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J10. Legitimate expectation
GENERAL
Public body that states it will do/not do something should be held to that statement where reasonable reliance
"[37] In the broadest of terms, the principle of legitimate expectation is based on the proposition that, where a public body states that it will do (or not do) something, a person who has reasonably relied on the statement should, in the absence of good reasons, be entitled to rely on the statement and enforce it through the courts. Some points are plain. First, in order to found a claim based on the principle, it is clear that the statement in question must be “clear, unambiguous and devoid of relevant qualification”, according to Bingham LJ in R v Inland Revenue Comrs, Ex p MFK Underwriting Agents Ltd [1990] 1 WLR 1545, 1569, cited with approval by Lord Hoffmann in R (Bancoult) v Secretary of State for Foreign and Commonwealth Affairs (No 2) [2009] AC 453, para 60." (United Policyholders Group v. AG of Trinidad and Tobago [2016] UKPC 17)
- Save to the extent it would interfere with statutory duty
"[38] Secondly, the principle cannot be invoked if, or to the extent that, it would interfere with the public body’s statutory duty - see eg Attorney-General of Hong Kong v Ng Yuen Shiu [1983] 2 AC 629, 636, per Lord Fraser of Tullybelton. Thirdly, however much a person is entitled to say that a statement by a public body gave rise to a legitimate expectation on his part, circumstances may arise where it becomes inappropriate to permit that person to invoke the principle to enforce the public body to comply with the statement. This third point can often be elided with the second point, but it can go wider: for instance, if, taking into account the fact that the principle applies and all other relevant circumstances, a public body could, or a fortiori should, reasonably decide not to comply with the statement." (United Policyholders Group v. AG of Trinidad and Tobago [2016] UKPC 17)
Summary of requirements
"[43] I have been greatly assisted by the agreed list of legal principles which set out the considerable common ground between the parties. There is no real dispute as to the applicable legal principles governing when a legitimate expectation may arise, and the circumstances in which, in the context of tax, it would nonetheless be fair to allow the HMRC to depart from it. For present purposes, it is sufficient to summarise the relevant principles as follows:
(1) A legitimate expectation arises in circumstances where:
(a) the claimant has an expectation of being treated in a particular way favourable to the claimant by the defendant public authority;
(b) the authority has caused the claimant to have that expectation by words or conduct;
(c) the claimant's expectation is legitimate; and
(d) it would be an unjust exercise of power for the authority to frustrate the claimant's expectation.
See R (on the application of GSTS Pathology LLP) and others v. HMRC [2013] STC 2017 ("GSTS") at [72]-[73]." (Airline Placement Limited v. HMRC [2023] EWHC 1191 (Admin), Constable J)
- Expectation that the ordinary law will apply is a matter of no legal significance
"[6]...As the appellants rightly stress, a legitimate expectation that the ordinary law will apply to them is a matter of no legal significance in that it adds nothing to the right of every citizen to due application to him of the ordinary law." (R (oao Davies) v. HMRC [2011] UKSC 47, Lord Wilson)
- Legitimate expectation arising from HMRC guidance/settled practice of a more benevolent interpretation
"[1]...For the main contention of the appellants is that, on its proper construction, the guidance contained a more benevolent interpretation of the circumstances in which an individual becomes non-resident and not ordinarily resident in the UK than is reflected in the ordinary law and that the appellants had a legitimate expectation, to which the court should give effect, that the more benevolent interpretation would be applied to the determination of their status for tax purposes. Their subsidiary and alternative contention is, that, even if, when properly construed, the guidance did not contain a more benevolent interpretation than is reflected in the ordinary law, it was the settled practice of the Revenue to adopt such an interpretation of it and that the practice was such as to give rise to a legitimate expectation, to which again the court should give effect, that the interpretation would be applied to the determination of their status.
[2] The latter limb of each of the appellants' alternative contentions is not in dispute. The Revenue accepts that, if either the proper construction of the booklet or its settled practice was as they contend, a legitimate expectation arose which requires that their status for tax purposes should be determined in accordance with the allegedly more benevolent interpretation of the circumstances in which an individual becomes non-resident and not ordinarily resident in the UK." (R (oao Davies) v. HMRC [2011] UKSC 47, Lord Wilson)
- HMRC can be bound by their opinions on what the law is
"[49] Equally, I do not consider that there is any force in the submission by Sir James Eadie QC that it is extremely difficult to build a legitimate expectation on a wrong view of the law. The authorities on which he relied all recognise in terms that, even where a statement or representation has been made by a public authority on a mistaken view as to what the law is, if the requirements of the doctrine of legitimate expectation are satisfied, it will apply and its application will not be rendered impossible or more difficult because the statement or representation was made on a mistaken view of the law. As in so many areas of public law, the applicable legal principle is stated with characteristic clarity by Laws LJ, who sadly died whilst this judgment was being written. In R v Education Secretary ex parte Begbie [2000] 1 WLR 1115 at 1127C, he said:
"Where the court is satisfied that a mistake was made by the minister or other person making the statement, the court should be slow to fix the public authority permanently with the consequences of that mistake. That is not to say that a promise made by mistake will never have legal consequences. It may be that a mistaken statement will, even if subsequently sought to be corrected, give rise to a legitimate expectation, whether in the person to whom the statement is made or in others who learnt of it, for example where there has been detrimental reliance on the statement before it was corrected."" (R (oao Alliance of Turkish Business People) v. Secretary of State for the Home Department [2020] EWCA Civ 553, Flaux, Newey, Rose LJJJ)
"[32] Although the courts have emphasised that HMRC does not have a general discretion to remit taxes that are lawfully due, it does not follow that a statement made in guidance as to the content of the law cannot give rise to legitimate expectation or that the only kinds of statements made by HMRC on which a taxpayer can rely are those relating to a policy, or a discretion or to the question of tax management. There is a managerial discretion being exercised here. That is the managerial discretion exercised by HMRC by publishing the guidance because the publication of guidance is an important aspect of the way in which HMRC manages the collection of taxes. It is inherent in the nature of guidance that it only fulfils the function of assisting in the management of the collection of taxes if taxpayers can rely on it. It is true, as the Judge said, that it is open to taxpayers to apply specifically to HMRC for a ruling on their circumstances, but an important function of publishing guidance is precisely to reduce the number of occasions on which a taxpayer or its advisers will need to seek an individual ruling from HMRC. Guidance as to the meaning of the taxing statutes also facilitates the self-assessment process by helping taxpayers and their advisers complete their self-assessment forms correctly. This in turn reduces the number of enquiries that HMRC will need to open into taxpayers' returns. Bingham LJ's exhortation in MFK Underwriting that taxpayers' only legitimate expectation is to be taxed according to statute is followed a few sentences later by the statement "No doubt a statement formally published by the Inland Revenue to the world might safely be regarded as binding, subject to its terms, in any case falling clearly within them". His observation was not an indication that a representation about HMRC's view of the law can never give rise to a legitimate expectation. Such a principle would, in my judgment, greatly reduce the value of HMRC's published guidance and greatly increase the burden on taxpayers and their advisers trying to navigate their way through complicated legislation." (R (oao Aozora GMAC Investments Ltd) v. HMRC [2019] EWCA Civ 1643)
- HMRC representation seeking to create certainty by guidance (going beyond merely expressing opinion)
"[31] There are some statements issued by HMRC which go beyond a mere expression of its opinion as to the law. For example, a taxing statute may contain wording which is inherently uncertain, such as where it describes something as needing to be 'substantial' or 'material' or states that something must be done within a 'reasonable time'. HMRC will wish to ensure that all members of staff apply the term in the same way so that taxpayers are dealt with consistently, regardless of which officer handles their case. That guidance may then be published so that taxpayers can conduct their affairs on the basis of the bright line created by HMRC's practice. In other cases, the legislation may by its terms confer a discretion on HMRC in the exercise of some power without spelling out the criteria to be applied. Again, in order to ensure consistent treatment, HMRC may issue guidance setting out what factors staff should take into account and may publish that guidance so that taxpayers know the kind of information that will be relevant to the decision that they are inviting HMRC to make." (R (oao Aozora GMAC Investments Ltd) v. HMRC [2019] EWCA Civ 1643)
HMRC has no free-standing policy-making function
"[114] A related issue is the court’s reliance on Preston and the other tax cases. It is of course true that the Revenue is not governed by special principles of public law. But those principles take effect in a special context. The Revenue has no free-standing policy-making function. So the potential for conflict with executive policy does not arise in the same way as in relation to most other government departments or local authorities. Tax policy is set by the legislature. The Revenue’s function is not to make the policy, but to collect the tax. It has a wide managerial discretion (see per Lord Templeman in Preston at p 862), and for that purpose may give general guidance or specific assurances to individual taxpayers. Even in that context, it is only in “exceptional circumstances” that the court will overrule the exercise of discretion by the commission (see para 93 above). As has been seen, it was the “unique” facts of Unilever which enabled the court to treat it as such an exceptional case." (United Policyholders Group v. AG of Trinidad and Tobago [2016] UKPC 17, Lord Carnwath)
- Giving and honouring of guidance part of the co-operative relationship
"[114] That approach has been refined in more recent cases, where the giving, and honouring, of guidance or more specific undertakings by the Revenue has been seen as -
“part of the cooperative relationship between the Commissioners and the public, and ultimately … part of the Commissioners’ tax collection function. But there are plainly circumstances when the Commissioners can retreat from their published statements (or rulings) …” (per Whipple J, R (Hely-Hutchinson) v Revenue and Customs Comrs [2015] EWHC 3261 (Admin), [2016] STC 962, para 42).”
In R (Davies) v Inland Revenue Comrs [2011] UKSC 47, [2011] 1 WLR 2625, para 25, Lord Wilson quoted words of Moses LJ to the same effect (in the judgment under appeal: [2010] STC 860, para 12), and added that to have legal effect the promise or practice relied on must constitute “a specific undertaking, directed at a particular individual or group, by which the relevant policy’s continuance is assured”. In other words the taxpayers needed evidence of a “practice … so unambiguous, so widespread, so well-established and so well-recognised as to carry within it a commitment to a group of taxpayers including themselves of treatment in accordance with it” (para 49)." (United Policyholders Group v. AG of Trinidad and Tobago [2016] UKPC 17, Lord Carnwath)
Who can make a relevant representation
- Must be someone with actual or ostensible authority to make the representation
"[18] It was common ground before me that a representation can only give rise to a legitimate expectation if the person making the representation on behalf of the relevant public body has the necessary actual or ostensible authority. For the Claimant, [the taxpayer] initially contended that it sufficed if the person in question had actual or ostensible authority to speak on behalf of that body generally. [The taxpayer] founded that submission on the judgment of Keene LJ (with whom Sumner J agreed) in South Bucks DC v Flanagan [2002] EWCA Civ 690, [2002] 1 WLR 2601 at [18]. In the course of his submissions [the taxpayer] accepted that this was a misreading of Keene LJ's comments. Instead, what is necessary is that the representation in question is made by a person with actual or ostensible authority to make such a representation. Fairness does not require a public body to be held to a representation made by a person who did not have authority to make the representation. Conversely, fairness to the representee may, in an appropriate case, require that a wide view is taken of who has ostensible authority to make a particular representation." (R (oao Zafari) v HMRC [2024] EWHC 3014 (Admin), Eyre J)
- Taxpayer aware that debt enforcement department deal with collection, not determining liability
"[24]...ii) It is very significant that the Claimant's accountants wrote to two separate departments of the Defendants. That is an indication that it was understood that different departments or teams would be concerned with different aspects of the Defendants' dealings with the Claimant. In that regard the Debt Management Enforcement and Insolvency Service were to be regarded as responsible for the recovery of sums due while others were responsible for determining the amount due. Miss Rafiq was herself a Debt Enforcement Officer and is to be taken as writing in that capacity. I take account of the fact that the other team to whom the accountants wrote on 10th August 2022 was also a "compliance" team and the fact of writing to two teams might carry little weight if matters had stood there. However, it is of note that in the 30th September letter Miss Rafiq said that the SA302 calculations had been sent to the Self Assessment team for them to deal with. That is a potent indication to the Claimant that Miss Rafiq's team were not concerned with the calculation of the amount due. That is significant because the whole purpose of submitting amended returns was to achieve a change in the amount of tax said to be due." (R (oao Zafari) v HMRC [2024] EWHC 3014 (Admin), Eyre J)
- May be impermissible to derive representation from Parliamentary proceedings
"[31] In my judgment, the Claimants' use of this material will involve an impermissible questioning or impeaching of Parliamentary proceedings, applying established principles: see OGC, at [58] - [59], and the other authorities cited at paragraphs 19 to 25 above.
