England and Wales High Court (Administrative Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		21/12/2005

Mr Justice Lindsay :

Introduction

1. In June 2004 the Commissioners of H.M. Revenue and Customs ("the Revenue") agreed in writing with the airline MyTravel a "flat rate expense allowance" such that for the tax years after 1996/7 the pilots and cabin staff would be entitled to claim expenses (and hence deductions on that account from their taxable emoluments) at certain new agreed fixed levels without their having to prove that such expenses had in truth been incurred and paid. However, by a letter of the 30^th November 2004 the Revenue resiled from that agreement. One of the MyTravel captains, Mr Bamber, (who also represents MyTravel's pilots as the British Airline Pilots' Association representative on MyTravel's Company Council) applies to quash that November letter. Are the Revenue, which appears by Mr Clive Lewis, to be held to the June Agreement? Is Mr Bamber, who appears by Mr Southern, able to bar their escape from it?

FREAs

2. If an employee is obliged, himself or herself, to incur and pay expenses "wholly, exclusively and necessarily in the performance of" his or her duties of employment then the amount so incurred and paid, thus satisfying that three-part statutory test, can be deducted from the income of that employee before it is assessed to income tax. An employee taxed by way of PAYE has, in practice, some 5 years and 10 months after the particular tax year in which he or she who has incurred and the paid the expense can claim the deduction. When income tax has already been paid without the appropriate deduction having been made then when it falls to be made there will commonly be a re-coding of the employee for PAYE purposes and a money repayment or credit. In general, and where no other arrangements have been made, the Revenue are likely to require evidence of the incurring and payment of the expense item beyond a mere assertion on the employee's part, on oath or otherwise, that that had been the case. Thus in such general cases the prudent employee, where the amount of the claim is worthwhile, obtains and retains receipts and vouchers to prove what his or her outgoings have amounted to, what they were for and when they were incurred and paid.
3. In connection with industries where it is common for employees to incur and pay expenses within the description I have cited it will immediately be seen that making claims and supplying a detailed verification of them can be tiresome for the employee, who has to retain receipts and vouchers or other evidence and aggregate the amounts, but the process is potentially far more time-consuming for the Revenue who, unlike each individual taxpayer, may have to deal with hundreds or even thousands of taxpayers in order to receive, examine and verify their respective claims and, possibly, to look at an astronomical number of receipts, vouchers or other documents in order to satisfy themselves that the deduction is indeed appropriate. Where the expenses are not truly substantial the game might hardly be worth the candle. Fortunately, however, the Revenue has broad management powers which it may exercise so as to arrive at a practical collection regime, one affordable both in human resource and monetary terms, and it is by exercise of its managerial powers that it makes "FREAs" – Flat Rate Expense Allowances".
4. In some cases where expenses do not greatly vary from one employer to another FREAs are nation-wide and industry-wide but that is not the case for airlines. There is too much variance between them to enable an industry-wide FREA to be arrived at. So particular FREAs are made. Such a FREA involves the Revenue looking at the expenses arrangements made by the particular employer and at the obligations and needs of its employees with regard to expenses and then, in consultation with the employer and its advisers, it arrives at figures for that employer's staff or sections of them which are figures broadly considered by the Revenue to be convenient flat-rate figures to be taken as deductible from income without the need for verification by the employees concerned. The Revenue looks at likely outgoings of the employees item by item and arrives at an aggregate figure for the FREA. The employer then adjusts the codings of the employees falling within the FREA. A FREA represents a departure from the strict terms of the Taxing Acts as it is inevitably possible, indeed probable, when a flat-rate is used, that some taxpayers may enjoy a deduction in respect of outgoings which (had evidence been required) would have been seen, for example, to be such as to have failed the strict three-part statutory formula for that employee or, indeed, may not have been incurred and paid at all. But, as Mr Lewis puts it, it's a "win-win" situation for the employees because, whilst the employee can claim expenses at the FREA level without proof, if he can adequately verify that he has incurred and paid expenses falling within the statutory formula but to a greater extent than the FREA level, then he may claim a deduction for that higher figure. On the other hand, FREAs represent real benefits to the Revenue as it avoids the need of receiving and examining and, where appropriate, challenging a whole series of expense claims. The administrative benefits are obvious. Of course, the higher the level of a FREA, the less likely are claims for deductions at still higher levels. I shall now turn from FREAs generally to describe how the particular FREA in issue emerged. The facts need to be set out at some length.

