England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM
QUEEN'S BENCH DIVISION ADMINISTRATIVE COURT
Mrs Justice Whipple
[2015] EWHC 3261 (Admin)

		Royal Courts of Justice Strand, London, WC2A 2LL
		26/07/2017

LADY JUSTICE ARDEN :

Issue for decision

1. The appellant, HMRC, now appeals from the order of Whipple J dated 11 November 2015 granting judicial review of four decisions of HMRC dated 30 April 2014. The judge quashed the decision. By these decisions, HMRC issued the closure notices in relation to the enquiries raised on the respondent's self-assessment tax returns ("SAs") for 1999 to 2002 and rejected losses which the respondent had claimed. The judge quashed those decisions and remitted the matter to HMRC to make a fresh decision consistently with her judgment.
2. To briefly indicate the background, in 1998 and 1999, the respondent exercised some share options and reported the transactions in his SAs for 1998/9 and 1999/2000. Subsequently he took advantage of an apparent change in the permitted treatment of those transactions which enabled him to claim additional losses in later periods following HMRC guidance (referred to below as the 2003 guidance) to that effect. This gave rise to a legitimate expectation that HMRC would be bound by that guidance. However, on 2 June 2003, HMRC opened enquiries into the respondent's SAs, warning him that they did not accept his additional losses. In 2009, HMRC, following legal advice, issued corrected guidance stating that it would not accept the additional losses unless (primarily) there had been reasonable detrimental reliance on the 2003 guidance. HMRC did not consider that the respondent had shown this and, for this and other reasons, served closure notices bringing the enquiries to an end and refusing the additional losses.
3. The essential question on this appeal is whether HMRC could resile from their previously expressed view in the 2003 guidance in the circumstances of this case. We are not concerned with the correctness of HMRC's view, which is the subject of a separate appeal to the First-tier Tribunal.
4. The parties have agreed a summary of HMRC's approach to the appropriate tax treatment of the exercise of the respondent's share options at the various material points in time. This summary can be found in Appendix 1 to this judgment. Appendix 2 to this judgment contains an abbreviated version of the agreed chronology of the events in this case for ease of reference. I will explain those events in narrative form in the next section of this judgment.

Taxpayer's capital losses and HMRC's published guidance

5. The respondent received share options in 1989 through his employment with ABN Amro plc ("ABN"). He exercised those options in 1999 and 2000 and shortly thereafter sold the shares. He reported the transactions to HMRC when he filed his SAs for 1998/9 and 1999/2000. He did so on the basis, as was the common understanding at the time, that no liability to capital gains tax arose. This was because section 120 of the Taxation of Capital Gains Act 1992 ("TCGA 1992") treats the amount on which income tax had been calculated as deductible when calculating the gain.
6. On 12 December 2002, this Court decided in Mansworth v Jelley [2003] STC 53 that the figure to use for base cost when calculating the gain which accrued on disposal of the shares was the market value at the date of exercise of the options. In many cases, this resulted in a capital loss which the taxpayer could set against his taxable income in that and subsequent years and carry back against income for the previous five years of assessment.
7. In 2003, HMRC issued guidance ("the 2003 guidance"). They stated that they did not intend to appeal Mansworth v Jelley. They also extrapolated from the ruling in that case that the amount of income tax payable had also to be added to the base cost and confirmed they would apply the same beneficial tax treatment that that case had upheld in relation to those who, like the respondent, had acquired shares under options linked to their employment exercised before 10 April 2003.
8. The judge set out the guidance in detail in her judgment, together with passages from the HMRC manuals which were to the same effect. I need not repeat these passages as it is common ground that the 2003 guidance gave rise to a legitimate expectation that in respect of share options exercised before 10 April 2003 HMRC would apply the equivalent beneficial tax treatment to that resulting from Mansworth v Jelley.
9. Following the issue of the 2003 guidance, the respondent made loss claims on the basis of Mansworth v Jelley for 1998/9 and 1999/2000 by adjusting his SAs and making loss claims. I will call these losses "Mansworth v Jelley losses". He subsequently made similar claims in his SAs for 2000/1 and 2001/2. He calculated that his total Mansworth v Jelley losses are about £428,000, of which some £326,806 remained for use after 2002.
10. The Finance Act 2003 amended the TCGA 1992 for options exercised after 9 April 2003. The base cost after that date was the cost of exercising the option plus any amount charged to income tax on exercise (TCGA 1992, section 144ZA).
11. On 2 June 2003, HMRC opened enquiries into all the respondent's relevant SAs. At the outset the enquiries were prompted by a concern that the option scheme under which ABN had issued options to the respondent had been used by ABN to avoid paying National Insurance contributions, though it appears that those matters were settled in 2005. Significantly, HMRC's letter to the respondent dated 2 June 2003 stated that:

The Revenue does not accept, for this scheme, the additional losses claimed under [Mansworth v Jelley] are due. One consequence is that no repayments will be made.

12. Substantial correspondence ensued. HMRC gave further explanations for the enquiries in correspondence. The respondent contended that his tax affairs should be treated independently of those of ABN, and noted that similar claims of colleagues had been allowed.
13. In July 2006, the respondent asked for an update, saying that he understood that the discussion with his employer had concluded some time previously. HMRC replied on 26 July 2006 that it intended to litigate the issues with other taxpayers, and that these proceedings were unlikely to be heard before the beginning of 2007.
14. The respondent claimed Mansworth v Jelley losses in his SAs for 2005/2006 and 2006/7. HMRC responded by opening enquiries into those SAs.
15. In April 2008, the respondent sought a further update and was told that the matter was a long way off settlement. He was also told that if he sought to use the losses, and they were found not to be due, he would have to repay them with interest.
16. On 12 May 2009, HMRC issued Revenue and Customs Brief ("RCB") 30/09, announcing that, following advice that its 2003 guidance was wrong in law, the tax treatment set out in the 2003 guidance would no longer apply. HMRC would thenceforth treat the base cost as the market value of the shares at the date of acquisition. HMRC stated that this treatment would apply to any enquiry or appeal open at that date relating to Mansworth v Jelley losses.
17. RCB 30/09 was followed in September 2009 by RCB 60/09. This stated that the corrected view of the law would be applied in all cases unless there was detrimental reliance. Thus the RCB stated:

HMRC does not accept that its published guidance alone can necessarily create a 'legitimate expectation' for a taxpayer. Whether a taxpayer has a legitimate expectation will depend upon the specific factors and circumstances of the case. Chargeable gains and allowable losses included in returns or claims should be calculated on the correct statutory basis, which HMRC now understand to be as described in Revenue & Customs Brief 30/09. HMRC's primary responsibility is to apply the law correctly and collect underpaid or under-declared tax. However, in some limited circumstances, to apply the statute may be so unfair as to amount to an abuse of power by HMRC and in these circumstances HMRC may be bound by its previous guidance. We will normally be bound by our previous guidance where the taxpayer can demonstrate that he or she:

-     reasonably acted in reliance on the previous guidance and would suffer detriment from the correct application of the statute.