[32] It is clear that the Claimants are seeking to rely on the reports as evidence of facts found by the Parliamentary Committees and/or their conclusions, in support of their claims. The evidence and findings are not uncontentious or accepted by the Defendant, and the Defendant cannot explain why without also breaching Parliamentary privilege. Therefore they do not fall within paragraph 158(1) of Heathrow Hub." (R (oao D1914) v. SoS [2025] EWHC 1853 (Admin), Lang J)
Who can rely on a representation
- Representations made to organisations acting on behalf of a group of taxpayers can be relied on
"It is not in my judgment any answer for the commissioners to say that the representations were not made directly to the taxable persons themselves. They were made to organisations acting on behalf of the taxable persons in the course of formal negotiations, and the commissioners were no doubt relieved that they could negotiate with such representative bodies rather than have to do so with all the individual taxable persons concerned. The agreement arrived at was a formal statement of the commissioners' position, intended to be brought to the attention of taxpayer opticians and in my view to be relied on. This was an entirely different situation from that which arose in the MFK case, where many of the representations made by the Revenue had been made to people who were not acting on behalf of the applicants in that case." (R v. CEC ex p. Kay [1996] STC 1500 at 1528, Keene J)
- Query whether companies controlled by the same individual can rely on representation to one
"[43] HMRC had a further significant point to make in opposition to this head of claim, which is that the only representations relied upon were made to Delta and not to 1st Alternative which could accordingly have no claim, even if Delta's claim were made out. There is some force in this point but I would not be prepared to find as a matter of principle that a representation made to one entity could not be relied upon by a different entity established by the controlling mind of the entity to which the representation was made (in this case, Mr Odong). That issue may turn on the facts of the particular case and in this case the point does not arise given the findings that I have made." (R (oao First Alternative Medical Staffing Ltd) v. HMRC [2021] EWHC 882 (Admin), Jason Coppel QC sitting as a Deputy Judge of the High Court)
CLEAR, UNAMBIGUOUS AND DEVOID OF RELEVANT QUALIFICATION
Representation must be clear, unambiguous and devoid of relevant qualification
"[27] Bingham LJ went on to state that where a representation had been made to a particular taxpayer following a request for a ruling it is necessary that the ruling statement relied on should be "clear, unambiguous and devoid of relevant qualification". In R (oao Davies) v HMRC; R (oao Gaines Cooper) v HMRC [2011] UKSC 47, [2011] 1 WLR 2625, where the issue was whether taxpayers who had moved abroad could claim non-resident tax status on the basis of certain paragraphs in a published booklet, Lord Wilson confirmed that Bingham LJ's requirement that representations should be "clear, unambiguous and devoid of relevant qualification" applied also to representations made in guidance formally published by HMRC to the world." (R (oao Aozora GMAC Investments Ltd) v. HMRC [2019] EWCA Civ 1643)
"[43] (3) For a legitimate expectation to arise in relation to an HMRC non-statutory clearance:
(a) the communication from HMRC should be clear, unambiguous and devoid of relevant qualification: see R v. IRC ex parte MFK Underwriting Agents Limited [1990] 1 WLR 1545 at p.1569G." (Airline Placement Limited v. HMRC [2023] EWHC 1191 (Admin), Constable J)
- Burden on party asserting expectation
"[64] The onus of establishing that a sufficiently clear and unambiguous promise or undertaking, sufficient to give rise to a legitimate expectation, is cast on the party claiming it - see, for instance, In re Loreto Grammar School’s Application for Judicial Review [2012] NICA 1; [2013] NI 41, para 42 et seq. In Paponette v Attorney General of Trinidad and Tobago [2012] 1 AC 1, para 37, Lord Dyson said:
“The initial burden lies on an applicant to prove the legitimacy of his expectation. This means that in a claim based on a promise, the applicant must prove the promise and that it was clear and unambiguous and devoid of relevant qualification. If he wishes to reinforce his case by saying that he relied on the promise to his detriment, then obviously he must prove that too.”
[65] The respondent in the present case sought faintly to argue that the statements made by the government were not sufficiently unconditional and devoid of qualification to give rise to a legitimate expectation. Stephens J and the Court of Appeal rejected that argument, and, in my judgment, they were right to do so."(Re Finucane [2019] UKSC 7)
- Whether test satisfied a question of "pure law"
"[57] In the light of those considerations I do not believe that the provisions of the UKVI letter on which Mr Malik relies amount to the clear and unambiguous undertaking that he claims. I accept that para. [7] contemplates that the Appellant might make an application for leave to remain during the currency of the EA, but I do not regard that by itself as necessarily implying an undertaking that if he did so the fact that he had been an unregularised overstayer for over nine months would be disregarded. As for para. [13], I have already identified the difficulty in working out what the crucial first sentence means: see para. 53 above. I need only say that, however it should be parsed, it is in my view entirely possible to read whatever assurance it conveys as being limited to the period of regularised overstaying.
...
[59] I am conscious that I have not so far said anything about the judgment of the Upper Tribunal. I mean no disrespect by that: where the issue is one of pure law, it is often more straightforward for an appellate court to address it directly rather than through the lens of the reasoning of the tribunal below..." (R (oao Seerangan) v. SoS [2025] EWCA Civ 354, Underhill, Dingemans, Falk LJJ)
Extra-statutory concession binding subject to its terms
"[29] Where HMRC or their predecessors have published an extra-statutory concession on such a basis, a taxpayer may be able to hold HMRC to it. In R v Inland Revenue Commissioners, Ex p M.F.K. Underwriting Agents Ltd [1990] 1 WLR 1545 ("M.F.K."), Bingham LJ said at 1569, "No doubt a statement formally published by the Inland Revenue to the world might safely be regarded as binding, subject to its terms, in any case falling clearly within them". As Sales J said in R (Accenture Services Ltd) v Revenue and Customs Commissioners [2009] EWHC 857 (Admin), [2009] STC 1503 ("Accenture"), at paragraph 8, "Where a taxpayer claims to be entitled to take advantage of an extra-statutory concession promulgated by the tax authorities, its claim is in the nature of a claim to benefit from an enforceable substantive legitimate expectation".
[...]
[32]...Further, for HMRC to be bound by a statement it should have been "clear, unambiguous and devoid of relevant qualification": M.F.K., at 1569, per Bingham LJ. In Davies, Lord Wilson said in paragraph 29 that the right course was to:
"proceed on the basis that the representations in the booklet for which the appellants contend must have been clear; that the judgment about their clarity must be made in the light of an appraisal of all relevant statements in the booklet when they are read as a whole; and that, in that the clarity of a representation depends in part upon the identity of the person to whom it is made, the hypothetical representee is the 'ordinarily sophisticated taxpayer' irrespective of whether he is in receipt of professional advice"." (Murphy v. HMRC [2023] EWCA Civ 497, Newey, Andrews, Falk LJJJ)
- Difficulty of satisfying test based on undocumented oral representation
"[86] The present case is an illustration of the inherent dangers, in point of fact, in relying on the recollection of an alleged oral assurance for the purpose of founding a legitimate expectation such as to be recognisable in public law. This is because it has transpired, by reason of the recording covertly made and only recently revealed, that Mr Cameron at this meeting in fact, as I conclude, gave no such promise, categoric or otherwise, in answer to the fourth claimant or at all.
It is true that, as recorded, Mr Cameron stated at the outset that he remained committed to the report as established: "so Part 1 and Part 2." But that clearly was an introductory statement of his then personal position and intent. Moreover, what he said at the meeting was throughout peppered with allusions to waiting to see first what Part 1 of the Leveson Inquiry came up with – he was demonstrably (and understandably) equivocal in that respect. His various answers have to be read as part of the whole and in that context. He plainly also was preserving Governmental discretion in the meantime." (R (oao Jefferies) v. SOS [2018] EWC 3239 (Admin) Davis LJ and Ousley J)
- Question is whether HMRC were reviewably wrong to determinate T did not fall within scope
"[108] This is a case of a statement published to the world: the issue for the Court being whether, HMRC were reviewably wrong to determine that the Claimant did not fall within its scope." (R (oao Royal Surrey NHS Foundation Trust) v. HMRC [2023] EWHC 2354, Foster J)
- Meaning determined by court
"[30] The meaning of an extra-statutory concession falls to be determined by the Court. In Accenture, Sales J recognised at paragraph 33 that "[t]he proper interpretation of the concession [which was at issue] is a matter for the court". Earlier, in First Secretary of State v Sainsbury's Supermarkets Ltd [2005] EWCA Civ 520, Sedley LJ had said in paragraph 16 in a planning context that "the interpretation of policy is not a matter for the Secretary of State" and that "[w]hat a policy means is what it says". In a similar vein, in R (Ellis) v Secretary of State for the Home Department [2020] UKUT 82 (IAC), the Judge expressed the view that, although "[t]here are some jurisdictions where decision-makers subject to administrative law are permitted to interpret for themselves the norms that govern their action, subject to review on a reasonableness or rationality standard", "[t]he UK courts have never adopted this approach to the interpretation of a statute" and, likewise, "[i]t would be inimical to legal certainty if the Secretary of State were permitted (even subject to rationality review) to interpret [an extra-statutory immigration policy] other than in accordance with the objective meaning that a reasonable and literate person would ascribe to it": see paragraphs 34 and 35." (Murphy v. HMRC [2023] EWCA Civ 497, Newey, Andrews, Falk LJJJ)
Approach to interpretation
- Misinterpretation leading to HMRC taking irrelevancies into account
"[109] I have concluded that the Claimant did clearly fall within the Concession's terms, properly understood, and that HMRC made public law errors in reaching the contrary conclusion. This was both in its understanding of the requirements of the Concession, leading it to take irrelevancies into account, and in its failure to appreciate, in reaching its decision, the case that was made on the Trust's behalf. This led to its erroneous equation of "purchase" with "supply". All these are matters that were available to be considered before the Decision Letter was written. Furthermore, the decision plainly cannot be defended in the light of the evidence submitted for this judicial review, for the reasons given. The manner in which the particular public law wrong is described is not decisive in this case." (R (oao Royal Surrey NHS Foundation Trust) v. HMRC [2023] EWHC 2354, Foster J)
- Read in context and alongside other relevant materials
"[57] I find that the terms of the scheme, properly interpreted in context and read with the guidance and the rules, contain a clear representation, made by the defendant, that once a migrant had embarked on the scheme he would enjoy the benefits of the scheme according to the terms prevailing at the date he joined." (R (oao HSMP Forum Limited v. SoS [2008] EWHC 664 (Admin), Sir George Newman)
- Assess objectively from perspective of person to whom representation addressed
"[30] As regards whether the representations were "clear, unambiguous and devoid of relevant qualification", the Board refers to what Dyson LJ said when giving the judgment of the Court of Appeal in R (Association of British Civilian Internees: Far East Region) v Secretary of State for Defence [2003] EWCA Civ 473, [2003] QB 1397, at para 56: the question is how on a fair reading of the promise it would have been reasonably understood by those to whom it was made. The words "management" and "control" are ordinary English words whose meaning is well understood. The members of the Association had been controlling and managing their own affairs. They knew that they were being asked to move to a facility which was owned by PTSC. In that context, they would reasonably have understood the representations as reassuring them that they would be able to continue to control and manage their own affairs if they moved. Managing their own affairs would include not having to satisfy anyone else (still less a rival) that they were fit and proper persons who required a permit for the use of the facilities and not having to pay a fee each time they made an exit journey. The fact that there might have been some uncertainty as to precisely what management entailed does not mean that the representations were not clear and unambiguous. They were certainly devoid of any relevant qualification." (Paponette v. Attorney General of Trinidad and Tobago [2010] UKPC 32)
"[31] The meaning of an extra-statutory concession published by HMRC is to be assessed by reference to how it would "reasonably have been understood by those to whom it was directed" (to borrow from R (Association of British Civilian Internees: Far East Region) v Secretary of State for Defence [2003] EWCA Civ 473, [2003] QB 1397, at paragraph 56, per Dyson LJ, giving the judgment of the Court; see also Paponette v Attorney General of Trinidad and Tobago [2010] UKPC 32, [2012] 1 AC 1, at paragraph 30). The "ordinarily sophisticated taxpayer" can be taken to be representative of those to whom an extra-statutory concession is directed: M.F.K., at 1569, and R (Davies) Revenue and Customs Commissioners [2011] UKSC 47, [2011] 1 WLR 2625 ("Davies"), at paragraph 29 ("the hypothetical representee is the 'ordinarily sophisticated taxpayer' irrespective of whether he is in receipt of professional advice", per Lord Wilson, with whom Lords Hope, Walker and Clarke expressed agreement, in the context of a booklet published by the Inland Revenue)." (Murphy v. HMRC [2023] EWCA Civ 497, Newey, Andrews, Falk LJJJ)
