UK and International Tax news
Court of Appeal And PPN Judicial Review Update
Wednesday 10th January 2018
The Court of Appeal has now given its decision on appeals concerning APNs and PPNs following earlier High Court decisions in Rowe and others v HMRC [EWHC 2293] and Vital Nut Co Ltd and others [EWHC 1797].
As previously reported in our previous UK Tax News item of 16 February 2016, the HC rejected the challenge by investors in Ingenious Media’s film partnership to the legality of certain PPNs [a form of APN], which required the partners to pay the disputed tax liabilities upfront, and which were issued under new powers contained in FA2014.
These powers permit HMRC to issue APNs in respect of tax avoidance schemes that are formally notified to HMRC through the DOTAS rules, or where a GAAR counteraction notice has been issued, or are similar to ones already defeated in court and follower notices have been issued. The disputed tax is held by HMRC whilst the dispute is resolved.
There is no formal right of appeal against an APN, written representations as to why the APN should not have been issued can be made to HMRC, or the taxpayer can apply to the Court for a judicial review.
In these cases, the claimants were not challenging the provisions themselves, which were contained in primary legislation, but the exercise of powers under the legislation, and contended that the notices issued in their cases were unlawful and of no effect on six grounds – unreasonableness, retrospectivity, natural justice, no tax due and payable, convention and ultra vires/’designated officer’.
HMRC’s case was that the exercise of discretion in issuing PPNs to the claimants was in accordance with the express language and purpose of FA 2014 and did not breach natural justice or their legitimate expectations. The decisions to give PPNs were not unreasonable or irrational and nor was there any breach of such Convention rights as they assert are engaged.
Arden LJ, McCombe LJ and Thirlwall LJ unanimously rejected all of the six grounds and it remains to be seen whether there will be a further appeal to the Supreme Court.
If you would like further information on the above, please contact Keith Rushen on 0207 486 2378.
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