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M21: Interim remedies

High Court interim remedies not generally to be used in respect of HMRC decisions

 

"[78] It is not possible for courts to invent a remedial legislative provision where, as seems here to be the case, the language of the self-executing scheme adopted by ALDA and of the appellate structure adopted by the Finance Act 1994 do not admit of a construction which allows for a power to stay a decision of HMRC pending appeal. Nor, if the court’s reading of the legislation is correct, can there be a remedy under section 8 of the Human Rights Act, since there is no unlawfulness if no other course is possible - see section 6(2). But if potential incompatibility is to be avoided, Page 28 those responsible for legislation in this field may wish urgently to address amendment, for example to give either the FTT or the High Court a limited power to impose a stay pending appeal in defined circumstances." (OWD Ltd v. HMRC [2019] UKSC 30, Lord Hughes (with whom Lord Sumption agreed))

“Parliament could have provided for the First-tier Tribunal to have power to make suspensory orders pending the outcome of an appeal, but it did not do so. I do not think that it is open to the Court to provide remedies or procedures for which the statute does not provide – particularly so when, as I have pointed out above, care was obviously taken to specify precisely what the Tribunal could and could not do. Where it is intended that the powers of the Court, including the power to grant interim relief, may be deployed "in aid of" (to use Mr Jones's phrase) another tribunal, that is typically done by express provision: see for example section 44 of the Arbitration Act 1996.” (CC&C Ltd v. HMRC [2014] EWCA Civ 1653, §41).

High Court interim remedies not generally to be used in respect of HMRC decisions

Absence of interim relief may breach human rights

 

"[81] In my opinion, a statutory appeal against a refusal of approval which is unable to provide a remedy before an appellant has been forced out of business, rendering the appeal entirely academic (or theoretical or illusory in the language of the Strasbourg Court) is capable of giving rise to a violation of article 6 which the High Court would be entitled to prevent by the grant of appropriate injunctive relief under section 37 of the 1981 Act. To that extent, the exceptions enumerated by Underhill LJ in CC&C can be expanded to include cases in which a claimant can demonstrate, to a high degree of probability, that the absence of interim relief would violate its ECHR rights. Moreover, such an injunction need not be ancillary to a claim for judicial review of any decision of HMRC, although it might be.

...

[83] It was no part of Mr Coppel's case that interim relief should issue automatically even if a claimant could demonstrate that it would not be able to survive the wait for the appeal to be heard. He recognised that factors such as the strength of the appeal and the nature of the concern that led to the refusal to approve would be factors to weigh when considering whether to grant an injunction, itself a reflection of the fact that the Scheme exists to protect the public purse and legitimate traders." (ABC Limited v. HMRC [2017] EWCA Civ 956, Burnett LJ)

However, the Supreme Court was sceptical as to what powers the High Court had

"[70] It will be apparent, from what I have set out of their submissions, that the parties do not share the court’s anxieties as to what, if any, form of order the High Court could make to safeguard the position of a wholesaler, without requiring HMRC to trespass impermissibly outside the statutory provisions relevant to the AWRS. As a result of this, the court has not had the benefit of any testing analysis, in the written or oral argument, of the parties’ essentially agreed position. This is not intended as a criticism (the parties were entitled to make the legal submissions they considered appropriate) but the result is that the process has not entirely dispelled the court’s unease about the form that the High Court’s order might legitimately take. To illustrate the point, let me take the suggestion that the High Court could order HMRC to grant temporary approval under section 88C to a wholesaler whose application they have rejected, but who has appealed to the FTT and has established an article 6 case for relief pending the appeal. Section 88C approval, whether indefinite or limited in time, depends on HMRC being satisfied that the wholesaler is fit and proper to carry on the controlled activity; that is an essential condition for approval under the section. For matters to have reached this point, however, HMRC must necessarily have concluded that they are not satisfied that the wholesaler is fit and proper, even for a limited period of trading. If the High Court orders HMRC to grant temporary approval to the wholesaler in these circumstances, it is necessarily requiring HMRC to be satisfied when they are not satisfied, and I question how that can properly be done."  (OWD Ltd v. HMRC [2019] UKSC 30, Lady Black (with whom Lord Reed, Lord Sumption and Lord Briggs agreed))