"[27]...Further, it is clear from the judgment in Davies that the content of the alleged representations is to be determined on an objective basis. As Lord Wilson expressed it at [29]:"… It is better to forsake any arid analytical exercise and to proceed on the basis that the representations in the booklet for which the appellants contend must have been clear; the judgment about their clarity must be made in the light of an appraisal of all relevant statements in the booklet when they are read as a whole; and that, in that the clarity of a representation depends in part on the identity of the person to whom it is made, the hypothetical representee is the "ordinarily sophisticated taxpayer" irrespective of whether he is in receipt of professional advice."" (R (oao Aozora GMAC Investments Ltd) v. HMRC [2019] EWCA Civ 1643)
"[43] (2) Whether HMRC have created an expectation is to be objectively assessed and does not depend upon their intention: see R v. Barking and Dagenham LBC ex parte Lloyd [2001] LGR 86 at [31]-[35] and R (oao Vacation Rentals (UK) Limited) v. HMRC [2019] STC 251 at [60]-[62]." (Airline Placement Limited v. HMRC [2023] EWHC 1191 (Admin), Constable J)
- Normally the ordinarily sophisticated taxpayer
"[29] In that the representations in the booklet are formally published by the Revenue to the world rather than being its response to approaches of a less formal nature, a literal reading of Bingham LJ's judgment suggests that, although they are binding in relation only to cases falling clearly within them, the requirement that they should be "clear, unambiguous and devoid of relevant qualification" does not apply to them. But in my view a case would fall clearly within them only if they were clear, unambiguous etc; and in R (Bancoult) v Secretary of State for Foreign and Commonwealth Affairs (No 2) [2008] UKHL 61, [2009] 1 AC 453, Lord Hoffmann, at para 60, applied the quoted words of Bingham LJ to a formal publication, namely a press announcement, on the part of the Foreign Secretary. It is better to forsake any arid analytical exercise and to proceed on the basis that the representations in the booklet for which the appellants contend must have been clear; that the judgement about their clarity must be made in the light of an appraisal of all relevant statements in the booklet when they are read as a whole; and that, in that the clarity of a representation depends in part upon the identity of the person to whom it is made, the hypothetical representee is the "ordinarily sophisticated taxpayer" irrespective of whether he is in receipt of professional advice." (R (oao Davies) v. HMRC [2011] UKSC 47)
"[41] Nor do I accept that the judge failed to apply the ordinarily sophisticated taxpayer test. While he did not expressly refer to the test in that part of his judgment dealing with the NAC, he was clearly aware that it was the appropriate test for considering whether a taxpayer could rely on a legitimate expectation arising from an extra-statutory concession, as he quoted the passage from Rose LJ's judgment in R (Aozora) v HMRC [2019] STC 2486, at [31], in which the test was referred to (see [37] of the deputy judge's judgment). More importantly, for the reasons already given, I am satisfied that the judge's interpretation of the NAC is consistent with how it would be understood by the ordinarily sophisticated taxpayer." (First Alternative Medical Staffing Ltd v. HMRC [2022] EWCA Civ 249)
- Read correspondence as a whole/in light of what it is replying to
"[23] The key factor supporting the Claimant's interpretation is that the letter of 30th September 2022 was a reply to that of 10th August from his accountants. The Defendants' letter has to be seen in light of the letter to which it was replying..." (R (oao Zafari) v HMRC [2024] EWHC 3014 (Admin), Eyre J)
- No assumption that ordinary taxpayer has read previous versions of a concession
"[52] I doubt myself whether it is in fact right to have regard to ESC B18 (1978) or ESC B18 (1994) when interpreting ESC B18 (1999). An "ordinarily sophisticated taxpayer" would not expect to have to research earlier versions of ESC B18 in order to understand ESC B18 (1999), especially when ESC B18 (1978) and ESC B18 (1994) are not readily available. Perhaps one or both could be found in old books, but an "ordinarily sophisticated taxpayer" should not be assumed to have looked at, or even to have had access to, these, and neither of the earlier versions of ESC B18 is readily to be found on the internet. If, however, it is appropriate to consider ESC B18 (1978) and ESC B18 (1994), it seems to me that, on balance, the prior history tends to support the appellants' case. The ways in which ESC B18 was altered between its 1994 and 1999 versions are much more telling than whatever might be said about what "A similar concession" meant in the 1978 version." (Murphy v. HMRC [2023] EWCA Civ 497, Newey, Andrews, Falk LJJJ)
- Avoid taking inappropriately technical approach
"[32] An extra-statutory concession should not be construed as if it were a statute (R (Greenwich Property Ltd) v Customs and Excise Commissioners [2001] EWHC Admin 230, [2001] STC 618)." (Murphy v. HMRC [2023] EWCA Civ 497, Newey, Andrews, Falk LJJJ)
"[76] Thirdly, [HMRC are wrong because they] take an inappropriately technical and rigorous approach to construing the words of the four components, in particular through their interpretation 30 of the word “transmitting”, which in our view must be given its ordinary meaning and is not nuanced in the way that HMRC suggest. The authorities that we have referred to at [60] and [61] above (Mohibulla and Paponette) make it clear that the question is how on a fair reading it would be understood by those to whom it was addressed, in this case the ordinarily sophisticated taxpayer. The guidance is not to be construed as 35 a taxing statute would be. " (R (oao Vacation Rentals (UK) Ltd v. HMRC [2018] UKUT 383 (TCC), Fancourt J and Judge Herrington)
- Disregard materials of which ordinary taxpayer not expected to be aware
"[56] I have queried above whether regard can properly be had to the "previous iterations" of ESC B18. However, the Judge was, in my view, plainly correct that no account should be taken of materials of which the "ordinarily sophisticated taxpayer" could not have been expected to be aware. If, therefore, the "ordinarily sophisticated taxpayer" would have had no means of knowing of an HMRC practice in relation to an extra-statutory concession, it must be right to disregard it. On the other hand, there may be cases in which the "ordinarily sophisticated taxpayer" would have been alerted to a settled practice of HMRC through, say, HMRC manuals, guidance published by HMRC or commentaries in practitioner texts. In such a situation, HMRC practice may be of relevance. In a sense, that might be said to result in the meaning attributed to an extra-statutory concession changing over time despite its wording remaining the same. As, however, Sales J explained in Accenture, a claim by a taxpayer to take advantage of an extra-statutory concession is "in the nature of a claim to benefit from an enforceable substantive legitimate expectation". Materials revealing a settled practice on the part of HMRC may bear on whether a taxpayer had such an expectation." (Murphy v. HMRC [2023] EWCA Civ 497, Newey, Andrews, Falk LJJJ)
- Clear words required for concession to be relied on retrospectively
"The reasoning in [35] is that, because extra-statutory concessions operate as a decision by HMRC not to collect tax that is statutorily due in respect of supplies actually made, there would need to be clear words for a concession to be given retrospective effect. That applies equally in this case irrespective of any difference in the wording of the concession." (First Alternative Medical Staffing Ltd v. HMRC [2022] EWCA Civ 249)
- Read consistently with international obligations
[47] In my view, however, EU law is of significance. The hypothetical "ordinarily sophisticated taxpayer" can, I think, be expected to appreciate that, read in the way favoured by HMRC, ESC B18 (1999) could favour UK trusts over non-resident ones and so, potentially, run counter to EU law principles. That, I think, would tend to confirm to an "ordinarily sophisticated taxpayer" that, contrary to HMRC's case, Concession 3 is not subject to a six-year income limit." (Murphy v. HMRC [2023] EWCA Civ 497, Newey, Andrews, Falk LJJJ)
Examples of interpretation
- Court not inferring a 6 year limit to claiming relief for tax paid by trustees
"[42]...For my own part, I can see that HMRC might have chosen to impose a six-year income limit on Concession 3 for such reasons. I do not think, however, that any issues of practicality for HMRC would lead an "ordinarily sophisticated taxpayer" to infer that there is a six-year income limit if ESC B18 (1999) does not otherwise so indicate. That is especially the case given the stringency of the conditions specified in the sentence beginning "This treatment". For credit to be claimed pursuant to Concession 3, the trustees must, among other things, "have made trust returns giving details of all sources of trust income and payments made to beneficiaries for each and every year for which they are required" and "keep available for inspection any relevant tax certificates"." (Murphy v. HMRC [2023] EWCA Civ 497, Newey, Andrews, Falk LJJJ)
- Stating that recovery would be paused to allow amended returns to be filed not a representation that time would be extended for filing those returns
"[23] The key factor supporting the Claimant's interpretation is that the letter of 30th September 2022 was a reply to that of 10th August from his accountants. The Defendants' letter has to be seen in light of the letter to which it was replying. In the August letter the Claimant's accountants had requested the Defendants' "kind authorities to allow us to make changes" and they said that the amended returns would be provided "upon your agreement". Although the letter was triggered by the demand of 15th July 2022 it was not expressly seeking a stay in enforcement but was asking for permission to file amended returns. The 30th September letter said that recovery action would be stayed for a period to allow the amended returns to be filed. In support of the Claimant's case the point can be made that there would be little point in doing this if the amended returns were to be rejected.
[24] There are a number of factors operating against the Claimant's interpretation.
i) The letter of 30th September 2022 does not expressly say that the amended returns would be accepted. It is a short letter and says expressly that the SA302 forms have been forwarded elsewhere; that recovery action will be put on hold for a specified period of time; and that a phone call should be made if the returns had not been amended by the end of that period. On a natural reading the letter was saying that enforcement action would be stayed to allow the amended returns to be prepared and submitted but was not saying that they would be accepted when submitted..." (R (oao Zafari) v HMRC [2024] EWHC 3014 (Admin), Eyre J)
- HMRC's power to recover overpaid claim not undermining clarity of representation when accepting claim
"[190] Mr Simpson also submits that the relevant context for the ruling given by HMRC includes the fact that there is a two year time limit for making a recovery assessment (s 80(4AA(a) VATA). He suggests that, on this basis, the reference to the issue potentially being revisited during future audit activity must have been understood as a reference to the fact that HMRC may change their mind at some point within that two year window.
[191] We do not accept this. Given the background to the statement made, the possibility of HMRC making a recovery assessment on the basis that they had changed their view on whether or not the relevant items could be zero rated would simply not be on PwC's radar. There is certainly no basis for thinking that a reasonable recipient of the email would have made a connection between the statement made and the two year time limit for making any such assessment."(Queenscourt Limited v. HMRC [2024] UKFTT 460 (TC), Judge Vos)
- No unambiguous statement that HMRC would not assess retrospectively where reviewing the sector
"[257] [The taxpayer] submits that the hypothetical taxpayer would understand Officer Hothi to be drawing a contrast between (a) the status quo and (b) the position following the issue of such revised guidance to the sector as HMRC might issue following their review. In the circumstances, to the "ordinarily sophisticated taxpayer" that was a clear and unambiguous statement that, whilst there might be guidance issued by HMRC in the future which could change the position, until then the Appellant could continue as it had done without threat of retrospective action by HMRC.
[258] Whilst we accept that the Appellant did put all of its cards "face up" on the table by engaging with HMRC to clarify the position following Officer Hothi's letter of 6 July 2021, and whilst we accept the contextual background leading up to that letter, we are satisfied that Officer Hothi unequivocally stated that no further action was being taken "at this time". We are further satisfied that Officer Hothi clearly stated that HMRC would be considering the sector more broadly, and that this may result in HMRC clarifying their view. We are fortified in our view by the fact that the Appellant stated that the letter gave it "no certainty or clarity", (the 13 July 2021 letter from the Appellant to HMRC). This is insufficient to give rise to a legitimate expectation. We find that there was no "clear and unambiguous statement" creating a legitimate expectation in Officer Hothi's letter. The Appellant's claim in respect of whether a legitimate expectation had been created therefore falls at the first hurdle. The Legitimate Expectation Issue is, however, academic, given our findings and conclusions on the Supply Issue." (United Carpets (Franchisor) Ltd v. HMRC [2025] UKFTT 895 (TC), Judge Manyarara)
- Clear statement not to collect VAT pending registration
"[71] Taken together, we consider that the two limbs of the Instruction Email amount to a clear, unambiguous and unqualified instruction not to collect VAT, or any sums "for VAT".
[72] We therefore find that the Appellant had a legitimate expectation that they were required not to collect any VAT (or sums on account of VAT) pending registration." (Treasures of Brazil Ltd v. HMRC [2025] UKFTT 929 (TC), Judge Frost)
- Distinction between HMRC agreeing a view of the law v. agreeing to forgo any tax on that basis
"[401] It is clear from MFK that it is one thing to ask an HMRC officer whether he shares a taxpayer's view on a point and quite another to ask whether HMRC would forgo any claim to tax on any other basis. For us find that the discussions in 2012 are sufficient to establish a legitimate expectation, Morrisons must prove, on the balance of probabilities, that it was clear that HMRC were being asked for a formal ruling which they would stand behind. Similarly, Morrisons must show that they made full disclosure to HMRC of all relevant material and the statement Officer Dean gave must be clear, unambiguous and devoid of relevant qualification. If these conditions are met, an ordinary sophisticated taxpayer could reasonably conclude that (whatever HMRC actually thought) HMRC had created a legitimate expectation.