-     to have acted in reliance on the advice the taxpayer must have done or refrained from doing something as a direct consequence of the advice. HMRC understand that in this context 'detriment' means real loss, it is not sufficient to have merely suffered disappointment or upset.

18. In this judgment, I use the word "open claims" to describe the claims of taxpayers who had Mansworth v Jelley losses in respect of which HMRC had opened enquiries which had not been closed before RCBs 30/09 and 60/09 were issued. We are told that there were some 600 taxpayers with open claims. Other Mansworth v Jelley losses where no enquiry was opened, or, where any enquiry opened was closed by that date, are referred to as made in "closed" years. The latter category include loss claims which were originally made in SAs which HMRC had no power to reopen, even if those losses had not then been fully utilised.
19. HMRC gave the respondent the opportunity to provide evidence as indicated by RCB 60/09.
20. On 30 April 2014, HMRC issued closure notices denying the respondent's Mansworth v Jelley losses. The notices stated:

You have not provided any contemporaneous evidence to show what actions you took or did not take as a direct result of the guidance, apart from claiming the capital losses. Your participation in the ABM Ambro Armadale share option scheme and the exercising of the options had taken place before the guidance was issued and was not affected by it.

The letter of 2 June 2003 was a written notice as required by the legislation at Schedule 1A and section 9A TMA 1970, notifying you of our intentions to enquire into the claims to capital losses for the years ended 1998/99, 1999/2000 and the returns of 2000/2001 and 2001/2002.

The notices issued by HMRC made it clear that the losses were subject to enquiry and were not agreed. The notices also mentioned that there may be capital gains tax consequences if the claims failed. You were therefore aware from 2 June 2003 that we did not accept that the additional capital losses claimed were due. The letters were specific to your circumstances and having received the letters you could not expect that the generic guidance would be applied instead of the specific circumstances of your claim.

You sold assets which realised gains in two later years 2005/2006 and 2006/2007 for which closure notices have been issued, appeals received and are awaiting a decision letter to be issued.

In the summer of 2005 when you and your wife discussed the potential purchase of a property in the South of France and in the summer of 2008 when you were considering the purchase of your private residence and EIS investments, any consideration of the tax implications should have been taken into account that the enquiry remained open and in the view of HMRC the capital losses were not due. You could not have been relying on the guidance issued on 8 January 2003 at that time and any planning should have taken this into account.

As the transactions which underline the losses had already taken place before the guidance was issued, and later transactions were made in the knowledge that the losses were not agreed, I do not agree that you have a legitimate expectation that the capital losses should be due.

21. On 7 December 2010, the respondent indicated that he would appeal against this rejection of his loss claim.
22. There was further correspondence between the respondent and HMRC.

These proceedings for judicial review

23. On 24 July 2014, the respondent began these judicial review proceedings. The grounds were: breach of a legitimate expectation, unfairness amounting to an abuse of power, unfairness by comparison with taxpayers whose Mansworth v Jelley claims had been accepted, i.e. "comparative unfairness", and the maintenance of unlawful enquiries.
24. The respondent has filed considerable evidence. In it, he explains that, following the financial crisis, he has suffered considerable financial hardship. He explains that he lost his employment. He and his wife set up a business in 2010. He states that, had he envisaged rejection of his Mansworth v Jelley losses, he and his wife would probably not have started this business, which has not been successful. Thus, the sums in issue are highly significant to him. In a later witness statement, he also explains that, had he realised that there was a risk his claims would not be allowed, he may have pressed for the earlier conclusion of the enquiries started by HMRC.
25. There are also witness statements from Carole Sanderson, the officer of HMRC who took the decision in his case. She gives a number of reasons for her decision. In addition to those referred to below, she explains that she followed the decision in May 2014 of HMRC's Personal Taxes Contentious Issues Panel on outstanding Mansworth v Jelley losses that HMRC would give taxpayers the benefit of the incorrect tax treatment if:

a) the taxpayer could make a realistic case that on the balance of probabilities they had relied on the incorrect guidance;

b) the taxpayer would suffer detriment if he could not use the loss; and

c) the taxpayer could on a balance of probabilities have shown a legitimate expectation that they could rely on the guidance if HMRC had not delayed in dealing with their case so that he could provide only limited evidence.

Judgment of Whipple J

26. The judge gave a careful and thorough judgment. In her review of the law, the judge held that, as regards unfairness, the respondent had to show conspicuous unfairness on the part of HMRC. It was, therefore, not enough that not all taxpayers were treated in the same way.
27. However, once clear guidance was given, the taxpayer could rely on it ([52]) so in consequence of having relied on the 2003 guidance in making his claims, the respondent:

had a legitimate expectation arising out of the 2003 Guidance that his claim for capital losses on the disposal of his shares would be taxed in accordance with that Guidance.

28. The legitimate expectation arising from the issue of the 2003 guidance was not affected by HMRC's subsequent discovery that the guidance was incorrect ([53]). A legitimate expectation could be overridden by the public interest, but again there had to be conspicuous unfairness.
29. In the judgment of the judge, the decision of Wyn Williams J in R (o/a Cameron) v Revenue and Customs Comrs [2012] STC 1691 established that:

the Commissioners were required to consider whether it was fair to taxpayers to withdraw the 2003 Guidance. What was fair depended on the circumstances surrounding the original Guidance and its proposed withdrawal. The obligation to act fairly brought with it the obligation to perform a balancing exercise, to weigh the taxpayers' legitimate expectations generated by the 2003 Guidance, and the consequent unfairness of withdrawing it in 2009, against the public interest in collecting the tax due under the statute, as the Commissioners now interpreted it. The important point is that all aspects of unfairness needed to be taken into account at this stage. ([61])

30. The key issue so far as the judge was concerned was the comparative unfairness: taxpayers whose SAs had been closed before HMRC's change of view had the full benefit of the 2003 guidance whereas those in the position of the respondent did not. HMRC should have considered the unfairness to taxpayers before withdrawing the 2003 guidance. Unfairness could not be limited to detrimental reliance ([62]). There was intrinsic unfairness because taxpayers who were in an identical position in 2003 had been treated differently ([68]). The officer of HMRC who dealt with the respondent's case, Mrs Sanderson, had not considered comparative unfairness arising from the fact that other taxpayers with Mansworth v Jelley losses which had been the subject of closed years before the 2003 guidance was withdrawn were not affected by that withdrawal ([63]).
31. Section 29(2) of the Taxes Management Act 1970 ("TMA") enables a taxpayer to rely on a practice generally prevailing at the date when he completes his SA as a defence to a section 29 TMA extended time limit assessment. But this provision did not affect the respondent because it had no application as HMRC had opened valid enquiries (within the relevant time limits) and so did not need to raise s29 TMA extended time limit assessments. The withdrawal of the 2003 guidance was potentially inconsistent with HMRC's own guidance on correcting mistakes of law ([72]). There had also been considerable delay in this case. The respondent found himself in the position he was because of HMRC's mistake in issuing the 2003 guidance ([73]).
32. The judge accepted that she did not have all the information necessary to perform the balancing exercise herself. Nonetheless, her "instinctive response" was that:

RCB 30/09 and the Closure Notices based on it were very unfair. By RCB 30/09, the Commissioners deliberately took away from the subset (i.e., those whose enquiries were open) an advantage which they had many years previously, by mistake, conferred on the whole of the 2003 cohort. The members of the cohort who were not affected by RCB 30/09 retained their advantage, permanently; the subset lost out, and were comparatively worse off as a result. That was discriminatory. ([75])

33. The judge summarised her decision as follows:

[76] I do not criticise Mrs Sanderson for approaching this case in the narrow way that she did. The steps she took were in line with the Commissioners' own guidance. That guidance focussed on detrimental reliance, and indicated that in the absence of detrimental reliance, the tax due under the statute should be collected.