The facts

5. MyTravel currently employs some 2,000 pilots and cabin crew. In 1991 it agreed an FREA with the Revenue covering its flying staff. There were then increases in the levels for pilots and cabin crew respectively by reference to inflation until, in 1997, the levels had reached £525 p.a. for each pilot and £140 p.a. for each member of the cabin crew. Between then and 2004 there were no further increases. I am not told that MyTravel or BALPA – the British Airline Pilots Association - had pressed for increases but had been rebutted but by March 2004 the subject of increases had been raised with the Revenue by KPMG, MyTravel's accountants. Mr Ray Hill, of the Large Business Service Employer Compliance office of the Revenue, asked Miss Angela Slater, an Employer Compliance Officer at Bolton, who had had regular contact with MyTravel, to negotiate a new FREA with the company. It cannot be said that she was not a suitable person to have the task delegated to her, still less that KPMG or MyTravel could have known that she was unsuitable. Although FREAs are a long-standing practice she had never agreed a FREA before (though there is no suggestion that KPMG or MyTravel knew that) but she had had relevant training and had been selected by Mr Hill for the task. She had access, inter alia, to the Revenue's "EIMs" – Employment Income Manuals – including EIM 32725 which, commenting on section 336 ITEPA 2003, invited Revenue staff to consider "locally agreed deduction" and which added that if the staff member was in doubt then "Personal Tax (Technical) Solihull" should be consulted. She had access, also, to EIM 32715 which indicates how FREAs operate. Neither says anything about FREAs never being retrospective.
6. Taking up her task, on the 12^th March 2004 Miss Slater, together with Mr Ray Hill and Mr K.A. Leather, a Large Business Office (Employer Compliance) Officer at Manchester on the Revenue side, met the Applicant, Mr T.R. Bamber (as I have said, the MyTravel airline captain elected by MyTravel members to be their BALPA representative on the MyTravel company council), a corresponding representative of cabin crew employees and Mr Neil Murray and Mr Buffey of KPMG along with officers of MyTravel. Amongst the topics discussed was the "Tools of the Trade Allowance" an alternative way of speaking of FREAs. Mr Hill mentioned "the Airline Forum", a loose grouping of those within the Revenue who were concerned with airlines and their employees and businesses. KPMG produced schedules which included figures, item by item, of what they alleged to be appropriate levels for a new FREA. There was discussion on the figures and explanations were given. Aircrew's luggage was mentioned. Mr Murray made it plain that refunds for earlier years than 2003/4 were looked for, refunds going back to 1997/98. It was left that Miss Slater and Mr Hill would, as it was put, "liaise with interested stakeholders".
7. On the 12^th March 2004 Mr Murray wrote to Miss Slater again making it clear that a tax refund for earlier years, back to the 6^th April 1997, was being claimed, a claim conveniently to be implemented by way of adjustment, he said, to the 2004/05 tax codings.