...
[418] To be completely clear on this point, for the reasons discussed at [401]-[404] above, we do not regard Officer's Dean's comment that what he saw on 2012 "appeared acceptable" to be a clear, unambiguous statement devoid of relevant qualification, which an ordinary sophisticated taxpayer could reasonably take to be a ruling by HMRC on the VAT liability of CDRCs, either in the Autumn of 2012 or when it was repeated on 5 September 2013." (WM Morrison Supermarkets Ltd v. HMRC [2025] UKFTT 1542 (TC), Judge Baldwin)
Devoid of relevant qualification
- Qualification need not be unambiguous
"[189] We accept that there may be a relevant qualification if the qualification is itself ambiguous and one possible interpretation amounts to a relevant qualification. However, for the reasons we have explained, we do not consider that the qualification in this case can be interpreted as a suggestion that HMRC may retrospectively decide that the dip pots are in fact part of a single supply and cannot therefore be zero rated." (Queenscourt Limited v. HMRC [2024] UKFTT 460 (TC), Judge Vos)
- Inconceivable that notice of qualification would not have been given if it had been intended
"[53] It would not have been inconsistent with nor inimical to the scheme for it to have been expressly stated that admission to it gave no guarantee that the criteria at the extension stages would not change during a migrant's participation in the scheme. But I do not think the defendant can escape from the consequences of having failed to make that clear. The stages leading to permanent settlement and security of status would have been of acute interest and significance to applicants. They received considerable attention in the guidance.
[54] Had it been in the defendant's contemplation that the criteria at the extension stages would need to change, even though a migrant had embarked on the scheme, it seems inconceivable that notice would not have been given of this possibility at the time notice was given to prospective applicants that the "criteria and documentation" would change. The defendant's original misconceived reliance upon the limited reservation as applying to changing the rules for extension and settlement, was abandoned between the summary grounds of defence and the hearing. I agree with Mr Fordham that the express reservation, and the absence of any equivalent, contribute to the overall representation as to what was- and what was not – capable of being changed." (R (oao HSMP Forum Limited v. SoS [2008] EWHC 664 (Admin), Sir George Newman)
- Representations about timing of submission of claims not subject to a qualification in the event that Parliament changed the law to introduce a shorter time limit
"Reliance is placed on that decision by the commissioners, it being said in the present case that no representation was ever made that nothing would ever change at any time in the future and that if Parliament does change the law, the commissioners can do nothing about it. Dr Lasok submits that the representation that was made could only have been made on the basis rebus sic stantibus and that things have now changed because the government is proposing to change the law retrospectively...
In any event, even if this paragraph is interpreted in favour of the commissioners, it clearly amounts to a representation that opticians have until March 2001 to submit claims in respect of overpayments, and it is clear from earlier passages that those claims can then date back to 1 September 1988. So while opticians were being told that they should now submit claims, they were also being told that they had until March 2001 to do so. It also seems to me that it would be wrong to invest the word 'now' in the passages relied upon by the commissioners with the degree of significance suggested. Put into context, those passages were really telling the recipients of such documents that the interim period of negotiation was now over, and that the inhibition on submitting claims was lifted. In all the circumstances, those who received the agreement or were told of its contents were in my judgment entitled to rely on it as indicating that they could certainly submit claims until March 2001 and that they would be repaid overdue payments dating back to 1 September 1988.
...
It is right that the commissioners' representations cannot be construed so as to override the will of Parliament. If Parliament were to legislate in such a way as to leave the commissioners no discretion but rather to oblige them to depart from their representations to the opticians' organisations, then that expression of Parliament's will must prevail, subject to any challenge on the basis of Community law. On the other hand, any such future legislation which may be passed may leave the commissioners some discretion as to making concessions in appropriate cases. In exercising any such discretion the commissioners would almost certainly have to take into account the existence of their representations already referred to." (R v. CEC ex p. Kay [1996] STC 1500 at 1527, Keene J)
LEGITIMATE EXPECTATION AGAINST RETROSPECTIVE INVALIDITY OF LAW
Legitimate expectation that a law/legal act will not be retrospectively invalidated to person's detriment
"[42] As just explained, in this and the next section of this judgment (starting at para 57), I am assuming that the effect of MGN v UK is that, where a claim involves restricting a defendant’s freedom of expression, it would normally be a breach of its article 10 rights to require it to reimburse the claimant any success fee or ATE premium which he would be liable to pay. Even if that contention is correct, it is argued on behalf of Mr Miller (and Mr Flood) that it would be wrong to invoke it to deprive him of the ability to recover from ANL (and TNL) the success fee and ATE premium for which he is liable to his legal advisers and ATE insurers respectively.
[43] If the Rule applies, it was effectively conceded on behalf of Mr Miller that, in the absence of any good reason to the contrary, it would mean that this Court should ensure that any order for costs should not impose such a liability on ANL. That is because section 6(1) of the Human Rights Act 1998 provides that it is “unlawful for a public authority to act in a way which is incompatible with a Convention right”, and subsection (3) provides that “public authority” includes “a court or tribunal”.
...
[46] In this connection, I consider that it would not simply be a plain injustice on Mr Miller to deprive him of the ability to recover the success fee and the ATE premium; it would in my view infringe his rights under A1P1, and that is a factor which can, indeed which must, be taken into account when considering how to dispose of ANL’s appeal. That view derives direct support from the concurring judgment of Lord Mance (with whom Lord Carnwath agreed) in Lawrence (No 3), para 106, where he said that claimants who had entered into a CFA and taken out ATE insurance under the 1999 Act regime must “have had a legitimate expectation that the system would apply and be upheld”, especially as “appellate courts have repeatedly endorsed the system”. Accordingly, he said:
“[The claimants’] legitimate expectation that the system would be enforced is one which falls to be taken into account at the present stage [ie when deciding whether to extend the costs order to payment of the success fee and ATE premium] and is not merely a matter that might (being itself a protected possession within A1P1) be raised as against the United Kingdom in Strasbourg.”
[47] Support for the notion that Mr Miller can rely on A1P1 in the instant circumstances appears to me to be found in the discussion on A1P1 in Simor and Emmerson on Human Rights Practice para 15.010, which includes the proposition that “where in reliance on a legal act, an individual incurs financial obligations, he may have a legitimate expectation that that legal act will not be retrospectively invalidated to his detriment”. Strasbourg jurisprudence also supports this proposition. Pine Valley Developments v Ireland (1991) 14 EHRR 319, Pressos Cia Naviera SA v Belgium (1995) 21 EHRR 301, and Stretch v United Kingdom (2003) 38 EHRR 12 are all cases where the applicant’s disappointed legitimate expectation of a legal right was held to justify his A1P1 claim. In Pine Valley (assumed validity of a planning permission) and Stretch (assumed validity of a contractual option), the basis of the claim was not as strong as here, where it is based on primary legislation whose validity was approved by the Law Lords; on the other hand, both cases related to loss of land-related rights rather than a money claim. Pressos provides a closer analogy for present purposes, as it involved retrospective amendment of legislation which deprived the applicant of an accrued statutorily based claim for damages." (Times Newspaper Limited v. Flood [2017] UKSC 33)
- Not always, however
"[48] Having said that, not all retrospective deprivations of accrued rights will offend A1P1. As the Strasbourg court pointed out in Pressos, para 38, the question of proportionality will normally arise, and this typically involves balancing “the demands of the general interest of the community and the requirements of the protection of the individual's fundamental rights”. Even bearing that factor in mind, I find it very difficult to see how Mr Miller’s A1P1 claim could be defeated. Parliament did not see fit to render the LASPO regime retrospective: on the contrary, as explained above, the 1999 Act regime applies to all proceedings begun before 1 April 2013. Parliament thereby correctly recognised that, while the 1999 Act regime was unsatisfactory, it would be wrong to disapply it to proceedings which had been issued in the expectation that that regime would continue to apply to those proceedings." (Times Newspaper Limited v. Flood [2017] UKSC 33)
- Applied to reject reliance on breach of Article 10 to refuse a costs order
"[53] It follows from all this that upholding Mitting J’s costs order would infringe ANL’s article 10 rights for the reasons given by the Strasbourg court in MGN v UK and would therefore involve an injustice, but amending that costs order in the way sought by ANL would not only involve an infringement of Mr Miller’s A1P1 rights: it would undermine the rule of law. It is a fundamental principle of any civilised system of government that citizens are entitled to act on the assumption that the law is as set out in legislation (especially when its lawfulness has been confirmed by the highest court in the land), secure in the further assumption that the law will not be changed retroactively - ie in such a way as to undo retrospectively the law upon which they committed themselves. To refuse the costs order which Mr Miller seeks would directly infringe that fundamental principle. While freedom of expression is, of course, another fundamental principle, it is not so centrally engaged by the issue in this case: the decision in MGN v UK is essentially based on the indirect, chilling, effect on freedom of expression of a very substantial costs order." (Times Newspaper Limited v. Flood [2017] UKSC 33)
CONDUCT & IMPLIED REPRESENTATIONS
Implied representation from long standing practice
"[40] ... The decision in Unilever was unremarkable on its unusual facts, but the reasoning reflects the case law as it then stood. Surprisingly, it does not seem to have been strongly argued (as it surely would be today) that a sufficient representation could be implied from the Revenue’s consistent practice over 20 years (see eg de Smith para 12-021)..." (R (oao Gallaher Group Ltd) v. The Competition and Markets Authority [2018] UKSC 25, Lord Carnwath)
"[51]... The source of the expectation may be either an express promise given on behalf of the public authority or an established practice which the claimant can reasonably expect to continue: Council of Civil Service Unions v Minister for the Civil Service [1985] AC 374, 401 per Lord Fraser. ..." (Rainbow Insurance Co Ltd v. Financial Services Commission [2015] UKPC 15, Lord Hodge)
"[43] (8) It is unreasonable and/or an abuse of power for HMRC to depart from a long-standing treatment of a taxpayer that HMRC has either agreed or implicitly accepted: see R v. IRC ex parte Unilever [1996] STC 681 at p.690-692." (Airline Placement Limited v. HMRC [2023] EWHC 1191 (Admin), Constable J)
- Unambiguous, widespread and well-recognised
"[49] It is an arresting proposition that, having published and regularly revised a booklet in which it purported to explain how it would determine claims by individuals to have become non-resident and of which it encouraged widespread use, the Revenue departed from it as a matter of settled practice. Clear evidence would be necessary in order to make the proposition good. But there is another reason for the need for clear evidence in this connection. For, whereas, in the booklet the Revenue gave unqualified assurances about its treatment of claims to non-residence which, if dishonoured, would readily have fallen for enforcement under the doctrine of legitimate expectation, it is more difficult for the appellants to elevate a practice into an assurance to taxpayers from which it would be abusive for the Revenue to resile and to which under the doctrine it should therefore be held. "[T]he promise or practice…must constitute a specific undertaking, directed at a particular individual or group, by which the relevant policy's continuance is assured": R (Bhatt Murphy) v The Independent Assessor [2008] EWCA Civ 755, per Laws LJ at [43]. The result is that the appellants need evidence that the practice was so unambiguous, so widespread, so well-established and so well-recognised as to carry within it a commitment to a group of taxpayers including themselves of treatment in accordance with it." (R (oao Davies) v. HMRC [2011] UKSC 47)
- Generalised, anecdotal understanding of witnesses not sufficient
"[51] In any event, however, the appellants accept that, in order to make good their case, they need evidence beyond the generalised, anecdotal understanding of their witnesses, however highly regarded; and in this regard they primarily rely on a letter, entirely unrelated to the cases before the court, from a Revenue Inspector, Mr Wilks, to an accountant, Mr Sawyer, dated 7 July 1999, which was never published and of which the appellants learnt only following the Revenue's disclosure of it in the course of these proceedings. I should add that, in this court albeit not in the Court of Appeal, the appellants have also relied on a document published by the Institute of Chartered Accountants in England and Wales, dated 30 November 1994, in which, no doubt accurately, it recorded the Revenue as confirming that, were a UK resident to "retire" overseas to a house which he owned but to retain ownership of another house in the UK to which he were to make regular "holiday visits" of 50 days each year, he would have become non-resident and not ordinarily resident in the UK; but in my view the quoted words sufficiently betoken a distinct break.
...