[77] In this case, there were wider issues to take into account. Once a legitimate expectation on the part of the taxpayer had been established, the Commissioners were obliged to balance all aspects of unfairness to determine whether, overall, there would be conspicuous unfairness in collecting the tax due. In this case, the Claimant was complaining of unfairness which went far beyond detrimental reliance (although his complaint included that feature). The Commissioners did not consider those other aspects of unfairness. The Closure Notices which were the product of the balancing exercise must for that reason be quashed.

[78] The matter must be remitted to the Commissioners to take a fresh decision, taking into account all aspects of unfairness.

34. Giving judgment in another case some two months later, R (City Shoes Wholesale Limited) v HMRC [2016] EWHC 107, the judge sought to give this further explanation of her judgment in this case:

70 Finally, on the day before I heard this case, I handed down judgment in R (Hely-Hutchinson) v Commissioners for HM Revenue and Customs [2015] EWHC 3261 (Admin). That case involved a challenge by a taxpayer based on comparative unfairness. I granted the taxpayer's application for judicial review and quashed the Commissioners' decision. Both parties addressed me briefly on Hely-Hutchinson, but neither sought to place particular weight on that case, not least given the possibility of an appeal. I wish to record one observation about Hely-Hutchinson, which became clear (at least to me) in the course of hearing this case. One of the problems in Hely-Hutchinson was the lack of evidence filed by the Commissioners to demonstrate their reasons for a change of policy in 2009, on which revised policy they relied in making the decision under challenge in 2014. In this case, by contrast, the Commissioners provided a full and frank account of their internal discussions leading up to the change of policy in 2014, on which revised policy they relied in making the Decisions under challenge, and so I had a clear view of the underlying policy and the reasons for changing it. This evidence was important to both parties' arguments, and to my overall evaluation of the merits of the case. Where comparative unfairness is alleged, the Court is likely to be heavily dependent on the evidence provided by the Commissioners. The evidence provided in this case provides the better working model.

General principles relating to legitimate expectation and their application to HMRC

35. As explained, there is no dispute here that HMRC created a legitimate expectation when it issued the 2003 guidance that pre-10 April 2003 Mansworth v Jelley losses would be dealt with in accordance with that guidance. Before discussing the parties' submissions, I will set out the general principles applicable to legitimate expectations and explain how they have been applied in relation to HMRC (which term I use to include its predecessors).
36. The general principles relating to legitimate expectation were helpfully summarised by Lord Neuberger, with whom Lord Mance, Lord Clarke, Lord Sumption and Lord Carnwath agreed, in United Policyholders Group v Attorney General of Trinidad and Tobago [2016] 1 WLR 3383, P.C., as follows:

The law on legitimate expectation

36 Before addressing the two questions identified in para 33 above, it is appropriate to summarise briefly the Board's understanding of the law relating to legitimate expectation.

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.

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.

39 Quite apart from these points, like most widely expressed propositions, the broad statement set out at the beginning of para 37 above is subject to exceptions and qualifications. It is, for instance, clear that legitimate expectation can be invoked in relation to most, if not all, statements as to the procedure to be adopted in a particular context: see again Ng Yuen Shiu [1983] 2 AC 629 , 636. However, it is unclear quite how far it can be applied in relation to statements as to substantive matters, for instance statements in relation to what Laws LJ called "the macro-political field" (in R v Secretary of State for Education and Employment, Ex p Begbie [2000] 1 WLR 1115 , 1131), or indeed the macro-economic field. As the cases discussed by Lord Carnwath JSC show, such issues have been considered by the Court of Appeal of England and Wales, perhaps most notably, in addition to Begbie, in R v North and East Devon Health Authority, Ex p Coughlan [2001] QB 213 , R (Nadarajah) v Secretary of State for the Home Department [2005] EWCA Civ 1363 and R (Bhatt Murphy) v Independent Assessor [2008] EWCA Civ 755; The Times, 21 July 2008 , and also by the Board in Paponette v Attorney General of Trinidad and Tobago [2012] 1 AC 1 .

40 For present purposes, for reasons which should become clear from the ensuing part of this judgment, it is unnecessary for the Board to consider the law on this difficult and important topic more fully.

37. These general principles do not need further explanation at this stage. They must be applied in this case in the context of the duties which the law imposes on HMRC (see paragraphs 38 to 48 below). HMRC is a public body invested with the power to collect tax, and taxpayers must expect to pay the right amount of tax. HMRC issues guidance in order to facilitate the smooth collection, and in general HMRC must follow that guidance or any policy. The importance of HMRC issuing guidance is recognised in the authorities.
38. As to the duties which the law imposes on HMRC, the leading cases are well known. In R v Inland Revenue, ex parte National Federation of Self-Employed Small Business Ltd [1982] AC 617 at 651, Lord Scarman held that HMRC owed a legal duty to the general body of taxpayers to treat taxpayers fairly and "to use their discretionary powers so that, subject to the requirements of good management, discrimination between one group of taxpayers and another does not arise".
39. In R v Inland Revenue ex parte MFK Underwriting Agents Ltd [1990] 1 WLR 1545, Bingham LJ, with whom Judge J agreed, held that judicial review could not compel HMRC to act contrary to its statutory duty (pages 1566 to 1567). HMRC had no general discretion to remit taxes but they had a general managerial discretion as to the best means of collecting tax. This discretion could properly include the issue of guidance (page 1568).
40. At page 1569, Bingham LJ held:

Every ordinarily sophisticated taxpayer knows that the revenue is a tax-collecting agency, not a tax-imposing authority. The taxpayers' only legitimate expectation is, prima facie, that he will be taxed according to statute, not concession or a wrong view of the law: Reg. v. Attorney-General, Ex parte Imperial Chemical Industries Pic. (1986) 60 T.C.I, 64G, per Lord Oliver of Aylmerton. Such taxpayers would appreciate, if they could not so pithily express, the truth of the aphorism of "One should be taxed by law, and not be untaxed by concession:" Vestey v. Inland Revenue Commissioners [1979] Ch. 177, 197 per Walton J. 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.

41. Judge J added at page 1573:

Abuse of power may take the form of unfairness. This is not mere "unfairness" in the general sense. Even if "unfair," efficient performance of the statutory obligations imposed on the revenue will not, of itself, amount to an abuse of power.