8. Miss Slater was not herself sure what could or could not be agreed within a FREA for airline employees and spoke to Mr Hill, who suggested that she should look at the Airline Forum on the Internet, which she did. She posted a note on the Internet asking for help from anyone who had dealings with FREAs. She was answered by Mr Michael Loome of the Revenue's North East Metropolitan Office, who had negotiated 3. On the 19^th March 2004 Mr Loome wrote to Miss Slater. He was an experienced man; he had been with the Revenue for some 30 or more years. He sent copies of the FREAs he had made. He had, in the course of negotiating them, taken advice from "Personal Taxation". The schedules he enclosed gave FREA levels item by item and in the aggregate for both pilots and cabin crew for 3 separate airlines. In aggregates they varied between £1420 and £1110 for pilots and between £1110 and £645 for cabin crew. Even looking at individual items – say the cleaning of uniforms – there is variation between £817 and £352. This is not surprising; not only are the expenses wholly, exclusively and necessarily incurred likely to vary between airlines according to the duties cast on employees from one airline to another but a FREA is intended to meet expenses within the 3-part statutory test but which are not borne by the employer. To take an example used at the hearing, if due performance of a crew member's duties required his or her uniform to be dry-cleaned twice a month then an employee of an airline which itself paid for cleaning once a month could expect to make a claim only half as large as a colleague in another airline which bore no expense at all in relation to dry cleaning. In consequence, a comparison between a FREA for one airline and that for another is fraught with possible misunderstanding and incomparability unless one knows in full the manner in which the respective employers bear or do not bear expenses.
9. Having seen Mr Loome's figures Miss Slater went back to review the material which KPMG had given her, consciously or unconsciously performing the injunction in EIM 31635 – "Get the facts".
10. Having done that, Miss Slater wrote to Mr Murray on the 30^th March 2004. She spoke of having been provided with information by "… my colleagues dealing with MyTravel's competitors" which, she said, made it clear that the Revenue needed to look more closely at what was to be included in the FREA. She gave a detailed item by item breakdown of classes of expense which could be used within the FREA, giving also the amounts she suggested for each. She had rejected some items which KPMG had asked for and, as to others, she asked for further evidence as to the appropriate amounts. She required, for example, evidence of costs as to employees' luggage. There was no hint that retrospectivity was inherently unacceptable nor that claims for employees' luggage was beyond what could be properly included in a FREA.
11. On the 16^th April Mr Murray told her that evidence of costs would be provided. By the 29^th April, when Miss Slater again wrote to Mr Murray, she had spoken further with Mr Hill. She rejected two forms of claim which Mr Murray had raised. She included an item by item schedule for a suggested FREA and asked for his comments. The aggregate had by then become £2115 for pilots and £1430 for cabin crew, in each case including luggage.
12. On 20^th May 2004 Miss Slater and Mr Murray met. He provided brochures to indicate the costs of the items in question. He allowed her to take the evidence away. A new claim was raised in connection with crews taking passengers to the Hajj in Mecca. She said she would need to read the Airline Forum website on that subject before agreeing a figure. As to the rest, her note records the meeting ended with agreement as to the "tools of the trade".
13. On the 9^th June 2004 Miss Slater, whilst reminding Mr Murray that two classes of expenditure were inadmissible, wrote that:-