[58] In my view the Court of Appeal was right to hold that the appellants failed to establish that, by its inquiries and determinations in respect of them, the Revenue was departing from a settled practice such as to found a legitimate expectation. In about 2001, probably triggered by the mobile workers, scrutiny of claims to non-residence became more frequent. But when, previously, claims had been scrutinised, had the Revenue adopted a settled practice of applying criteria different from those identified not only by the ordinary law but also in its own booklet read as a whole? The appellants' evidence to this effect was far too thin and equivocal." (R (oao Davies) v. HMRC [2011] UKSC 47)
- Abrupt change of practice so unfair as to amount to abuse
"Laws LJ in formulating this expectation was considering unusual circumstances where, absent a representation that the policy would continue, an abrupt change of policy was held to be so unfair as to amount to an abuse of power. A classic example is R v Inland Revenue Commissioners, Ex p Unilever plc [1996] STC 681. In that case the Inland Revenue Commissioners on thirty occasions over twenty years had exercised their lawful discretion to entertain late claims for loss relief against corporation tax and then suddenly, without notice or consultation and for no good reason, refused such claims as out of time. The Board does not need to address questions of taxonomy by deciding whether this is a separate head of legitimate expectation or whether it is a particular example of what Lord Fraser described as an established practice which the claimant could reasonably expect to continue. It is enough to observe that there are cases in which fairness requires that a change in policy cannot be made abruptly because it would defeat the legitimate expectations of an individual or group. In such cases, as Sedley LJ stated in Niazi at para 70, it is not the alteration of the policy but the way in which it is done which is capable of frustrating a legitimate substantive right expectation." (Rainbow Insurance Co Ltd v. Financial Services Commission [2015] UKPC 15, Lord Hodge)
- Not applicable where practice based on HMRC misapprehension of which taxpayer was/should have been aware
"[87] Unilever does not give APL any basis to contend that HMRC's resiling from the Clearance Letter retrospectively is abusive in circumstances where no legitimate expectation arises precisely because, in seeking the ruling which HMRC has resiled from, APL did not give full and frank disclosure. Unilever, which Ms Shaw accepts was an exceptional case and which Sir Thomas Bingham MR described as 'unique' is readily distinguishable. It involved a clear, consistent and consensual procedure which worked harmoniously between Unilever and HMRC for many years, which both parties viewed as very satisfactory and which operated to the mutual benefit of both Unilever and the taxpayer. The Court considered that the Revenue's decision revoking the procedure fell into the category of one so outrageously unfair that it should not be allowed to stand. This is plainly not the case in circumstances where, whilst the practice of VAT treatment was longstanding, that treatment had been since 2009 predicated on a specific ruling which had been given pursuant to a materially inaccurate and misleading request, and in respect of which APL had not placed all its cards face up on the table. Indeed, as I have pointed out above, in the communications which followed the ruling and in which HMRC explained the basis of its decision, it should have become more than clear to APL that HMRC was labouring under the misapprehension that the effect of the arrangement was that the airlines were paying for the training when, at least in relation to its biggest customer, this was plainly wrong. APL did not seek to correct the obvious misapprehension at any time. MFK is clear that in the absence of a legitimate expectation, HMRC is entitled to resile from its ruling. In circumstances where the ruling was obtained by omitting material facts and giving a materially inaccurate impression of the overall arrangement, the Decision is in no way unfair or otherwise an abuse of power." (Airline Placement Limited v. HMRC [2023] EWHC 1191 (Admin), Constable J)
- No representation from HMRC's failure to question tax treatment during inspection
"[89] Much of the evidence was directed to the question whether the Defendants' officers did in fact consider whether the Relevant Supplies were exempt or not. I am prepared to accept that they should have done, especially given the amounts involved. I also acknowledge that there was no witness statement from any of the officers who conducted the inspections. However, the contemporary documents would surely have been very different if they had in fact carried out such an inquiry. Moreover, Mr Cutting, who was the only witness who had any involvement in any of the inspections of the Claimant, gave no evidence that the Defendants' officers said that they were carrying out such an inquiry. I find that none of the Defendants' officers in any of the inspections carried out a critical examination of the proposition that the Relevant Supplies were exempt from VAT. However, it is perhaps more significant that the Defendants did not tell the Claimant that they had done so. That much is evident from the follow-up letters written by the Defendants' officers to the Claimant.
[90] Balancing all of these different considerations, I conclude that the Defendants did not give rise to a legitimate expectation on the part of the Claimant to which the Defendants were bound to give effect. Alternatively, I find that any expectation which the Defendants created was such that the Defendants would only be bound to give effect to it if the Claimant had relied on it to its detriment." (R (oao Realreed Limited) v. HMRC [2023] EWHC 1572 (Admin), Lavender J)
Public authority may, by its conduct, be treated as exercising power it did not intend to
"[61] In my judgment it is plain from the passage that I have cited above from Janet Smith LJ's judgment in London Borough of Southwark v D, paragraphs 48-50, that a local authority may by its conduct in dealing with a potential or proposed foster parent be treated as having taken a decision which it may not have taken or even intended to take. If a potential foster parent is allowed by the local authority to believe that she will receive financial support from the authority, rather than have to look to her own resources to fund the cost of keeping the child, then it may be concluded that the local authority was exercising its functions under sections 20 and 23 of the 1989 Act and was not simply facilitating a private fostering arrangement." (R oao A v. Coventry CC [2009] EWHC 34, Edwards-Stuart QC)
- Public authority allowing individual to believe they would receive financial support, detrimental reliance
"[65] So, like Collins v Knowsley, this is a case that falls squarely within the circumstances discussed by Janet Smith LJ in R (D) v London Borough of Southwark where a local authority has allowed a proposed foster parent to believe that she would receive financial support for looking after a child, as opposed to having to do so at her own expense.
[66] Accordingly, in my judgment this is a case where it is to be concluded that, in its dealings with Ms Casey between March and September 2007, the Council is to be taken to have exercised its powers and duties as a public authority pursuant to sections 20 and 23 of the 1989 Act. This conclusion makes it unnecessary for me to go on and consider the second question, but in case I am wrong I shall briefly state my views on that question also." (R oao A v. Coventry CC [2009] EWHC 34, Edwards-Stuart QC)
LEGITIMACY
- No legitimate expectation that body will take action it has no power to take
"[18] There can be no legitimate expectation that a public body will take action which it has no power to take as a matter of law (see Begbie at 1125D per Peter Gibson LJ and at 1129E per Laws LJ and MFK per Judge LJ, as he then, was at 1573G-H)." (R (oao Zafari) v HMRC [2024] EWHC 3014 (Admin), Eyre J)
- No legitimate expectation that public body will act contrary to statute
"[52] The courts will enforce an expectation only if it is legitimate. There is an established line of authority that nobody can have a legitimate expectation that he will be entitled to an ultra vires relaxation of a statutory requirement: R v Attorney General, Ex p ICI plc (1986) 60 TC 1, p 64G per Lord Oliver; R v Inland Revenue Commissioners, Ex p MFK Underwriting Agents Ltd [1990] 1 WLR 1545, p 1569 per Bingham LJ, p 1573 per Judge J, Ali Fayed v Advocate General for Scotland 2003 SLT 747, para 135 per Lord Justice Clerk Gill, 2004 SLT 798, paras 115-119 per Lord President Cullen. Those cases are all concerned with tax legislation and the Board recognises that, as Judge J stated in MFK (above) the correct approach to legitimate expectation in any particular field of public law depends on the relevant legislation. But what is at stake here is the principle of legality. In R v Secretary of State for Education and Employment, Ex p Begbie [2000] 1 WLR 1115, the Court of Appeal considered an argument that the Secretary of State was required to exercise his discretion to continue to fund a primary school pupil's education at a private school until her secondary education was complete under an assisted places scheme which the Government had abolished by legislation, because an announcement by the governing party when in opposition had created a substantive right legitimate expectation. The court's principal reason for rejecting that submission was that an undertaking to allow all children in the position of the claimant's child to continue in an assisted place was contrary to the limited discretion which the statute had given the Secretary of State. There could be no legitimate expectation that the Secretary of State would act contrary to the statute: Peter Gibson LJ at p 1125D-G, Laws LJ at p 1129E, Sedley LJ at p 1132B. See also R (Sovio Wines Ltd) v The Food Standards Agency [2009] EWHC 382 (Admin), paras 95-98 per Dobbs J.
[53]...In this case in which the FSC was exercising regulatory powers in the interests of policy holders and others, third party interests were clearly engaged. Thus on any view there could be no legitimate expectation that the FSC would act in a way which was contrary to its statutory obligations, which included "[taking] measures to suppress illegal … practices": section 6 of FSDA." (Rainbow Insurance Co Ltd v. Financial Services Commission [2015] UKPC 15, Lord Hodge)
- Cannot be invoked to the extent it would interfere with statutory duty
"[38] Secondly, the principle cannot be invoked if, or to the extent that, it would interfere with the public body’s statutory duty - see eg Attorney-General of Hong Kong v Ng Yuen Shiu [1983] 2 AC 629, 636, per Lord Fraser of Tullybelton. Thirdly, however much a person is entitled to say that a statement by a public body gave rise to a legitimate expectation on his part, circumstances may arise where it becomes inappropriate to permit that person to invoke the principle to enforce the public body to comply with the statement. This third point can often be elided with the second point, but it can go wider: for instance, if, taking into account the fact that the principle applies and all other relevant circumstances, a public body could, or a fortiori should, reasonably decide not to comply with the statement." (United Policyholders Group v. AG of Trinidad and Tobago [2016] UKPC 17)
- But note, the "legitimate" expectation may be that a change of view will not be applied retrospectively
"[66] The judge put the point accurately when, after referring to part of the official VAT inquiries guide (Notice 700/51/95) he said,
"Thus, the legitimate expectation is not that the clearance will be treated as binding come-what-may; but that, if there is a change in the understanding of the legal position, it will not be treated as retrospective. Although the reference is to a change resulting from a court or tribunal ruling, that is by way of example. A bona fide change of legal opinion within the commissioners might be expected to have the same result. (In this case, of course, there was no change of legal opinion within the commissioners; but that fact is relevant to the issue of negligence, rather than to the extent of any legitimate expectation created by a clearance itself.)
Secondly, the need for such a limitation is reinforced when one considers the implications for taxpayers other than the person relying on the clearance. In this case, unlike those considered above, the effect of the Miss Sellick's ruling was, not simply to lift a VAT burden from one group of taxpayers (the car dealers), but to impose it on another (the participating retailers). Although there is evidence that the second group were in practice content, the commissioners could not bind them to accept that position."
[67] F&I's only legitimate expectation was that it would not be asked to pay tax in respect of past transactions..." (R v. CEC ex p F&I Services Ltd [2001] EWCA Civ 762, Robert Walker LJ)
- Not legitimate to have expectation based on expressly off the record discussion
"[81] Statements to the effect that "what is said in this room stays in this room" are, objectively (and no doubt subjectively, too), designed to encourage frankness and to discourage guardedness. Mr Cameron could not possibly, in consequence, have thought (or, objectively, could be expected to have thought) that what he was saying could or would thereafter be relied upon directly by those present as creating a legitimate expectation. If it was to be, why was it ever said that "what is said in this room stays in this room"? Moreover, Dr Harris in his witness statement makes clear that the overall strategy throughout had been to get politicians to commit "on the record." Yet this meeting, at his own volunteering, was off the record – not just in the sense of not being attributable but also in the sense of not being reportable. The clear inference was that this was a designed (and entirely understandable) means for endeavouring to get Mr Cameron thereafter to commit on the record – as he did in the House of Commons on 29 November 2012. But the court should not, in my opinion, as a matter of public law lend itself for this purpose to deployment of, let alone enforcement of, statements made on a "what is said in this room stays in this room" basis – indeed to do so would be thoroughly counterproductive and would tend to discourage frank and open discussion (cf. without prejudice discussions between lawyers and litigants). If those in the room were proposing to place reliance on what was said in the sense of a having a legitimate expectation in that regard then a privacy commitment of this kind should never have been made: cf. the observations of Bingham LJ in the (tax) case of R v Inland Revenue Commissioners ex p. MFK Underwriting Agents Ltd. [1990] 1 WLR 545 a p. 1565 F-H.
[82] That point of itself, therefore, causes me to hold against this claim. Any expectation engendered by what Mr Cameron said in this meeting, conducted on the basis that it was, cannot, in my judgment, be recognised or protected as a legitimate expectation for this reason alone." (R (oao Jefferies) v. SOS [2018] EWC 3239 (Admin) Davis LJ and Ousley J)
Subsequent legislation
- Parliament may legislate to leave HMRC with no discretion other than to depart from representation
"It is right that the commissioners' representations cannot be construed so as to override the will of Parliament. If Parliament were to legislate in such a way as to leave the commissioners no discretion but rather to oblige them to depart from their representations to the opticians' organisations, then that expression of Parliament's will must prevail, subject to any challenge on the basis of Community law." (R v. CEC ex p. Kay [1996] STC 1500 at 1528, Keene J)
- Legislation may leave some discretion to make concessions in appropriate cases
"On the other hand, any such future legislation which may be passed may leave the commissioners some discretion as to making concessions in appropriate cases. In exercising any such discretion the commissioners would almost certainly have to take into account the existence of their representations already referred to." (R v. CEC ex p. Kay [1996] STC 1500 at 1528, Keene J)
- Mere fact that government proposing to change the law not sufficient
"In the meantime, pending any such legislation, it seems to me that it would be unfair and an abuse of power for the commissioners to depart from those representations. The mere fact that the government is proposing a change in the law is not in itself enough to justify any such departure. Such a change may never be approved by Parliament. Until it is, those who have relied upon the commissioners' representations are entitled to hold them to them. That category includes Rayner and Keeler Ltd, who cannot be properly be criticised for the time they took, given their understanding that they had at least until March 2001 to submit a claim.