42. In the next landmark case of R v Inland Revenue Commissioners ex parte Unilever plc [1996] STC 681, the taxpayer complained that HMRC, who had by conduct allowed loss claims to be filed late for some twenty years suddenly refused to accept further claims on the basis that they were out of time. This Court (Sir Thomas Bingham MR, Simon Brown and Hutchinson LJJ) held that rejection of the claims simply on that basis, without any notice of the change in practice, was so unfair as to amount to an abuse of power. Sir Thomas Bingham MR held that the categories of unfairness were not closed and precedent should be taken as a guide and not a cage. Each case had to be decided on its own facts, bearing in mind HMRC's duty to act fairly and to the highest public standards. The threshold of public law irrationality was high. Sir Thomas Bingham MR held that it was to be noted that conduct which might constitute fair treatment of one taxpayer might be unfair if other taxpayers "similarly placed" are treated differently (page 692). He added:

And in all save exceptional circumstances the Revenue are the best judge of what is fair.

43. Simon Brown LJ emphasised that there had to be conspicuous unfairness. He drew a distinction between a decision that amounted to "mere unfairness", which he described as "conduct which may be characterised as a 'bit rich' but otherwise understandable", and a "decision so outrageously unfair that it should not be allowed to stand" (page 697). Hutchinson LJ agreed with both judgments.
44. Most recently, Henderson LJ in Samarkand Film Partnership No 3 v HMRC [2017] STC 926, with whom David Richards LJ and I agreed, summarised the law on unfairness in these terms:

[115] I would add this general observation. Although it is now well established that the doctrine of legitimate expectation in public law can extend to substantive as well as procedural expectations, and can in an appropriate case prevent a public body, including HMRC, from applying the law correctly where to do so would frustrate the claimant's expectation, experience shows that the cases where such a claim has succeeded, at any rate in the field of taxation, are relatively few and far between. This is in my view hardly surprising. There is a strong public interest in the imposition of taxation in accordance with the law, and so that no individual taxpayer, or group of taxpayers, is unfairly advantaged at the expense of other taxpayers. There is also a real public interest in the Revenue making known the general approach which it will adopt, and the practice which it will normally follow, in specific areas. The publication of the BIM is a good example of this principle in operation. But there are likely to be few cases where a taxpayer can plausibly claim that a representation made in general material of this nature is so clear and unqualified that the taxpayer is entitled to rely on it and to be taxed otherwise than in accordance with the law.

45. I now turn to the situation where HMRC issues a policy or guidance but later comes to the view that its policy or guidance was wrong in law. Legitimate expectations are not unqualified: see, for example, United Policyholders, above. If HMRC finds that they need to resile from guidance, a taxpayer can only rely on the legitimate expectation that the guidance created where, having regard to the legitimate expectation, it would be so unfair as to amount to an abuse of power.
46. There are two important corollaries of HMRC's duty of fairness. First, HMRC's duty does not mean that it has to ensure that all taxpayers are charged with tax, if it appears that the facts bring them within a particular statutory charge, as there may be all sorts of reasons why it is not practical in the interests of good management to do so: R (on the application of Weston) v HMRC (2004) 76 TC 207 at [8] – [10] per Moses J. Second, in R (o/a Esterson) v HMRC (2005) 77 TC 629 at [40], Davis J, applying Weston concluded that the fact that some other taxpayers benefitted from a policy does not require that the claimant taxpayer should, as a matter of public law fairness, do so if that involves the perpetuation of the mistake or misapprehension that led to the adoption of the policy.
47. Once it is appreciated that HMRC can apply the law selectively in these ways, the issue that arises is as to the circumstances in which it is unfair to do so. That is the issue of comparative unfairness to which I turn in paragraphs 52 to 65 below.
48. The further question which I must next consider is whether and, if so, when HMRC may correct its mistakes in issuing a policy or guidance. This is largely common ground. In R (O'Brien) v Independent Assessor [2007] UKHL 10 at [30], Lord Bingham, with whom the other members of the House, apart from Lord Scott, agreed on this point, held that, while it was generally desirable that decision-makers should act in a broadly consistent manner, a decision-maker (whether administrative or judicial) is not bound, and is not entitled, to follow a previous decision that he considered erroneous. However, the precise circumstances are subject to dispute between the parties, and so I will leave that issue to my discussion of the submissions under Parties' Submissions and My Analysis of Them, below.

PARTIES' SUBMISSIONS AND MY ANALYSIS OF THEM

49. Because the respondent relies on a legitimate expectation, the respondent is able in effect to challenge RCBs 30/09 and 60/09. So, as I see it, the logical order of the issues to this appeal gives rise is in my judgment:

(1) was there comparative unfairness by reason of the withdrawal of the beneficial tax treatment of Mansworth v Jelley losses by the issue of the RCBs for taxpayers with open claims only?

(2) if the answer to (1) is no, was the withdrawal of the 2003 guidance otherwise unfair under the law about legitimate expectations, or alternatively was it incompatible with Article 14 of the European Convention on Human Rights ("the Convention"), taken with Article 1 of the First Protocol ("A1P1")? And

(3) if the withdrawal was not unfair and was Convention compliant, was the decision in any event lawfully taken by Mrs Sanderson on the basis of the RCBs and the information before her.

50. As explained above, the judge answered each of these questions yes, except that she did not deal with the Convention. On remittal, she directed that the matter be remitted back to HMRC.
51. When I have dealt with those issues, I will deal with the final issue which is about the court's jurisdiction for the judge's order remitting the matter back to HMRC.

Issue (1): was there comparative unfairness by reason of the withdrawal of the beneficial tax treatment of Mansworth v Jelley losses by the issue of the RCBs for taxpayers with open claims only?

52. As stated above, the judge held that the taxpayers with Mansworth v Jelley claims formed a single cohort whereas the RCBs in 2009 treated those who then had closed years differently from those with open years.
53. Mr Akash Nawbatt QC, for HMRC, submits that the judge made three errors here. First, under the law about legitimate expectation, comparative unfairness may only be found to exist where parties are materially identically placed, and taxpayers with open claims are in a materially different position from those with claims made in closed years. So he submits that the judge should have held that taxpayers who, like the respondent, had open Mansworth v Jelley losses were not in a materially identical position to those with claims for closed years. In particular, the losses of the latter group could not now be corrected. This flows from section 29(4) and (5) TMA 1970 (which I need not set out as this is common ground).
54. Mr Nawbatt cites R (o/a British Sky Broadcasting Group plc) v HMRC [2001] STC 437, where the only material difference was that HMRC had raised an assessment against the taxpayer which it had not raised against the other cable companies with which the taxpayer sought to compare itself. Elias J held that HMRC considered that the taxpayer was in a materially different position from the other cable companies. He accepted that HMRC's reasons were not irrational. He held that accordingly, and even if HMRC was subsequently found to be wrong for treating the taxpayer differently, HMRC was not required to have regard to comparative fairness as between the taxpayer and the other cable companies. He further held that, for comparative unfairness, there had to be disparate treatment between taxpayers in a materially identical position, citing Unilever at 692. I would add that, by implication, Elias J read the words "similarly placed" used by Sir Thomas Bingham MR in Unilever as meaning, in this context placed in a materially identical position (at [30]), or "identically placed" (at [33]). However, this case did not concern taxpayers with open and closed years and so it was not authority for the proposition that the similarities or differences were to be determined at the outset. They clearly had to be determined when the decision under challenge was made. The judge, on Mr Nawbatt's submission, should have distinguished this decision on that basis.
55. Mr Nawbatt also relies on City Shoes at [84]-[86] where employee benefit trust ("EBT") users had applications to register under the Lichtenstein Disclosure Facility ("LDF") which HMRC accepted. These users were held to be in a "fundamentally different position" to otherwise identically placed EBT users whose applications happened to have been put on hold pending HMRC's review of whether EBT users should be allowed to benefit from the favourable terms of the LDF.
56. The second error on Mr Nawbatt's submission was that the judge was wrong to conclude that the question of comparative unfairness was to be determined as at the time of the 2003 guidance and not at the time when it was withdrawn.
57. Third, Mr Nawbatt submits that the judge failed to direct herself correctly about the exception to the normal requirement for decision-makers to act consistently where the decision-maker had previously acted under a mistake as to the law. He cites O'Brien (paragraph 48 above). Mr Nawbatt also relies on the conclusion of Elias J in R (o/a Lewisham) v AQA [2013] EWHC 211 (Admin) at [126] that:

there is nothing inherently unfair in putting right earlier errors rather than compounding them, even if this involves a disparity between similarly placed individuals.

58. Mr Rory Mullan, for the respondent, submits that HMRC had a duty to treat taxpayers consistently and that section 29(2) TMA (enabling a taxpayer to rely on a practice generally prevailing at the date when he completes his SA) confirms this approach. He relies on the separate judgment of Lord Carnwath in United Policyholders. In this case, the Government of Trinidad and Tobago had given assurance to policyholders of an insurer which it subsequently sought to qualify in the light of pressures on public finances. Lord Carnwath drew an analogy with the need to adhere to a published policy and indicated that the need for consistency might be relied on rather than legitimate expectation. He held:

116 Outside the tax field, of course, published policy or guidance may have an equally important role, for example in relation to immigration. But there again the law has moved on since Coughlan. It is no longer necessary to find all the answers in the law of legitimate expectation. This accords with the view of Wade & Forsyth (op cit, p 456) that "where there is no knowledge of the policy allegedly disregarded, inconsistency in the application of policy rather than frustration of a legitimate expectation is the appropriate ground of review." In support of their assertion that this view has been "gathering strength", they are able to point to Lord Hope of Craighead DPSC's reference to their previous edition in R (SK (Zimbabwe)) v Secretary of State for the Home Department [2011] 1 WLR 1299 , para 36, where he said:

" Wade & Forsyth, Administrative Law , 10th ed (2009), pp 315–316 states that the principle that policy must be consistently applied is not in doubt and that the courts now expect government departments to honour their statements of policy. Policy is not law, so it may be departed from if a good reason can be shown."

To similar effect, De Smith, 7th ed, para 12–040 suggests that in the context of policy statements, use of the term "expectation" may not add anything to general public law duties, and "may indeed dilute them". In retrospect it seems that the court's understandable concern in Coughlan to find a rational basis for the early substantive expectation cases, such as Khan [1984] 1 WLR 1337 and Ruddock [1987] 1 WLR 1482, both of which turned on departure from adopted policy or practice (para 83).

59. Mr Mullan naturally pressed on us the approach of Lord Carnwath. His judgment usefully highlights the strength of Lord Neuberger's first proposition, and his emphasis on consistency supports Mr Mullan's own submission that HMRC should be held to what they had said in the 2003 guidance. At the end of his judgment, Lord Carnwath also holds that the trend of modern authority is to favour a narrow interpretation of substantive legitimate expectation, such as is involved in this case by reason of the issue of the 2003 guidance. In my judgment, however, we should apply the formulation of Lord Neuberger in so far as there is any difference between his judgment and that of Lord Carnwath. It is sufficient therefore to cite only that of Lord Neuberger.
60. While Mr Mullan accepts that there is no duty of equal treatment, he argues that, once HMRC publish guidance, they must apply that policy unless there is a good reason not to do so: see Mandalia v Secretary of State for the Home Department [2015] 1 WLR 4546 at [29]-[31] per Lord Wilson, with whom the other members of the Supreme Court agreed. Lord Wilson held:

The legal effect of policy

29 In 2001, in R (Saadi) v Secretary of State for the Home Department [2002] 1 WLR 356, para 7 Lord Phillips of Worth Matravers MR, giving the judgment of the Court of Appeal, said: "The lawful exercise of [statutory] powers can also be restricted, according to established principles of public law, by government policy and the legitimate expectation to which such a policy gives rise." Since 2001, however, there has been some departure from the ascription of the legal effect of policy to the doctrine of legitimate expectation. Invocation of the doctrine is strained in circumstances in which those who invoke it were, like Mr Mandalia, unaware of the policy until after the determination adverse to them was made; and also strained in circumstances in which reliance is placed on guidance issued by one public body to another, for example by the Department of the Environment to local planning authorities: see R (WL (Congo)) v Secretary of State for the Home Department [2010] 1 WLR 2168, para 58. So the applicant's right to the determination of his application in accordance with policy is now generally taken to flow from a principle, no doubt related to the doctrine of legitimate expectation but free-standing, which was best articulated by Laws LJ in R (Nadarajah) v Secretary of State for the Home Department [2005] EWCA Civ 1363 at [68]:

"Where a public authority has issued a promise or adopted a practice which represents how it proposes to act in a given area, the law will require the promise or practice to be honoured unless there is good reason not to do so. What is the principle behind this proposition? It is not far to seek. It is said to be grounded in fairness, and no doubt in general terms that is so. I would prefer to express it rather more broadly as a requirement of good administration, by which public bodies ought to deal straightforwardly and consistently with the public."

30 Thus, in R (WL (Congo)) v Secretary of State for the Home Department [2012] 1 AC 245 (in which this court reversed the decision of the Court of Appeal but without doubting the observation in para 58 for which I have cited the decision in para 29 above), Lord Dyson JSC said simply, at para 35: "The individual has a basic public law right to have his or her case considered under whatever policy the executive sees fit to adopt provided that the adopted policy is a lawful exercise of the discretion conferred by the statute." There is no doubt that the implementation of the process instruction would have been a lawful exercise of the power conferred on the Secretary of State by section 4(1) of the Immigration Act 1971 to give or vary leave to remain in the UK.

31 But, in his judgment in the WL (Congo) case, Lord Dyson JSC had articulated two qualifications. He had said, at para 21: "it is a well established principle of public law that a policy should not be so rigid as to amount to a fetter on the discretion of decision-makers." But there was ample flexibility in the process instruction to save it from amounting to a fetter on the discretion of the caseworkers. Lord Dyson JSC had also said, at para 26, "a decision-maker must follow his published policy … unless there are good reasons for not doing so."