"The flat rate expense allowances in respect of the pilots and cabin crew are now agreed as detailed on the enclosed schedules."

The allowances, she said, were to be linked to the annual RPI. The schedules which she enclosed provided a FREA of £2265 per annum for pilots and £1580 per annum for cabin crew and computed the consequential coding adjustments for the 6 years from April 1997 by deducting, for pilots, £525 (the old allowance) from £2265 (their new one) and multiplying the resultant figure by 6 in order to arrive at a figure of £10,440. There was a corresponding computation for cabin crew. The total coding adjustment including 2004/05 was given as £14,559 and £11,704 for pilots and cabin crew respectively. A provisional allowance for 2005/06 was given as £2322 plus RPI.

14. The agreement of the 9^th June 2004 ("the June Agreement") was clear and unambiguous. It was conspicuously retrospective as well as having present and prospective force. Luggage had been included. There is no suggestion that the evidence of costs provided to the Revenue did not make good the amounts claimed or that Miss Slater would not have spotted that, had it been the case. The June Agreement was unhurried; very nearly three months had been spent on it since the first meeting on the 12^th March. It is not suggested that KPMG or MyTravel had failed to disclose anything that could reasonably have been expected of them. The Revenue, by Miss Slater, had been free to consult as they pleased and she did so consult and she had had the guidance of Mr Hill, of Mr Loome, of the EIMs and from the Revenue's Airline Forum generally available to her. It is not suggested that KPMG, MyTravel or BALPA either knew or ought to have known that the figures then agreed were unjustified or excessive though, as will be seen, they regarded the deal as a good one. It cannot be and is not said that KPMG sought out Miss Slater as, so to speak, a "soft touch" on expenses; it was Mr Hill who had selected her for the task that she was given.
15. In the June Agreement Miss Slater indicated that the Schedule PRIVATE contained, as it did, a global allowance to be included in the code numbers of the pilot and cabin crew staff currently employed by MyTravel. "This" she wrote, "as you are aware, will enable those employees to receive their appropriate refunds through their salaries". She asked for details of the employees concerned.
16. There is nothing unusual about FREAs; the evidence is that they are typical.
17. MyTravel "very rapidly" supplied the information to the Revenue which it needed in order to make the changes for the tax codes which were required in consequence of the June Agreement.
18. On the 14th June by a letter signed jointly by Mr Bamber as MyTravel's BALPA company Council member and on behalf of MyTravel, MyTravel's pilots were advised of the new agreed figures which, the letter said, represented a significant increase in the tools of the trade allowance. A much better deal had been obtained, it said, than had been obtained by any other airline. It was said in the letter that the changes affected all flying employees. That being so, I think it highly improbable, although the letter I have seen was sent only to pilots, that news of the increases did not get through to cabin staff. The letter advised pilots that there had been an increase from £525 per annum to £2265 for 2003/04 and to £2322 for 2004/05. The letter continued:-

"Critically this change, adjusted for RPI over the past 6 years, will be backdated resulting in a significant rebate for all current employees who will be affected through revised tax codes in the current year."

19. The letter then explained how tax refund could be claimed. At the end the letter concluded:-

"In summary we believe this Agreement places MyTravel flying personnel in the most favourable tax position available in the industry and should be seen as beneficial to employees and Company alike."

20. No doubt spurred on by the prospect of substantial refunds which, if the employee concerned was a pilot who had worked at MyTravel throughout the 6 years covered by the June Agreement could be of some £5,000 or more, employees approached the Local Revenue Office in Accrington in numbers, pressing for refunds. Miss Slater had not warned Accrington but she had (after they had been sent out) seen the combined Company and BALPA letters which had announced the new Agreement to MyTravel staff. She wrote to KPMG saying that the necessary coding exercise would be discussed by the Revenue on the 30th June. That was on the 24th June; the next day KPMG by an e-mail for Miss Slater made suggestions as to how, technically, the June Agreement could be implemented. It was not answered.
21. On the 1st July 2004 Mr Bamber spoke to Miss Slater. She said that she would be unable to get monies out in July but hoped that repayments might start coming in in August. The Revenue preferred that repayment should be made by cheque to each pilot. She said that problems were being caused by pilots ringing up the Accrington Tax Office and asked Mr Bamber to post something on the MyTravel website asking pilots to desist from contacting Accrington. That he did. He also sent her a copy of the combined MyTravel and BALPA letter but, as it would seem, she had already received a copy of that.
22. On the 16th July KPMG telephoned Ms Sheila Anderton at the Accrington Tax Office to ask her why none of the repayments had been processed. She said that there had been a discussion within the Revenue including the Regional Office and the Personal Tax Division about how the Agreement could be implemented and the Personal Tax Division had asked for the papers. There were technical problems if some employees were repaid through their code numbers whereas others were repaid by cheque. There was no suggestion that the June Agreement was in any way in jeopardy. However, at some date in late July the Accrington Tax Office had raised its difficulties with Mr Parker of the Personal Tax (Technical) Department of the Revenue. From January 2004 he had been the Revenue's Technical Specialist on the Employee Expenses Rules within sections 336 to 339 of ITEPA 2003. He was telephoned by Sheila Anderton who said that she had been asked to make tax repayments going back 6 years for some 2000 employees of MyTravel. She said the instructions to make the repayments had been given by Angela Slater of the Bolton Compliance Office. She was concerned about the amount of work which her office would have to do to make those repayments and also about the amount of money involved. He asked that he should see the Bolton Office papers and asked Miss Anderton to take no further action until he had done so. The papers arrived at his office on the 23rd July. He saw the June Agreement. His witness statement says:-