In such cases, therefore, this provides another reason why, on the law as it now stands, the commissioners cannot decline to pay properly established claims for repayment even in respect of periods more than three years before the making of the claim. As I have already indicated, the effect of any future legislation on that position must depend on the detailed terms of that legislation and whether it would be in conflict with Community law. This decision does not cover any such future state of affairs." (R v. CEC ex p. Kay [1996] STC 1500 at 1528, Keene J)
FULL DISCLOSURE
Full disclosure must be made in seeking clearance/ruling
"[43] (3) For a legitimate expectation to arise in relation to an HMRC non-statutory clearance:
[...]
(b) the taxpayer must show that he has put all his cards face up on the table by giving full details of the specific transaction on which a ruling is sought. The taxpayer is to treat HMRC with complete frankness and make full disclosure of all the material facts known to him. The situation calls for utmost faith on the part of the taxpayer: see MFK at p.1569E, p.1575B.
(c) full disclosure will not have been made where statements made in the clearance request are materially inaccurate or misleading. It does not follow that full disclosure has been made because sufficient information was disclosed to enable inference to be drawn therefrom. Where a piece of information essential to the deliberations required of HMRC by the taxpayer was not furnished to them there is no unfairness in revoking a clearance: see R v. IRC (ex parte Matrix Securities Limited) [1994] 1 WLR 334 at p.342B, p.352B, p.354B & H and p.356A & G.
(d) the requirement for full disclosure will be especially difficult to satisfy if there has been a purely oral exchange with a tax official. Full disclosure requires the taxpayer to disclose the perceived problem which the taxpayer wishes to have addressed: see Corkteck Ltd v HMRC [2009] STC 1681, at [30]-[31]." (Airline Placement Limited v. HMRC [2023] EWHC 1191 (Admin), Constable J)
- Non-disclosure is material if real possibility it would have made a difference to decision
"[61]...Helpfully, on the second day of argument, [the taxpayer] drew the Court's attention to the Court of Appeal's decision in Bolton Metropolitan Borough Council v Secretary of State for the Environment and Greater Manchester Waste Disposal Authority (1991) 61 P.& C.R. 343 at p.352-353, in which Glidewell LJ set out (amongst other things) the following statements of principle:
'2. The decision maker ought to take into account a matter which might cause him to reach a different conclusion to that which he would reach if he did not take it into account. Such a matter is relevant to his decision making process. By the verb 'might' I mean where there is a real possibility that he would reach a different conclusion if he did take that consideration into account.
[…]
6. If the judge concludes that the matter was 'fundamental to the decision' or that it is clear that there is a real possibility that the consideration of the matter would have made a difference to the decision, he is thus enabled to hold that the decision was not validly made.'
[62] Drawing on these statements of principle by analogy, it was submitted by [the taxpayer], and accepted and averred by [HMRC] that I should consider that a matter is 'material' if 'there is a real possibility that the consideration of the matter would have made a difference to the decision'.
[...]
[68] Therefore, in order to determine whether the inaccuracy in the NSC Request was 'material', the Court must consider on the ordinary standard of balance of probabilities, had the NSC Request not been inaccurate, whether there is a real possibility that consideration of the matter as corrected would have made a difference to the decision." (Airline Placement Limited v. HMRC [2023] EWHC 1191 (Admin), Constable J)
- Not generally possible to rely on alternative sources of information to demonstrate full disclosure
"[77] It is contended for by [HMRC] that a finding that the NSC Request was materially inaccurate and misleading is sufficient for me to conclude that there was not full and frank disclosure, and therefore no legitimate expectation has arisen. There is considerable force in this submission. As stated by Judge J in MFK, 'In those cases where the taxpayer has approached the revenue for guidance the court will be unlikely to grant judicial review unless it is satisfied that the taxpayer has treated the revenue with complete frankness about his proposals.' I consider that it will generally not be possible for a party who has submitted a materially inaccurate or misleading request for a ruling to point to other material not specifically referred to within the request in order to show that, notwithstanding the materially inaccurate and misleading nature of the request, it has 'treated the revenue with complete frankness'. To find otherwise would place an unfair burden on those considering the request: HMRC should generally be entitled to proceed on the basis that (taking Bingham LJ's phraseology from MFK) the taxpayer placed all his cards face upwards on the table within the four corners of the request and the materials attached. If other material is relied upon, it should be specifically appended to or identified within the Request.
[78] Nevertheless, it is right that I should, notwithstanding [HMRC's] submission, go on to consider whether, as contended for by APL, the fact of the disclosure within the ruling request in 2002, and/or the audit report of Officer Smith, mean that I should conclude that in all the circumstances APL did in fact treat HMRC with complete frankness because it had disclosed (through means other than the NSC Request) the fact of the salary sacrifice arrangement." (Airline Placement Limited v. HMRC [2023] EWHC 1191 (Admin), Constable J)
- No reliance on information submitted for previous ruling request, even if referred to
"[81] APL suggests that, therefore, because APL made reference to the 2002 ruling in its 2009 NSC Request, all the details submitted for the earlier ruling may be effectively taken as having been imported into the 2009 NSC Request. This argument is unsustainable:
(1) There will be situations (as rightly identified by Ms Shaw in argument) where the specific transaction in respect of which a ruling is sought is identical to a previously ruled upon transaction but, for example because of a change of relevant company, a further ruling is required. In these circumstances, as Bingham LJ makes clear, a party need only identify the previous ruling, identify any material difference, and request the new ruling. It will not have to rehearse all the details again;
(2) This is entirely different from the scenario where, as here, whilst reference is made to a previous ruling, APL and its advisors considered it necessary to set out in detail what it considered to be all the relevant aspects of the new scheme (even if materially similar to an earlier one) for the purposes of seeking the new ruling. In these circumstances, HMRC is reasonably entitled to assume that in setting out all the details of the new arrangement, the taxpayer has done this fully and accurately; and
(3) Even if this were not generally the position, in the present case, APL's submission is particularly unattractive in circumstances where, upon receipt of the NSC Request, HMRC specifically told APL that it could find no record of the 2002 ruling and requested APL to provide 'a copy of any relevant correspondence and documentation'. The 2002 ruling request now relied upon by APL is plainly 'relevant […] documentation' and should have been provided in response to this request. APL provided the 2002 ruling itself but, although it was in possession of the ruling request (it was disclosed in the course of this dispute), APL did not provide it. It is not necessary for me to determine whether, consistent with the comment in the draft NSC request relating to the removal of any reference to salary sacrifice, this was a conscious decision or merely an oversight. However, in my view it does not lie well for APL now to place reliance upon the contents of a document that it was asked to provide, and did not. I also reject the contention advanced by Ms Shaw that HMRC has a burden to prove that it did not have a copy of the ruling request, but even if it does I am satisfied on the basis of the internal contemporaneous communication dated 17 March and quoted at paragraph 23 above that HMRC took reasonable efforts to locate the 2002 documents at the time but they could not be found for the reasons stated at the time." (Airline Placement Limited v. HMRC [2023] EWHC 1191 (Admin), Constable J)
- Failure to disclose problem taxpayer perceives may exist may mean disclosure not complete
"[84](5) There will be some circumstances where a failure to identify the particular problem a taxpayer perceives may exist will be regarded as a failure to have been completely frank with the HMRC (as indeed was the case in R (on the application of Corkteck Ltd) v Revenue and Customs Commissioners [2009] EWHC 785 per Sales J as he then was at [30(b)]). In the present case, APL should have, as I have found, fully and frankly described the nature and extent of the salary sacrifice arrangements, their integral role in the easyJet contract, and APL should have corrected the misleading impression clearly given by the materials that the cadets' bond monies would be repaid by (all) the sponsor airlines. Doing this clearly identifies the facts which give rise to the perceived problem. As Deloitte correctly advised, some description of the 'the reason for uncertainty' should be included within a fully frank request. In this case, Deloitte flagged that the area of uncertainty was whether the deposit of a security bond by the Cadet with APL should, or should not, not be treated as a supply for VAT purposes. The identification of the issue was sufficient. What was problematic was the inaccurate and misleading representation of the overall arrangement, rather than in failing to alert HMRC to the perceived problem with more specificity." (Airline Placement Limited v. HMRC [2023] EWHC 1191 (Admin), Constable J see also remainder of [84] for what should have been disclosed)
- Failure to disclose heat retentive properties of bag in relation to hot food zero-rating
"[427] What is abundantly clear, though, is that, if HMRC had known about the heat retentive properties of the chicken paper bags in 2012/13, there is more than a "real possibility" that Officer Dean would not have made the comments he did. We hold that there was material non-disclosure so far as that issue was concerned. If (which we do not consider to be the case at all) Officer Dean's comments so far as Note (3B)(c) or (d) and the chicken paper bags were concerned would otherwise amount to a representation which could establish a legitimate expectation, Morrisons' material non-disclosure (whatever its explanation) of the heat retentive properties of the chicken paper bags would negate that conclusion." (WM Morrison Supermarkets Ltd v. HMRC [2025] UKFTT 1542 (TC), Judge Baldwin)
FAIR TO FRUSTRATE
HMRC may depart from representation if fair to do so
"[43] (4) Where a clear and unambiguous undertaking has been made in a Clearance Letter it must be shown that it would nonetheless be fair to allow HMRC to depart from it: see In the matter of an application by Geraldine Finucane for Judicial Review for Judicial Review (Northern Ireland) [2019] 3 All ER 191 at [62].
(5) In a tax context it is for the taxpayer to demonstrate a high degree of unfairness in order to override the public interest in HMRC collecting taxes in accordance with the law: see R (oao Aozora GMAC Investment Ltd) v. HMRC [2020] 1 All ER 803 at [52]." (Airline Placement Limited v. HMRC [2023] EWHC 1191 (Admin), Constable J)
- The court is arbiter of fairness
"[62] From these authorities it can be deduced that where a clear and unambiguous undertaking has been made, the authority giving the undertaking will not be allowed to depart from it unless it is shown that it is fair to do so. The court is the arbiter of fairness in this context..." (Re Finucane [2019] UKSC 7)
- Burden not on HMRC to justify resiling
"[46] Secondly I do not accept that, once a representation capable of giving rise to a legitimate expectation has been identified, the burden shifts to HMRC to adduce evidence to the court showing some public interest in it being able to resile from the representation. Such an approach fails to recognise that these supposed separate elements or stages in establishing unfairness are all part and parcel of the taxpayer making good his claim that he has a legitimate expectation arising from the representation which the court should protect. Further, the Upper Tribunal does not seem to have been reminded by HMRC of the important public interest in the collection of taxes imposed by Parliament." (R (oao Aozora GMAC Investments Ltd) v. HMRC [2019] EWCA Civ 1643)
- Query the relevance of proportionality
"[120] A narrower approach is also consistent with the Board’s decision in Paponette. Although the group involved was much larger than in Coughlan, there was similar mutuality of specific commitments. It involved a clear promise by the authority, made to a defined group in return for specific action by them within a defined time scale, and designed to further the authority’s own purposes. There was no argument that it raised wider political or economic considerations. The legitimate expectation having been established, it was for the authority to justify its departure from it, applying an approach which (although not so described by Lord Dyson) can in its practical effect be equated with a proportionality test (as proposed by Laws LJ and Professor Elliott).