61. Mr Mullan also submits that taxpayers affected by the 2003 guidance form a single cohort, and that there was a duty to apply the 2003 guidance consistently to all those within its scope. He further submits that changes in the policy in that guidance have to be managed fairly: see R (o/a of (Cameron) v HMRC [2012] STC 1691, [71]; R (Gaines Cooper) v HMRC 81 TC 134 at [12] and [58]-[59] per Moses LJ, with whom Dyson LJ agreed. (The decision of this Court was subsequently affirmed on partly different grounds by the Supreme Court ([2011] STC 2249). He submits that taxpayers are entitled to expect that HMRC should be kept to its word. Moses LJ held:

[12] The importance of the extent to which thousands of taxpayers may rely upon guidance, of great significance as to how they will manage their lives, cannot be doubted. It goes to the heart of the relationship between the Revenue and taxpayer. It is trite to recall that it is for the Revenue to determine the best way of facilitating collection of the tax it is under a statutory obligation to collect. But it should not be forgotten that the Revenue itself has long acknowledged that the best way is by encouraging co-operation between the Revenue and the public. Mr Beighton, a member of the Board of Inland Revenue, said as much twenty years ago (cited by Bingham LJ in R v IRC ex parte MFK Underwriting Agents Ltd [1990] 1 All ER 91, [1989] STC 873, [1990] 1 WLR 1545 at 1568H). Co-operation requires fair dealing by the Revenue, and frank and open dealing by the public…

[59] For the reasons I have given earlier, I accept that the specific assurances that taxpayers will be treated as non-resident in the circumstances identified in IR20 amount to statements of practice, or policy, which the Revenue was obliged as a public law duty to consider and apply, until they promulgated a change of practice for the future….

Conclusions on Issue (1)

62. In my judgment, Mr Nawbatt's three submissions are correct and they are amply supported by the authorities which he cites and which I have set out above. A recent further example of his first submission is R (Gallaher Group Ltd) v Competition and Markets Authority [2016] Bus LR 1200 at paragraph 53 per Lord Dyson MR, with whom Longmore and Lloyd Jones LJJ agreed. The judge, as I see it, did not give due weight to the fact that a public body can change its policy if there is a good reason. In MFK, Bingham LJ stated that a policy once made was binding but this was in the context of a case where there was no question of any change of direction. The view that a policy may be changed if there is good reason to do so is supported by the judgment of Lord Dyson in WL Congo (cited by Lord Wilson in Mandalia, paragraph 60 above), by Elias LJ in Lewisham (paragraph 57 above), and by Bhatt Murphy, cited by Lord Neuberger (paragraph 36 above).
63. Mr Mullan urged on us the principle of consistency, i.e. that public law requires that, once HMRC or any public body has given guidance or published a policy, they should be held to it. As the authorities cited by Mr Nawbatt show, this overstates the position reached in the authorities. As Bingham LJ put it in MFK, the taxpayer's only legitimate expectation is that he will be taxed according to statute, not concession or a wrong view of the law (see paragraph 40 above). The correct position in law is not that urged on us by Mr Mullan but that set out by Lord Bingham in O'Brien (see paragraph 48 above).
64. On what I have termed Mr Nawbatt's second submission (paragraph 55 above), I consider that on principle it is not enough to say that the persons to be treated in the same way were in the same cohort originally. It is necessary to look at the time when the decision is made, that is, when the decision-maker is called upon to assess whether they should be treated as being in the same position. In the present case taxpayers with Mansworth v Jelley losses were not in the same position if they were in open years as opposed to closed years. For the latter group, HMRC had no power to reopen their affairs and to remove the ability to utilise the Mansworth v Jelley loss. The position was entirely different for those whose years were open, including the respondent. Therefore this ground of unfairness was not available to the judge.
65. I therefore conclude that in law the RCBs in 2009, withdrawing the 2003 guidance for Mansworth v Jelley losses in open years, did not involve comparative unfairness of which the respondent could properly complain. HMRC were not precluded from changing its policy by the fact that not every taxpayer's losses could be reopened.

Issue (2): if the answer to (1) is no, was the withdrawal of the 2003 guidance otherwise unfair under the law about legitimate expectations, or alternatively was it incompatible with the Convention, taken with A1P1?

66. Although this was not a case of comparative unfairness, HMRC still could not resile from the 2003 guidance if it was so unfair as to amount to an abuse of power. So I need to consider whether those circumstances are present. HMRC's position is that once it was appreciated the 2003 guidance was mistaken they should, subject to questions of fairness, correct the mistake and that they could not do so for closed years.
67. For the respondent, Mr Mullan submits that (if the decision to withdraw the 2003 guidance was not flawed because of comparative unfairness) there was a balancing exercise to be performed between the public interest and the interests of those affected by the decision. As to the public interest, he submits that the authorities recognise that the payment of the correct amount of tax according to the statute properly interpreted was not always conducive to the public interest as where there is hardship or tax is artificially reduced by tax avoidance. Further, he submits, the principle of consistency is again relevant here because there is a public interest in the consistent application of tax law for several reasons, including ensuring that everyone is taxed according to the same rules, avoiding capricious selective application, ensuring the tax burden is shared rationally, increasing co-operation with taxpayers and thus decreasing the cost of administering the system and giving effect to the will of Parliament.
68. On the other side of the scale, unfairness to the respondent had to be considered. In particular, some weight had to be given to the comparative unfairness as between the respondent (and others in the same position), and those whose claims had been accepted. In addition, the change applied to claims already lodged. This was contrary to the approach taken by the amendments to the TCGA 1992, and in that sense was retrospective.
69. Turning to the Convention, Mr Mullan submits that Article 14 of the Convention, taken with A1P1, applies. These Articles guarantee (a) the enjoyment of rights without discrimination on any specified ground "or other status" (Article 14) and (b) that a person will not be deprived of his property "except in the public interest and subject to the conditions provided by law" (A1P1).
70. Mr Mullan accepts that under Article 14 the difference in treatment had to be on one of the proscribed grounds: see R (o/a S) v Chief Constable for South Yorkshire [2004] 1 WLR 2196 at [42] to [43], and R (o/a Clift v Secretary of State for the Home Department [2007] 1 AC 484 at [59] to [66]. He submits that the difference in treatment in this case falls within Article 14 taken with A1P1 because of his status as a employee in the financial services sector. He was treated differently because HMRC were pursuing enquiries against his employer, and there was discrimination because the respondent's claim was not determined when the enquiries against ABN were closed. The difference arose from the "procedural fluke" of HMRC having opened enquiries.
71. HMRC submits that the Convention is not engaged. As to Article 14, Mr Nawbatt submits that no authority was cited. As regards A1P1, this was not engaged because there was no established right to capital losses. In any event, the interference with property rights was in any event justified by the need to correct the mistaken view of the law taken in the 2003 guidance, and it was prescribed by law on the issue of the RCBs.

