968] AC 997)

No statutory discretion is unfettered

"[23]...Section 3(1) provides that the scheme regulations permitted by section 1(1) may make such provision as the Secretary of State “considers appropriate”. But the power cannot be as broad as that. No statutory discretion is unfettered. When we read further into section 3, we at once find a helpful signpost. For subsection (2)(a) states that the permitted provision includes, in particular, provision as to any of the matters specified in Schedule 3. It is only a signpost because the words “in particular” mean that the matters specified in Schedule 3 are not the only matters which can be the subject of provision in the regulations. But it valuably identifies the matters which, in particular, Parliament had in mind." (Palestine Solidarity v. Secretary of State for Housing [2020] UKSC 16, Lord Wilson)

Statutory powers must be exercised to promote the policy and objects of the Act as a whole

Power to specify 'how' something should be done does not include power to specify 'what' 

 

"[31] Irrespective of whether the misconception to which I have referred played a part in leading the Secretary of State to include in the guidance the two passages under challenge, I conclude that his inclusion of them went beyond his powers. HOW does not include WHAT. Power to direct HOW administrators should approach the making of investment decisions by reference to non-financial considerations does not include power to direct (in this case for entirely extraneous reasons) WHAT investments they should not make." (Palestine Solidarity v. Secretary of State for Housing [2020] UKSC 16, Lord Wilson)

Power to specify 'how' something should be done does not include power to specify 'what' 

Powers must be exercised rationally

 

[40]...It seems clear in any event from the context that Simon Brown LJ was not proposing “conspicuous unfairness” as a definitive test of illegality, any more than his contrast with conduct characterised as “a bit rich”. They were simply expressions used to emphasise the extreme nature of the Revenue’s conduct, as related to Lord Diplock’s test. In modern terms, and with respect to Lord Diplock, “irrationality” as a ground of review can surely hold its own without the underpinning of such elusive and subjective concepts as judicial “outrage” (whether by reference to logical or moral standards).

[41] In summary, procedural unfairness is well-established and well-understood. Substantive unfairness on the other hand - or, in Lord Dyson’s words at para 53, “whether there has been unfairness on the part of the authority having regard to all the circumstances” - is not a distinct legal criterion. Nor is it made so by the addition of terms such as “conspicuous” or “abuse of power”. Such language adds nothing to the ordinary principles of judicial review, notably in the present context irrationality and legitimate expectation. It is by reference to those principles that cases such as the present must be judged."(R (oao Gallaher Group Ltd v. CMA [2018] UKSC 25)

Powers must be exercised rationally

Consistency is an aspect of rationality

 

"[50] ... Consistency of treatment is, as Lord Hoffmann observed in Matedeen v Pointu [1999] 1 AC 98, at para 9 “a general axiom of rational behaviour”. The common law principle of equality is usually no more than a particular application of the ordinary requirement of rationality imposed on public authorities." (R (oao Gallaher Group Ltd v. CMA [2018] UKSC 25)

Consistency is an aspect of rationality

Binding agreements without assessment

 

“That case [IRC v Nuttall [1990] 1 WLR 631] established, consistently with Cockerline, that HMRC in the exercise of its collection and management powers could reach a binding agreement with a taxpayer under which sums were payable and could be enforced, even though no assessment had been issued in respect of the amounts agreed to be paid.” (Patel v. HMRC [2018] UKFTT 185 (TC), §116, Judge Brannan).
 

Binding agreements without assessment
Double recovery is likely to be disproportionate

Double recovery is likely to be disproportionate

 

"[32]  Any provision which entitles the Executive to effect double recovery from an individual, although not absolutely forbidden by A1P1, is clearly at risk of being found to be disproportionate. That proposition would seem to apply in relation to any sum payable pursuant to POCA, which, while intended to be deterrent, is not intended to be punitive.

[36] For these reasons, we are of the view that, although it would be appropriate under the terms of POCA as traditionally interpreted, it would be disproportionate, at least when VAT output tax has been accounted for to HMRC (either by remittance or by its being set off against input tax), to make a confiscation order calculated on the basis that that tax, or a sum equivalent to it, has been "obtained" by the defendant for the purposes of POCA." (R v. Harvey [2015] UKSC 73)

Challenging HMRC's exercise of their powers/judicial review

Challenging HMRC's exercise of their powers/judicial review

 

See:

 

J8: Judicial review procedure

J9: Grounds of judicial review

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