[121] In summary, the trend of modern authority, judicial and academic, favours a narrow interpretation of the Coughlan principle, which can be simply stated. Where a promise or representation, which is “clear, unambiguous and devoid of relevant qualification”, has been given to an identifiable defined person or group by a public authority for its own purposes, either in return for action by the person or group, or on the basis of which the person or group has acted to its detriment, the court will require it to be honoured, unless the authority is able to show good reasons, judged by the court to be proportionate, to resile from it. In judging proportionality the court will take into account any conflict with wider policy issues, particularly those of a “macro-economic” or “macro-political” kind. By that test, for the reasons given by Lord Neuberger, the present appeal must fail." (United Policyholders Group v. AG of Trinidad and Tobago [2016] UKPC 17, Lord Carnwath)
- Even if clear representation, high degree of unfairness required for HMRC to be bound
"[49] The need for a high degree of unfairness arises, in my judgment, from the fact that, as Lord Templeman put it in Preston the primary duty of the Commissioners is to collect, not to forgive tax. It is not linked with the existence or absence of a representation. Lord Carnwath in Gallaher was not dispensing with the need for a high degree of unfairness to be established before the court would prevent HMRC resiling from a representation, assurance or promise. I consider that wherever an express representation is established it is still essential for the court to consider all the factors relevant to whether it would be unfair to allow HMRC to frustrate an expectation arising from that promise, assurance or representation and further that a high level of unfairness is necessary to override the public interest in the collection of taxes to which I have referred." (R (oao Aozora GMAC Investments Ltd) v. HMRC [2019] EWCA Civ 1643)
- Distinction between representation re method of collecting tax v. failure to apply clear, mandatory terms of legislation
"[86] So, it is necessary to consider (1) whether the 1993 Agreement merely represented a method of collecting NICs actually due on the Cars, or whether it resulted in a failure to apply clear mandatory terms of section 167, and (2) in light of that, whether it was then conspicuously unfair for HMRC to resile from the Agreement with retrospective effect. It follows from our conclusion above that the expectation claimed by the Appellants in this case would result in HMRC failing to collect tax in accordance with its statutory duties, so a high level of conspicuous unfairness would need to arise." (MWL International Ltd v. HMRC [2026] UKUT 62 (TCC), Adam Johnson J and Judge Thomas Scott)
- Not unfair where HMRC had subsequently published guidance inconsistent with the representation made
"[42] In my judgment, it was not unfair for HMRC to depart from the position stated in the 14 January 2004 letter, and certainly not unfair to the required very high level. The short point is that the assessments under challenge covered periods which fell a minimum of nine years after the letter and four years after the first of a series of publications which made clear to the informed reader that the position stated in the letter regarding agent status was no longer regarded by HMRC as correct. Mr Firth did not go so far as to suggest that HMRC could only resile from the position stated in the 14 January 2004 letter by direct communication with Delta. On that basis, the reality is that HMRC had resiled from the letter a long time before the disputed assessments. HMRC cannot be held indefinitely to the position stated in a single letter, in the face of multiple subsequent publications to different effect. In those circumstances, case-law which focused upon the quality and duration of the notice which HMRC was required to give before resiling from an earlier ruling or position (such as R (Vacation Rentals (UK)) v HMRC [2018] UKUT 383 (TCC) and R (GSTS Pathology LLP) v HMRC [2013] EWHC 1801 (Admin)) is of no assistance to the Claimants. There was amply sufficient notice in this case. That reasoning applies equally to the Claimants' alternative alleged legitimate expectation arising out of the 14 January 2004 letter, that the Claimants would be treated as making supplies as principal which were exempt under statute. HMRC had given amply sufficient notice that it regarded the application of the relevant statutory exemption to be conditional upon meeting a criterion – that they themselves controlled and directed the nursing staff which they supplied - which the Claimants did not meet." (R (oao First Alternative Medical Staffing Ltd) v. HMRC [2021] EWHC 882 (Admin), Jason Coppel QC sitting as a Deputy Judge of the High Court)
- Knowledge of policy not necessarily essential
"[3] ... If the policy is not made public, and an affected individual is unaware of its relevance to his case and in that sense has no actual expectation arising from it, the authority may still be required to comply with it unless able to justify departing from it: Mandalia v Secretary of State for the Home Department [2015] UKSC 59; [2015] 1 WLR 4546. Under some conditions the holder of a discretionary power may be required to formulate a policy and to publish it: R (Lumba) v Secretary of State for the Home Department [2011] UKSC 12; [2012] 1 AC 245. Thus, policies have moved increasingly centre stage in public law." (R (oao A) c. SoS [2021] UKSC 37)
Public policy considerations
- Number of persons affected may be relevant
"[59] I am wholly unpersuaded that there are any significant macro-political reasons for including admitted HSMP migrants within the changes. On the defendant's own case:
(1) the number of migrants likely to be removed is small; and
(2) an appreciable number will be able to remain under the Work Permit scheme.
The macro-political aspect of the changes rests with the stated objective of introducing a more effective and robust scheme. That is not to any degree undermined by a small percentage who are not making the contribution expected of them and when the level of contribution meets that originally set by the scheme." (R (oao HSMP Forum Limited v. SoS [2008] EWHC 664 (Admin), Sir George Newman)
- Departure from policy justified as proportionate means of promoting counter-vailing public interest
"[3] Policies are different from law. They do not create legal rights as such. In the case of policies in relation to the exercise of statutory discretionary powers, it is unlawful for a public authority to fetter the discretion conferred on it by statute by applying a policy rigidly and without being willing to consider whether it should not be followed in the particular case. However, in an important development in public law in the last decades, the courts have given policies greater legal effect. In certain circumstances a policy may give rise to a legitimate expectation that a public authority will follow a particular procedure before taking a decision and it may give rise to a legitimate expectation that the authority will confer a particular substantive benefit when it does decide how to exercise its discretion. In these cases, the courts will give effect to the legitimate expectation unless the authority can show that departure from its policy is justified as a proportionate way of promoting some countervailing public interest." (R (oao A) c. SoS [2021] UKSC 37 - note this is dealing with departure from policy rather than change of policy)
Detrimental reliance
- Detrimental reliance relevant but not essential
"[62] From these authorities it can be deduced that where a clear and unambiguous undertaking has been made, the authority giving the undertaking will not be allowed to depart from it unless it is shown that it is fair to do so. The court is the arbiter of fairness in this context. And a matter sounding on the question of fairness is whether the alteration in policy frustrates any reliance which the person or group has placed on it. This is quite different, in my opinion, from saying that it is a prerequisite of a substantive legitimate expectation claim that the person relying on it must show that he or she has suffered a detriment.
...
[70] For reasons that will shortly appear and for those given at para 63 above, it is unnecessary for me in this case to decide whether it is a requirement that there be a reciprocal undertaking by the person or group to whom the promise is made or that they should suffer a detriment in order to sustain a claim for substantive legitimate expectation. But, if it had been necessary to decide that point, I would have concluded that it was not.
[71] Lord Carnwath has provided, in his judgment in this case, an explanation of his remarks in United Policyholders Group v Attorney General of Trinidad and Tobago [2016] UKPC 17; [2016] 1 WLR 3383. It is clear that those remarks were obiter - see the leading judgment of Lord Neuberger of Abbotsbury in the same case at para 40, where he said that, “for present purposes … it is unnecessary for the Board to consider the law on this difficult and important topic more fully”.
[72] I would disagree with any suggestion that it must be shown that the applicant suffered a detriment before maintaining a claim for frustration of legitimate expectation for a fundamental reason. A recurring theme of many of the judgments in this field is that the substantive legitimate expectation principle is underpinned by the requirements of good administration. It cannot conduce to good standards of administration to permit public authorities to resile at whim from undertakings which they give simply because the person or group to whom such promises were made are unable to demonstrate a tangible disadvantage. Since the matter does not arise, however, it is better that the point be addressed in a future case when it is truly in issue." (Re Finucane [2019] UKSC 7)
"[44]...As regards the role of detrimental reliance, I have already concluded that this is a relevant and indeed an important factor in cases such as the present where the issue involves HMRC's wish to resile from guidance issued either to an individual taxpayer or to the whole world. It is true, as Leggatt J said in GSTS, that some cases have recognised a legitimate expectation without detrimental reliance and I have described earlier other, different situations in which the absence of reliance on - or even knowledge of the guidance - does not rule out a successful claim. But Leggatt J's observation was limited to stating that it is not essential in all cases but that it is still relevant, he said, to the question of whether it would be unjust for the authority to frustrate the expectation created. There is nothing controversial in that statement of the law...
[45] In GSTS as in MFK and the other cases concerning representations made by HMRC in response to requests for guidance made in respect of specific proposed transactions, there is generally no difficulty with detrimental reliance - the claim for judicial review is likely to be brought only if the taxpayer in fact goes ahead with the transaction following the guidance and HMRC then seeks to tax the transaction less favourably than it said it would. I do not regard either GSTS or Vacation Rentals as deciding that detrimental reliance is not relevant. Further, I do not agree with Mr Ewart's contention that there was no reliance or detriment described in Vacation Rentals. It may well have been assumed that the very fact that the claimant treated its supplies as exempt rather than standard rateable gave rise to detriment since it would have organised its business in terms of setting the level of the fees and dealing with input tax on the basis that the supplies were exempt.
...
[53] ... If a taxpayer is unaware of the existence of guidance or if, as in Hely-Hutchinson, he only becomes aware of it after he is committed to the transaction giving rise to the tax dispute, then that may well prove fatal to his claim." (R (oao Aozora GMAC Investments Ltd) v. HMRC [2019] EWCA Civ 1643)
"[92] I accept that there can be cases in which a claimant can enforce a legitimate expectation on which it has not relied to its detriment, but it does not follow that the present case is one of those cases, nor does it follow that the presence or absence of detrimental reliance is without significance in a case such as the present..." (R (oao Realreed Limited) v. HMRC [2023] EWHC 1572 (Admin), Lavender J)
- Reliance on an specialist adviser may diminish reliance on HMRC's representation
"[55] That does not mean that the use of an external adviser to advise on the correct tax position is irrelevant to determining how much reliance there was. That is particularly the case with this kind of representation which simply states what the law is. If a taxpayer engages a specialist adviser to advise on the correct tax position that greatly diminishes the extent to which the taxpayer can then say that his view of the law was influenced by a representation of the kind given in this case. I accept that HMRC can be expected to have considered their opinion on the law carefully and they bring considerable expertise to bear in forming their opinion. But they are not in the same unique position in that regard as they are in relation to the other kinds of statements relating to how they interpret inherently uncertain terms used in the legislation or the criteria according to which they will exercise their discretion. The position might be different if the legal opinion needed to be based, as sometimes happens, on drawing together a number of heavily amended provisions found in a number of different taxing statutes and disparate schedules or sets of regulations. Here the opinion related to a single, relatively straightforward statutory provision. An expert tax adviser was not at so much of a disadvantage as compared to HMRC when it came to reading the Treaty in conjunction with section 793A and working out what it means. Further, ordinarily sophisticated taxpayers know that sometimes HMRC loses cases because the tribunals and courts prefer the taxpayer's construction of the legislation over that proposed by HMRC. A specialist tax adviser, whether an employee of the taxpayer or an external consultant, is engaged to come to his own conclusion about what the law says and not merely to read and repeat to his client the terms of guidance that is publicly available. That is the case regardless of whether in a particular case he in fact did a thorough job or took a short cut by simply relying on the guidance and presenting that to the client as his own work. It is the fact that the taxpayer receives advice on the law from someone whose expertise he expects to match that of HMRC that is the important point
...
[57] ...But I would also conclude that Aozora Japan's reliance on the representation made in the Manual was weak because (i) the representation was merely as to HMRC's opinion about the construction of a relatively straightforward legal provision; and (ii) Aozora Japan sought and obtained specialist advice on the meaning of the legislation and how it would apply to its particular circumstances." (R (oao Aozora GMAC Investments Ltd) v. HMRC [2019] EWCA Civ 1643)
- No detrimental reliance where T had already decided to adopt tax treatment and would have continued even without representation
"[101] Dr Moran's statement makes clear that any reliance which he placed on what the Defendants said or did was placed in reliance on the negative proposition that the Defendants did not say that the Relevant Supplies were subject to VAT. The courts should not use the jurisprudence of legitimate expectation to reverse the burden created by the VAT Act. It is for the taxpayer to determine the correct treatment of its supplies. As a general rule, the fact that the Defendants do not challenge the taxpayer's treatment of a particular supply on a particular occasion or occasions is not to be treated as shifting the burden from the taxpayer to the Defendants.
[102] In any event, the Claimant does not claim in the present case that, as a result of the VAT inspections, it did anything different from what it would have done if there had been no VAT inspections. The Claimant treated the Relevant Supplies as exempt. It did so of its own accord. In the absence of the inspections, it would have continued to treat the Relevant Supplies as exempt.
[103] Equally, the Claimant does not contend that it has done anything different from what it would have done if the Defendants had said, in relation to the inspections, words to the effect of, "We make no assurances and you must not rely on anything said or done in relation to this inspection.
...
[105](1) the Claimant did not do anything in reliance on the alleged legitimate expectation, since the Claimant had already decided to treat the Relevant Supplies as exempt from VAT and would have continued to do so if the alleged legitimate expectation had not been created; alternatively" (R (oao Realreed Limited) v. HMRC [2023] EWHC 1572 (Admin), Lavender J)
- No serious detriment suffered where HMRC paid claim and later sought to recover payment
"[214] Our conclusion therefore is that, based on the evidence available to us, whilst Queenscourt may have suffered some detriment to its business as a result of having to repay the VAT which had been reclaimed, it has not shown that there has been, or is likely to be, any serious detriment to it which results solely or primarily from HMRC making the recovery assessments.