Conclusions on Issue (2)

72. As explained under Issue (1), it is well established that it is open to a public body to change a policy if it has acted under a mistake. The decision whether or not to do so is not reviewed for its compatibility in the public interest: the question is whether or not there has been sufficient unfairness to prevent correction of the mistake. It is clear from the authorities that the unfairness has to reach a very high level: see, in particular, the holding of Simon Brown LJ in Unilever where he held that it was not enough that the change of course by the public body was "mere unfairness" or conduct which was "a bit rich". It had to be outrageously or conspicuously unfair. The respondent relies on authorities showing that it is not necessary for HMRC to charge the correct amount of tax and makes the obvious point that HMRC has no authority to do so where it is constrained by public law. I accept those points but they do not address the crucial question of when HMRC can depart from published guidance.
73. Confining the question at this stage to the balancing of the public interest against the interest of taxpayers affected by the decision to withdraw the 2003 guidance as a general body, I do not consider that, in the absence of comparative unfairness, it can be said that there was conspicuous unfairness. Mr Mullan draws an analogy with the approach taken by Parliament when it reversed Mansworth v Jelley. Parliament did not seek to disturb the position of those who had already exercised their options. This analogy does not in my judgment compare like with like since in that situation Parliament was removing for the future a right which, when it comes into existence, was thought to be sound in law. In this case, HMRC removed guidance which was premised on a right which they did not, at the date of removal, consider existed.
74. The respondent contends that HMRC filed no evidence as to the reasons for the decision in 2009. I do not consider that this is a sustainable criticism of HMRC. HMRC claimed legal professional privilege for the corrective legal advice that prompted it to issue the 2009 RCBs. This seems entirely reasonable and not a point on which HMRC can be criticised. It follows that the judge's criticism in City Shoes about the significance of the lack of evidence from HMRC as to its reasons for withdrawing from the 2003 guidance was misconceived. It was also not determinative since the crucial question was whether the changed guidance should be applied in the respondent's particular case.
75. As to reliance on the Convention, I do not accept the ambitious submission that the respondent's employment in the financial services industry could give him a requisite status for Article 14 purposes. No remotely similar case was cited. I would also accept Mr Nawbatt's submission on A1P1 that even if the respondent had any form of property right for A1P1 purposes (a question I do not need to consider), the interference with it by the RCBs was in the circumstances described above justified.
76. The respondent's case on unfairness stands or falls, as I see it, on the facts of his individual case, taking into account the general principles of legitimate expectations as they apply to HMRC, and this is a matter to which I turn under Issue (3).

Issue (3): if the withdrawal was not unfair and was Convention compliant, was the decision in any event lawfully taken by Mrs Sanderson on the basis of the RCBs and the information before her

77. Mr Nawbatt submits that the appropriate test is one of rationality and whether the relevant considerations were taken into account, i.e. did HMRC make a rational decision when they issued closure notices and amended the respondent's SAs to reject his Mansworth v Jelley losses, and did they have regard to the material considerations? I have set out in paragraph 20 above the reasons which HMRC gave in their closure notices. These were amplified in Mrs Sanderson's witness statements.
78. On Mr Nawbatt's submission, the judge should have attached weight to the fact that withdrawal of the 2003 guidance was not unfair because the guidance post-dated the making by the respondent of his original Mansworth v Jelley claims. In fact, when refusing permission on paper, Andrews J had found this fact to be determinative:

The fatal flaw in the C's claim lies in the fact that the 2003 guidance issued by HMRC on which he seeks to rely, and which HMRC later withdrew on the basis of legal advice, post-dates the relevant transactions and the submission of the relevant tax returns, in which no relief in respect of the alleged losses was initially claimed. Although he did amend his self-assessment returns seeking to off-set the alleged losses against capital gains after the guidance was published, HMRC never agreed the losses. On 2 June 2003 the statutory notices issued by HMRC informing C that it intended to enquire into the claims made it clear that the losses were not agreed. Any arrangements C made thereafter were made in that knowledge.

79. Moreover, in making her decision, the officer concerned, Mrs Sanderson had, as stated in her first witness statement, taken into account a wider range of considerations than those noted by the judge. She took into account the fact that the respondent had exercised his options and submitted his SAs before the 2003 guidance was issued. So he filed his SAs on the premise that he would receive the very same tax treatment as set out in RCB 30/09.
80. Mr Nawbatt further submits that, while detrimental reliance is not essential, it is a powerful factor: see R (Bancoult) v Secretary of State for Foreign and Commonwealth Affairs (No 2) [2009] 1 AC 453, at [60] per Lord Hoffmann at and at [135] per Lord Carswell, both of whom cited with approval the judgment of Peter Gibson LJ in R v Secretary of State for Education and Employment, Ex p Begbie [2000] 1 WLR 1115). Peter Gibson LJ held at 1124 that:

It is very much the exception, rather than the rule, that detrimental reliance will not be present when the court finds unfairness in the defeating of a legitimate expectation.

81. Moreover, the court is entitled, on Mr Nawbatt's submission, to expect that the claimant will submit proper evidence demonstrating his detrimental reliance: see R (o/a Bamber) v HMRC [2005] EWHC 3221 at [59].
82. Furthermore, on Mr Nawbatt's submission, when applying a test of rationality and considering whether relevant considerations were taken into account the court should be cautious about "concluding that advice given by HMRC which is wrong in law will create a legitimate expectation, such that applying the law correctly amounts to an abuse of power." (HMRC v Noor [2013] UKUT 71, [97f], Warren P).
83. Mr Nawbatt submits that the judge took into account an irrelevant consideration, namely the immigration decision in R (Rashid) v Secretary of State for the Home Department [2004] EWHC 2465 (Admin). Mr Mullan did not take issue with this point. As it is not determinative of this appeal, I propose to say no more about it. The decision in Rashid was affirmed by this Court ([2005] INLR 550) but subsequently overruled by the Supreme Court in R (TN Afghanistan) v Secretary of State for the Home Department [2015] 1 WLR 3083.
84. Moreover, on Mr Nawbatt's submission, the judge should not have relied on the delay in concluding the enquiries because they were lawfully open. He submits that the judge correctly rejected the respondent's criticisms of HMRC's conduct in carrying out the enquiry:

[56] I reject the Claimant's submission that the Commissioners deliberately delayed the conclusion of the enquiries in his case because they wished to await the revocation of the 2003 Guidance and disallow his claimed losses. Mrs Sanderson's evidence is to contrary effect: she says there was no deliberate delay, rather the investigations were complex and took a long time. I accept that.

