Case: No abuse of power when HMRC issued APNs even though they had previously agreed to postpone the tax

[Appeal against decision R (oao of Dickinson & Ors) v R & C Commrs [2017] BTC 23]

[2018] EWCA Civ 2798

Court of Appeal (Civil Division)

Lord Justice McCombe, Lord Justice Hamblen and Lord Justice Peter Jackson

Decision released 18 December 2018

Appeal against dismissal of claim for judicial review – Issue of Accelerated Payment Notices (APNs) following agreement to postpone payment of underlying tax – TMA 1970, s. 55 – FA 2014, s. 219–225 − Whether an unlawful abuse of power – No – Appeal and cross-appeal dismissed.

Dickinson & Ors v R & C Commrs [2019] BTC 1


The claimants had entered into a scheme using an offshore employee-benefits trust notifiable under the Disclosure of Tax Avoidance Schemes (DOTAS) regime, under which they contended that sums paid to them were loans taxable as benefits-in-kind. Initially, HMRC appeared to accept this treatment. Eventually, however, HMRC issued discovery assessments on the grounds that the sums were taxable as income, but agreed under TMA 1970, s. 55 to postpone the disputed tax until the appeals against those assessments had been determined. Nevertheless, shortly afterwards, HMRC issued APNs to the claimants under FA 2014, s. 219(1), requiring immediate payment of the disputed tax as determined by HMRC.

The claimants argued that HMRC going back on their promise not to enforce payment of the disputed tax pending consideration of the appeals amounted to an unlawful abuse of power.

In R (oao of Dickinson & Ors) v R & C Commrs [2017] BTC 23, the High Court concluded that the strengths of HMRC’s alternative arguments outweighed the strengths of the claimants’ arguments and the claim was dismissed. The core of that conclusion was that:

the macro-political policy issues flowing from the terms and underlying purpose of the APN legislation undermined the force of the clear and unambiguous promises given by the postponement agreements because the legislation provided a change in the underlying statutory test and approach to the issue when disputed tax should be paid;

those macro-political policy issues provided a weighty factor in favour of the conclusion that the giving of APNs was unlikely to be an abuse of power if the arguability of the tax dispute and other conditions for giving them were satisfied, as they were here, although they did not warrant a ‘one approach fits all’ approach or one that had regard only to those policy issues reflected in legislative change; and

the strengths of the claimants’ case identified a number of valid criticisms of the approach and decision making of HMRC but assessed with the rival strengths of HMRC’s case relating to the particular circumstances of the claimants and the approach taken by them, the claimants’ assertions of conspicuous unfairness to them were effectively based on the change that parliament had enacted and were not an abuse of power.

The claimants argued that the High Court’s decision was wrong because:

(a)the factors identified in favour of HMRC were not sufficient to outweigh the conclusion that HMRC had abused their power in issuing the APNs in contravention of the earlier postponement agreements; and

(b)having found that HMRC had acted unlawfully and in a manner amounting to an abuse of power in issuing the APNs, the learned judge ought to have simply ordered that the APNs be quashed instead of going on to consider whether there were factors which HMRC might have relied on (but in fact did not even consider) to justify their conduct and thus their decision lawful.

The Court of Appeal accepted (with the reservations detailed below) the following seven propositions put forward by HMRC in support of the lawfulness of HMRC’s approach:

(1)A postponement agreement made under the pre-2014 statutory regime was conditioned by and dependent upon that regime and its continuance. It was not a free-standing agreement or promise which would hold good irrespective of legislative change.

(2)The new legislative provisions were of fundamental importance in considering the agreements made under the old statutory regime.

(3)A discretion remained under the new regime, and the discretion had to be exercised in accordance with public law principles. Old postponement agreements were not rendered irrelevant.

(4)Such discretions had to be exercised consistently with, and to promote, the underlying statutory purpose for which they were conferred.

(5)The clear promise relied on by the claimants had been made to them as taxpayers but parliament had made clear that the reason why it was made no longer governed whether payment of the tax in dispute on the appeal should be postponed by giving HMRC a power to effectively reverse the existing agreements and promises made by them and the ‘macro-political’ factor related not just to a change in executive policy which undermined a previous express promise, but from the higher authority of primary legislation.

(6)If the fact of the promise in these cases remained a factor in the assessment to be made, it was one that fed into the discretion only in exceptional circumstances. The Court of Appeal noted that one must be careful, in this context, not to be over-general in assessment of HMRC’s approach in a manner that whittles down the statutory discretion so far as to render it non-existent. A statutory discretion was just that and it had be exercised conscientiously in all the circumstances. The simple rule was, as Arden LJ said in R (oao Rowe) v R & C Commrs; R (oao of Vital Nut Co Ltd v R & C Commrs [2018] BTC 4, the internal policy must not preclude a proper exercise of the statutory discretion in each case.

(7)No exceptionality had been shown and none had been asserted beyond the mere fact of the postponement agreements. The Court of Appeal expressed no view on this.

The Court of Appeal rejected the claimants’ criticism of the structure of the judge’s judgment which would have had him cut off his consideration of the matter at the stage where he had established the factors in the claimants’ favour, and concluded that HMRC’s approach in deciding to give the APNs ignored principles of good administration and constituted ‘conspicuous unfairness’. In the Court of Appeal’s judgment, the High Court judge was entitled to go on to consider HMRC’s alternative argument, in considering the overall lawfulness or otherwise of the giving of the APNs.

Contrary to the appellant’s second ground of appeal, the Court of Appeal noted that the judge did not find there had been an ‘abuse of power’: he held that the unfairness which he had found was outweighed by other factors with the result that there was no abuse of power.

The Court of appeal accordingly dismissed the claimants’ appeal.

The Court of Appeal also dismissed HMRC’s invitation to uphold the judge’s order on the further ground that the judge was wrong to conclude that HMRC’s approach to issuing APNs ignored the principles of good administration and was conspicuously unfair. And in turn rejected HMRC’s cross appeal against the judge’s ‘no order for costs’. The Court of Appeal could see no reason to disturb the judge’s findings on these points which appeared to have been fully and properly reasoned.


The Court of Appeal found nothing wrong with the High Court’s conclusion that HMRC’s approach in deciding to give the APNs ignored principles of good administration and constituted ‘conspicuous unfairness’. However, the Court of Appeal also judged that the High Court was entitled to go on to consider other factors and to conclude that there had not been an ‘abuse of power’.

For commentary on accelerated payment notices, see the In-Depth commentary at ¶192-765.

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