[215] Against this must be balanced HMRC's duty to collect the right amount of tax. If HMRC's error were not corrected, Queenscourt would be put in a better position than other taxpayers in respect of whom HMRC had applied the law correctly. As noted above, the Court of Appeal in Samarkand considered that there was a strong public interest in ensuring that no individual taxpayer is unfairly advantaged at the expense of other taxpayers.
[216] In addition, in our view, Queenscourt must also bear some responsibility for HMRC's mistake. On reviewing the error correction notice which led to HMRC accepting the first claim, it is apparent that, although this refers to over-declared output VAT on sales of zero rated products when sold as part of a meal deal, it does not refer in terms to the question as to whether the meal deal should be treated as a single standard rated supply or whether it could be treated as a multiple supply.
[217] Whilst Queenscourt cannot be criticised for not doing HMRC's job for them, given the existence of HMRC guidance referring to the Domino's case where dips supplied with hot food were treated as part of a single standard rated supply which, given PWC's expertise, they would no doubt have been aware of, it is hard for Queenscourt to say that it is conspicuously unfair for HMRC to recognise its mistake and to apply the law correctly despite its original acceptance of the claim.
[218] Overall, taking all these factors into account, we do not consider that any detriment which may have been suffered by Queenscourt is sufficient to enable us to say that HMRC's decision is so outrageously unfair that it should not be allowed to stand." (Queenscourt Limited v. HMRC [2024] UKFTT 460 (TC), Judge Vos)
Benefits already enjoyed
- Not unfair to frustrate expectation generated by contract that T would still have had the benefit of for many years
"[90] In this case, even if we assume that the basic elements of a legitimate expectation claim were made out (as to which the FTT made no findings) we consider that it was not conspicuously unfair to allow HMRC to resile from the 1993 Agreement as they did in reaching the disputed NICs decisions. We accept that there would have been some unfairness in resiling from the Agreement with retrospective effect, but carrying out the balancing exercise set out in the leading authorities, that unfairness would have been significantly counterbalanced by other factors. In particular, the public interest in the proper collection of taxes would have been engaged, given our conclusion that the 1993 Agreement would have permitted the Appellants to have the benefit of the exemption in section 167 over many years without having to satisfy one of its central conditions. It is also relevant in assessing the degree of unfairness that since the liability decisions issued by HMRC related only to the tax years 2015-2020, the Appellants benefitted from the exemption in section 167, with a consequential tax saving, for over 10 years. In all the circumstances, we consider that the NICs decisions did not result in the high level of conspicuous unfairness which would have to be established in order for the legitimate expectation claim to succeed." (MWL International Ltd v. HMRC [2026] UKUT 62 (TCC), Adam Johnson J and Judge Thomas Scott)
Query whether fair to frustrate test applies to ESCs
No test of whether it would be fair to frustrate applied to ESC that remained in force
"Where HMRC or their predecessors have published an extra-statutory concession on such a basis, a taxpayer may be able to hold HMRC to it. In R v Inland Revenue Commissioners, Ex p M.F.K. Underwriting Agents Ltd [1990] 1 WLR 1545 ("M.F.K."), Bingham LJ said at 1569, "No doubt a statement formally published by the Inland Revenue to the world might safely be regarded as binding, subject to its terms, in any case falling clearly within them". As Sales J said in R (Accenture Services Ltd) v Revenue and Customs Commissioners [2009] EWHC 857 (Admin), [2009] STC 1503 ("Accenture"), at paragraph 8, "Where a taxpayer claims to be entitled to take advantage of an extra-statutory concession promulgated by the tax authorities, its claim is in the nature of a claim to benefit from an enforceable substantive legitimate expectation"." (Murphy v. HMRC [2023] EWCA Civ 497, Newey, Andrews, Falk LJJJ - court did not consider fairness or reliance)
HMRC not arguing it would be fair to act inconsistently with prior agreement with statutory force
"[34] As [the taxpayer] helpfully articulated, the key dispute in this case is thus whether there is such an inconsistency. It is not a case, that sometimes arises in the context of legitimate expectation claims, where the public authority seeks to argue that, even if there is an inconsistency, such inconsistency is justified in the public interest. We agree with him that it does not much matter whether the unlawfulness is characterised as entailing: a) an error of law by HMRC; or b) an abuse of HMRC's statutory power and/or HMRC having acted irrationally. Reflecting the initial impression Foster J formed of the case when she granted permission, that its public law focus lay in a similarity with legitimate expectation cases, we consider the most apt analogy is with the kind of unfairness Lord Templeman referred to in Preston v IRC [1985] 1 AC 835. In that case, which concerned a taxpayer who had withdrawn claims for tax relief and paid tax on the basis a Revenue inspector had told the taxpayer the inspector did not intend to raise further inquiries, Lord Templeman considered that there would be "unfairness" amounting to an abuse of power entitling the taxpayer to judicial review (at 867B) where:
"the commissioners have been guilty of conduct equivalent to breach of contract or breach of representations on their part."
[35] Thus, as [the taxpayer] argued, the judicial review claim should be granted if we are persuaded that HMRC made an error of law by misconstruing the effect of a document to which it was required to give legal effect; and /or where it acted in a way which amounted to, or was, a breach of contract; and hence constituted an abuse of power. As [the taxpayer] pointed out, if the claimants' case regarding inconsistency with the APA is made out, the argument that that then gave rise to an abuse of power is all the more apparent given the statutory force given to such agreements under Part 5." (R (oao Refinitiv Limited) v. HMRC [2023] UKUT 257 (TCC), Green J and Judge Raghavan)
WITHDRAWAL OF REPRESENTATION/PRACTICE
Reasonable notice of withdrawal of tax treatment
"[43] (6) Where the taxpayer has a legitimate expectation as to a particular tax treatment, they also have a legitimate expectation that it will not be withdrawn retrospectively and that any withdrawal will be managed fairly. Reasonable notice of any withdrawal should be given so as to allow the taxpayer time to make any necessary adjustments to its affairs: see R (on the application of Cameron v Ors) v HMRC [2012] STC 1691 at [71] and GSTS at [96]-[101].
(7) Where the taxpayer has a legitimate expectation from a Clearance Letter it is unfair for HMRC to depart from it retrospectively in circumstances where the Claimant has relied upon it in carrying on its business and has no mechanism for recovering the VAT now retrospectively demanded: see GSTS at [99] and in contrast to R (oao Dixons Retail plc) v. HMRC [2018] EWHC 2556 (Admin) at [67]." (Airline Placement Limited v. HMRC [2023] EWHC 1191 (Admin), Constable J)
- Cases where it is not the alteration of the policy that is unfair, but the way it is done (i.e abruptly, without notice)
"Laws LJ in formulating this expectation was considering unusual circumstances where, absent a representation that the policy would continue, an abrupt change of policy was held to be so unfair as to amount to an abuse of power. A classic example is R v Inland Revenue Commissioners, Ex p Unilever plc [1996] STC 681. In that case the Inland Revenue Commissioners on thirty occasions over twenty years had exercised their lawful discretion to entertain late claims for loss relief against corporation tax and then suddenly, without notice or consultation and for no good reason, refused such claims as out of time. The Board does not need to address questions of taxonomy by deciding whether this is a separate head of legitimate expectation or whether it is a particular example of what Lord Fraser described as an established practice which the claimant could reasonably expect to continue. It is enough to observe that there are cases in which fairness requires that a change in policy cannot be made abruptly because it would defeat the legitimate expectations of an individual or group. In such cases, as Sedley LJ stated in Niazi at para 70, it is not the alteration of the policy but the way in which it is done which is capable of frustrating a legitimate substantive right expectation." (Rainbow Insurance Co Ltd v. Financial Services Commission [2015] UKPC 15, Lord Hodge)
- Legitimate expectation may be that a change of view will not be applied retrospectively
"[66] The judge put the point accurately when, after referring to part of the official VAT inquiries guide (Notice 700/51/95) he said,
"Thus, the legitimate expectation is not that the clearance will be treated as binding come-what-may; but that, if there is a change in the understanding of the legal position, it will not be treated as retrospective. Although the reference is to a change resulting from a court or tribunal ruling, that is by way of example. A bona fide change of legal opinion within the commissioners might be expected to have the same result. (In this case, of course, there was no change of legal opinion within the commissioners; but that fact is relevant to the issue of negligence, rather than to the extent of any legitimate expectation created by a clearance itself.)
Secondly, the need for such a limitation is reinforced when one considers the implications for taxpayers other than the person relying on the clearance. In this case, unlike those considered above, the effect of the Miss Sellick's ruling was, not simply to lift a VAT burden from one group of taxpayers (the car dealers), but to impose it on another (the participating retailers). Although there is evidence that the second group were in practice content, the commissioners could not bind them to accept that position."
[67] F&I's only legitimate expectation was that it would not be asked to pay tax in respect of past transactions..." (R v. CEC ex p F&I Services Ltd [2001] EWCA Civ 762, Robert Walker LJ)
- 30 days breathing space not generous but reasonable
"[67] F&I's only legitimate expectation was that it would not be asked to pay tax in respect of past transactions. The 30-day breathing space which the Commissioners allowed (for existing customers) may not have been generous, but it was reasonable in all the circumstances. A longer period would have been unfair to competing traders. Moreover F&I resorted to judicial review without having pursued alternative remedies either through the Commissioners' own Adjudicator, or through the Parliamentary Commissioner for Administration." (R v. CEC ex p F&I Services Ltd [2001] EWCA Civ 762, Robert Walker LJ)
REMEDY
Monetary remedy
- Normally has to be a free-standing cause of action
"The fact that our courts were able to strike down the Secretary of State's instruction as wrong in law is not enough. Our law does not recognise a right to claim damages for losses caused by unlawful administrative action (although compensation may sometimes be available to the victims of maladministration). There has to be a distinct cause of action in tort or under the Human Rights Act 1998. No-one suggests that there is an action in tort here. The question is whether a claim for damages may be made under the Human Rights Act 1998. Under section 6(1) of that Act it is unlawful for a public authority to act in a way which is incompatible with a Convention right. Under section 8(1) of the Act the court may grant such relief or remedy, or make such order, within its powers as it considers just and appropriate in relation to any act of a public authority which the court finds unlawful. There is, for the reasons already given, a respectable argument that the Secretary of State for Foreign and Commonwealth Affairs, when advising Her Majesty on the conduct of government in South Georgia, is not a public authority within the meaning of the 1998 Act." (R v. SoS ex p. Quark Fishing Limited [2005] UKHL 57, Lady Hale)
- Payment of money as a practical means of eliminating unfairness
"[72] The other step concerns the award of damages or compensation as a remedy in a case such as the present. This is largely uncharted territory in this country. In France, for example, damages will ordinarily accompany a finding of détournement de pouvoir. In EU law, Brasserie du Pêcheur v Germany [1996] QB 404 now occupies the field. In domestic law Mr Cordara has fastened upon a passage from the decision of this court in R v North and East Devon Health Authority, ex parte Coughlan [2000] 2 WLR 622, §84. There the point was made that the unfairness which a change of policy may work on those who have relied on the earlier policy can often be adequately mitigated by writing into the new policy an exception in their favour or - if money can do it - by compensating them in money. The point, however, is that such a payment of money is not an anticipatory payment of damages: it is a practical means of eliminating unfairness which a policy change is otherwise going to inflict. In such a case there will be, in the end, no justiciable abuse of power.
The first part of an excellent conspectus of the present availability of damages against public authorities can be found in [2001] JR 44 (the second part, at the time of writing, is to follow in the next issue). That the cases do not include damages for abuses of power falling short of malfeasance in public office does not necessarily mean that door is closed to them in principle. But the policy implications of such a step are immense, and it may well be that - despite the presence for some years in the rules of a power to award damages on an application for judicial review - a legal entitlement to them cannot now come into being without legislation." (R v. CEC ex p F&I Services Ltd [2001] EWCA Civ 762, Sedley LJ)
- May be an abuse not to reimburse expenditure incurred by T before legitimate expectation representation withdrawn
"If, however, the applicant had been entitled to rely on the clearance given by the inspector and had spent money in promoting the scheme before the clearance was withdrawn, then it seems to me that fairness demands that the applicant should be reimbursed for this out-of-pocket expense and it could be regarded as an abuse of power for the Revenue to refuse to do so. This point does not have to be decided in this appeal but I mention it because this aspect of the argument only surfaced towards the end of the hearing and the Revenue strenuously resisted any liability to compensate the applicant in such circumstances." (Matrix-Securities Ltd v. IRC [1994] 1 All ER 769 at 782 Lord Griffiths)