85. Likewise, Mr Nawbatt submits, it was not correct to say, as the judge held, that the respondent had open claims because of the mistake made by HMRC (judgment, [73]). He had open claims because HMRC had lawfully opened enquiries in his case. This factor should therefore also have been left out of account.
86. Mr Mullan contends that the decision of Mrs Sanderson was not lawfully made.
87. He submits that Mrs Sanderson took a narrow view of detrimental reliance since the respondent's expectation that the 2003 guidance would be applied to him was reinforced by the passage of time. The balancing exercise carried out by Mrs Sanderson was inadequate. HMRC did not take into account that the enquiry was driven by HMRC's enquiry into ABN, not the respondent personally. Nor did Mrs Sanderson take into account the fact that the 2003 guidance was thought to be correct when he made his Mansworth v Jelley loss claims.
88. As to HMRC's finding that the respondent had not shown any detrimental reliance on the 2003 guidance, Mr Mullan submits that HMRC's approach had been too narrow and that because of the time which the enquiries had taken he had suffered, in his words, "creeping detriment" sufficient to amount to detrimental reliance. If the appeal succeeded, the respondent would have to pay £25,000 with interest from 2003. There were cash flow consequences to the respondent from reversal of the loss claims, and he had made an investment in the new business he had started with his wife and incurred expenditure on purchasing a house. Mrs Sanderson failed to consider comparative unfairness (which does not assist in the light of my conclusion on Issue (1)). Mr Mullan also submits that HMRC did not tell the respondent that he could not rely on the 2003 Guidance but HMRC's letter of 2 June 2003 clearly indicates the risk. Mr Mullan points to the delay of 11 years and submits that it is no answer to say that the respondent is returned to the position he was in when he exercised his option after a delay of 11 years.
89. Mr Mullan made a number of criticisms in his skeleton argument about the conduct of the enquiries in the respondent's case. He submitted that the enquiries had been conducted "with considerable unfairness" because the original enquiries were opened for reasons unrelated to the respondent's claim instead and were carried on longer after the ABN enquiry had been completed. In addition, Mr Mullan submitted that the enquiries were carried on in a manner contrary to HMRC's own guidance. Mr Mullan submitted that the respondent's request that his claim be dealt with or closed were not properly dealt with, and that no actual enquiring had taken place during the course of the enquiry. Mr Mullan submitted that HMRC did not give the respondent an adequate explanation as to what was going on. The enquiries had lasted eleven years and on Mr Mullan's submission discovered nothing.

Conclusions on Issue (3)

90. I remind myself that the respondent has to show conspicuous unfairness. The principal reasons why I consider that this is not shown are those given by Andrews J in her perceptive reasons given on paper. The respondent was returned to the same position as he was in when he committed himself to the transactions which gave rise to the capital losses. Moreover he had been clearly warned by HMRC in the letter of 2 June 2003 that they did not accept his additional Mansworth v Jelley losses. HMRC was entitled to open the enquiries and those enquiries were open at the time when HMRC made its decision. Mr Mullan has no basis for challenging the conduct of the enquiries in this court in the light of the judge's evaluation and clear rejection of this submission.
91. The witness statement of Mr Everett shows that a large number of other claims were met under the 2003 guidance, but the existence of such claims is in reality accepted by HMRC and the number of them is immaterial. In my judgment this does not give rise to unfairness because the case of people who have closed years and open years is different.
92. It is apparent that HMRC carefully considered whether he had suffered any detriment and made their decision on the information that the respondent provided. The absence of detriment is not conclusive but as the authorities show, it is a powerful factor. The respondent's case is unlike that in Gaines-Cooper, cited in paragraph 61 above, where the taxpayer had relied on the published guidance. In the present case, the detriment was not caused by any reliance on the 2003 guidance but general financial difficulty due to other reasons.
93. The decisions under challenge are clearly hard for those whose claims were outstanding in 2009. Nonetheless, in my judgment, the level of unfairness is not that of conspicuous unfairness.

Final issue (4): The judge erred in remitting the matter to HMRC

94. On my conclusions, if my Lords agree, this contention made in the respondent's notice does not arise but it was argued and so it is convenient to deal with it. Mr Mullan does not ask this court to substitute its decision for that of HMRC but he submits that the judge was wrong to remit the matter to HMRC. He submits that this Court should hold "that, in the light of the respondent's legitimate expectations and HMRC's duties it would be unlawful for HMRC to deny the respondent the losses which he has claimed." (Respondent's replacement skeleton argument, 15 March 2017, [83]). That is tantamount to saying that the judge should have remade the decision herself.
95. Mr Mullan submits that the judge should not have remitted the matter back to HMRC because HMRC had deliberately failed to put in evidence which justified the difference in treatment: see Paponette v AG for Trinidad and Tobago [2012] 1 AC 1 at [38], which holds that the onus is on the public authority to show justification.
96. HMRC submit that it was not open to the judge to make the decision because under section 31(5A) Senior Courts Act 1981 she could only remake a quashed decision where (i) the decision was made by a court or tribunal, (ii) it was quashed because there was an error of law, and (iii) without the error, there would be only one decision that could have been reached

Conclusions on Issue (4)

97. In my judgment, the judge made no error here for the reasons given by HMRC.

Disposal of this appeal

98. For the reasons given above, I would allow this appeal and dismiss the respondent's notice.

Postscript

99. I acknowledge with gratitude the assistance provided by Rory Mullan and Harriet Brown, who have appeared pro bono.

LORD JUSTICE McCOMBE

100. I agree.

LORD JUSTICE SALES

101. I also agree.
APPENDIX 1 AGREED TAX TREATMENT OF UNAPPROVED EMPLOYMENT-RELATED SHARE OPTIONS

Pre 2003 Guidance

102. The position, as understood before January 2003, was that the base cost of unapproved employment-related share options was (i) the cost of acquisition of the option (ii) any cost on exercise of the option and (iii) any sum on which income tax was payable under section 135 of the Income and Corporation Taxes Act 1988 (per section 120 TCGA 1992).

2003 Guidance

103. The position set out in the guidance issued by HMRC in 2003 was that the base cost for the acquisition of the shares was the market value of the shares (as per section 17 TCGA 1992 and Mansworth v Jelley) at the time the option was exercised plus any amounts charged to income tax on their acquisition (as per section 120 TCGA 1992).

2009 Guidance

104. The position set out in the 2009 Guidance was that the base cost of unapproved employment-related share options is the market value of the shares as at the date of the exercise of the share option.
105. The Respondent does not accept that the 2009 Guidance is a correct statement of the law or that section 120 TCGA 1992 can be disregarded. He has appealed the closure notices to the First-tier Tax Tribunal.
APPENDIX 2 AGREED CHRONOLOGY

Date	Event
1998	Exercise of share option
1999	Exercise of share option
19/1/00	RHH submitted 1998/1999 tax return
25/1/01	RHH submitted 1999/2000 tax return
16/10/02	RHH's employer informs him of an enquiry relating to NICs
12/12/02	Court of Appeal judgment in Mansworth v Jelley
8/1/03	HMRC issue "Tax treatment of options following Mansworth v Jelley"
29/1/03	RHH claims capital losses for 98/99 and 99/00 and amends returns for 01/02
3/03	HMRC issue "Further details on tax treatment of options following decision in Mansworth v Jelley"
10/4/03	Amendments made by section 158 FA 2003 come into force
2/6/03	HMRC open enquiry
20/3/09	HMRC published Revenue and Customs Brief 30/09
11/9/09	HMRC publish Revenue and Customs Brief 60/09
12/11/10	RHH informed M v J losses not allowable, enclosed 30/09 and 60/09
12/11/10	HMRC close enquiries in 05/06 and 06/07 and amend SAs
7/12/10	RHH appeals amendments
30/4/14	Closure notices
22/5/14	RHH submits appeal against closure notices
8/7/14	Pre-Action Protocol Letter
22/7/14	Pre-Action Protocol Response
24/07/14	Claim for judicial review