"I was concerned to see that those figures included several items which did not qualify for relief and others which, if relief were due at all, would qualify under the Capital Allowances Code .... rather than under section 336 ITEPA. I was also concerned to see that in each case the allowance for the upkeep of uniforms seemed too high to be credible. Furthermore, not only had there been an agreement for 2003/4 Tax Year but the Agreement appeared to be retrospective and to apply to earlier tax years. That would not accord with HMRC policy and would be wrong in principle as I explain below."

23. I shall need to come back later to that reference to HMRC policy.
24. On the 2nd August Mr Parker raised his doubts with Mr Dave McKnight, then the Area Compliance Officer at Bolton. He set out the previous FREA at £525 and £140 respectively and the new figures in the June Agreement. He mentioned Miss Anderton's concern; by his calculation the amount of tax that would have to be repaid was about £4.6m at an average of nearly £400 per employee per year. He explained that he had asked to see the Bolton papers. His view was that the allowances that had been agreed in Bolton had been unduly generous. He had seen the letter and evidence from Mr Loome as to the three other airlines and commented that the allowances in the June Agreement were significantly higher than those in Mr Loome's FREAs. He found it difficult to accept, he said that MyTravel employees regularly spent twice as much on deductible expenses as their counterparts in other airlines. Of course, for the reason that I have already given, the amount that an employee spends on deductible expenses will depend in part at least on what expenses are provided for him by his employer. The comment that he makes that Mr Loome's figures are often 50% more or lower does not, of itself, indicate some hard to believe difference between MyTravel and the other three airlines without one knowing whether MyTravel left more than did the other three airlines to be incurred and paid by the employees themselves. Mr Parker continued:-

"I am afraid I must therefore ask you to revisit the agreement that your office has reached with KPMG in relation to employees of MyTravel Airways. If the allowances of £2265 and £1580 are allowed to stand there is no doubt that knowledge of them will soon spread throughout the industry, with consequent pressure on other offices to increase the amounts that they have agreed."