Absence of interim relief may breach human rights

EU law requires an interim measures procedure to be available

 

"[4] It is not in dispute that the principle of effectiveness mandates that there be an interim measures procedure available to a claimant in an action that safeguards his or her rights derived from the Equality Directives. In my view counsel were correct so to agree. The CJEU in R v Secretary of State for Transport, Ex p Factortame (No 2) (Case C-213/89) EU:C:1990:257; [1991] 1 AC 603 ruled that the full effectiveness of EU law would be impaired if a rule of national law were to prevent a court seised of a dispute governed by EU law from granting interim relief in order to ensure the full effectiveness of the judgment to be given on the existence of the rights claimed under EU law (para 21). The CJEU made a similar statement in Unibet (London) Ltd v Justitiekanslern (Case C-432/05) EU:C:2007:163[2007] ECR I-2271, para 67. Further, in Križan v Slovenská inšpekcia životného prostredia (Case C-416/10) EU:C:2013:8; [2013] Env LR 28, which concerned the prevention and control of pollution under Council Directive 96/61/EC, the CJEU held (paras 107-109) that the right to bring a legal action under article 15a of that Directive included a right to seek interim relief pending the determination of the lawfulness of a permit." (Anwar v. Advocate General for Scotland [2021] UKSC 44)

But not necessarily in the same venue

"[65] In reaching this conclusion, I recognise not only the value of the employment tribunal system as a means of compensating for the imbalance of economic power between employers and employees, but also the vulnerability of employees who may recently have lost their jobs. The benefits of being able to present a claim in a flexible and relatively informal forum without requiring legal representation, at moderate cost, and without exposure to adverse awards of expenses are important attributes of the employment tribunal system. But I agree with Mr Johnston that the requirement to raise proceedings in the sheriff court to obtain diligence on the dependence, including the possible exposure of the claimant to an adverse award of expenses, is a modest departure from that favourable regime. Having regard to the potential of such diligence to disrupt and even destroy the employer’s business by freezing its assets, I agree with Lord Drummond Young that that departure is proportionate." (Anwar v. Advocate General for Scotland [2021] UKSC 44)

EU law requires an interim measures procedure to be available

Freezing order in the High Court

 

Seeking indication before serving assessment on taxpayer to prevent asset dissipation 

 

“HMRC did not wish to serve a direction and associated assessment…on [the taxpayer] because they feared it would result in his hiding his assets or removing them from the jurisdiction. They therefore wanted to obtain a freezing order. However, HMRC were concerned that they might not have a cause of action sufficient to support a freezing order unless they had first issued the assessment. If push comes to shove they would argue that there is a sufficient cause of action even before the assessment is issued, but to avoid that argument they decided to adopt the procedure establish in Re Q’s Estate [1999] 1 All ER (Comm) 499. Under this procedure HMRC came before me on 16 February to explain the case in just the way they would have done if they were in fact applying for a freezing order on that occasion. I indicated, after full submissions from [HMRC], that I would be prepared to make the order the next day once the direction and assessment had been served on Mr Ali. This took place so that the period between service of a direction and the assessment and service of the freezing order was very short.” (HMRC v. Ali [2011] EWHC 880 (Ch), §4).

Freezing order in the High Court

Interim payments in High Court claim relating to tax

 

"(1)This section applies to an application for an interim remedy (however described), made in any court proceedings relating to a taxation matter, if the application is founded (wholly or in part) on a point of law which has yet to be finally determined in the proceedings.

(2)Any power of a court to grant an interim remedy (however described) requiring the Commissioners for Her Majesty’s Revenue and Customs, or an officer of Revenue and Customs, to pay any sum to any claimant (however described) in the proceedings is restricted as follows.

(3)The court may grant the interim remedy only if it is shown to the satisfaction of the court—

(a)that, taking account of all sources of funding (including borrowing) reasonably likely to be available to fund the proceedings, the payment of the sum is necessary to enable the proceedings to continue, or

(b)that the circumstances of the claimant are exceptional and such that the granting of the remedy is necessary in the interests of justice.

(4)The powers restricted by this section include (for example)—

(a)powers under rule 25 of the Civil Procedure Rules 1998 (S.I. 1998/3132);

(b)powers under Part II of Rule 29 of the Rules of the Court of Judicature (Northern Ireland) (Revision) 1980 (S.R. 1980 No.346)." (FA 2013, s.234(1) - (4))

 

Commencement

(5)This section applies in relation to proceedings whenever commenced, but only in relation to applications made in those proceedings on or after 26 June 2013.

(6)This section applies on and after 26 June 2013.

(7)Subsection (8) applies where, on or after 26 June 2013 but before the passing of this Act, an interim remedy was granted by a court using a power which, because of subsection (6), is to be taken to have been restricted by this section.

(8)Unless it is shown to the satisfaction of the court that paragraph (a) or (b) of subsection (3) applied at the time the interim remedy was granted, the court must, on an application made to it under this subsection—

(a)revoke or modify the interim remedy so as to secure compliance with this section, and

(b)if the Commissioners have, or an officer of Revenue and Customs has, paid any sum as originally required by the interim remedy, order the repayment of the sum or any part of the sum as appropriate (with interest from the date of payment)." (FA 2013, s.234(5) - (8))

 

Appeal treated as part of original proceedings

"(9)For the purposes of this section, proceedings on appeal are to be treated as part of the original proceedings from which the appeal lies." (FA 2013, s.234(9))

Tax does not include NICs

(10)In this section “taxation matter” means anything, other than national insurance contributions, the collection and management of which is the responsibility of the Commissioners for Her Majesty’s Revenue and Customs (or was the responsibility of the Commissioners of Inland Revenue or Commissioners of Customs and Excise)." (FA 2013, s.234(10))

Look at substance of application

"[24] In cases relating to taxation Section 234 imposes a restriction on applications for interim remedies 'however described' if founded even in part on a point of law. The use of the phrase 'however described' focuses attention on the substance of an application and not simply how it is framed. I would accept that the present application is not seeking an order that is essentially discretionary. It is however seeking an order that is provisional. In contrast to its own position, Jazztel is not in a position to seek a final order on behalf of the Affected Claimants. It is using its own position as lead claimant within the GLO to seek orders on behalf of the Affected Claimants outside the GLO, applying for a provisional judgment before the claims have proceeded to trial.

...

[31] No evidence has been filed addressing the circumstances of any particular Affected Claimant; and the mere fact that a claimant is subject to a GLO relating to a taxation claim cannot be regarded as exceptional. The delay in recovering the payment of duty is the consequence of treating proceedings as not being final until an appeal has been resolved, as specified by s. 234(9). The normal basis for compensating for the loss of the use of money is an award of interest. In my view the circumstances of the Affected Claimant have not been shown to be either exceptional or such as to require interim relief as a matter of necessity in the interests of justice." (Jazztel Plc v. HMRC [2019] EWCA Civ 1301, Simon LJ - lead claimant in GLO succeeded and affected claimants wished to rely on their success)

Previous position

"[37] It follows, since the principle of making an interim payment order in relation to part of the claim is not disputed by the Revenue, that the real issue is to what extent I can be satisfied that, if the claim went to trial, Six Continents would obtain judgment against HMRC. For that purpose, it is common ground that I should apply the law as it now stands, while having regard to the pending appeal in the quantification proceedings." (Six Continents Ltd v. HMRC [2015] EWHC 2884 (Ch), Henderson J – interim payment granted - application made on 13 May 2013)
 

Interim payments in High Court claim relating to tax

Temporary customs and excise approvals

 

See J6a - Temporary approvals

Temporary customs and excise approvals
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