25. In more detail, Mr Parker took the view that the luggage allowance - £300 every year - was not an allowance expense (but rather, if anything, for capital allowance) and that the figure for cleaning of uniforms at almost £20 a week was difficult to believe. Retrospection, moreover, he said was not appropriate. Once a FREA had been agreed it was to remain in force until it was reviewed; it did not apply to the period before it was agreed. Mr McKnight, the Area Director (Compliance) for Bolton was thus told to "revisit" the June Agreement.
26. Early in August substantial redundancies amongst MyTravel employees were announced; those who feared they might be dismissed would no doubt have wished to clutch at whatever tax refunds were open to them.
27. The Revenue made no immediate contact with MyTravel or with BALPA to warn them of the required "revisit". On the 18th August Miss Slater wrote to Mr Bamber to say that she was not sure when the refunds would arrive; he took that to be a reassurance that they would be made. But at some time in August Mr McKnight told Miss Slater that the figures she had agreed were too high.
28. There were telephone calls between the Revenue and KPMG on 24^th and 25^th August. KPMG were told that a number of Revenue staff were to meet to discuss aspects of the June Agreement between themselves on the 27th August. KPMG were told that both retrospectivity and the expense levels in the June Agreement were for review. Luggage and cleaning expenses were singled out as not to be included and although some retrospectivity - back to 2002/03 - was thought by the Revenue to be such as might be appropriate, going back to 1997/8 was said no longer to appear appropriate. KPMG said they were very disturbed at the news. On the 25th KPMG spoke to Mr McKnight expressing disappointment that the June Agreement might be overturned. Indeed, as Mr Jamieson of KPMG said that he would go "ballistic" if the June Agreement was even tinkered with, the word "disappointment" would be too weak to describe his reaction.
29. On the 13th September Mr McKnight met KPMG and said that the Revenue's Personal Tax Division wished to reopen the June Agreement, in particular as to some of the items included and retrospection. KPMG protested but Mr McKnight said that his Head Office believed that the Revenue employees concerned should not have reached the agreement which they had. KPMG indicated that they would not accept its withdrawal. Mr McKnight agreed to take the matter back to his Head Office and to ask them to conclude their deliberations by the 30th September. He also acknowledged that the June Agreement had been reached in good faith. He said he was trying to obtain all relevant information before making a decision. KPMG added that if the Revenue did withdraw from the June Agreement then it would encourage the employees of MyTravel to submit expense claims for the previous years. There were currently, said KPMG, about 2,000 employees and taking those together with employees who had left, there could possibly be some 6,000 separate claims for expenses.
30. On the 30th September KPMG telephoned Mr McKnight to ask what his Head Office had decided. He was told that the Revenue had not completed their deliberations and could not even give a date by which the deliberations would be completed. Relations were not improved when a member of the Accrington Tax Office told a MyTravel employee claiming a refund that MyTravel's Human Resources Department had "jumped the gun" in informing the employees of the June Agreement.
31. On the 29th October a full letter of complaint was written by KPMG to the Inland Revenue's Regional Director.
32. On the 8th November Mr McKnight was replaced as Area Director (Compliance) by Mr P.H. Braviner.
33. On the 19th November both KPMG and MyTravel were orally informed by the Revenue at a meeting on that day that the June Agreement was "so out of line with Revenue policy and practice that the Inland Revenue cannot live with the agreement in its present form". The Revenue apologised but said, remarkably, that KPMG ought to have known better than to have negotiated the Agreement in its current form. KPMG indicated they would fight the Revenue's resiling from the June Agreement. The Revenue said that legal advice had been taken and that it would be wrong to keep the June Agreement as it was. The Revenue later again said that they had to follow their legal advice and resile from the June Agreement. No repayments would flow, said the Revenue, in the foreseeable future. The Revenue offered to renegotiate in an attempt to reach an acceptable FREA but KPMG would not agree to that.
34. Although in his argument Mr Lewis has more than once relied upon the Revenue having received legal advice, none has been disclosed. What the Revenue said, with my emphasis, was "Our legal advice was that we should resile". It would not, I think, be unfair to reflect that had the advice been categoric and unequivocal in the firmness with which it had indicated a duty to resile then it would have been put before me.
35. As the incoming Area Director (Compliance), Mr Braviner conducted a review and concluded that the June Agreement should be resiled from for three reasons. Firstly, because it was retrospective, secondly, because it included items for which no tax relief was due or for which relief was due under capital allowance codes rather than by way of FREAs and thirdly, because the amounts allowed were excessive. In his view the appropriate allowance was £455 for pilots rather than £2265 and £300 instead of £1580 for cabin crew. Immediately before the meeting on the 19th November there had been an internal meeting of the Revenue on the 18th November at which the June Agreement had been discussed. Speaking of the 19th November, Mr Braviner's witness statement says that "At that meeting it was confirmed that the [Revenue] was going to resile from the agreement" - my emphasis. It may thus be that the terms in which the matters were discussed on the 19th was not that there was there and then a resiling from the June Agreement but that perhaps there was left open some possibility that there would not be a resiling after all. However, on the 30th November Mr Braviner wrote to My Travel to say:-

"Fixed rate expenses agreement

Further to our meeting last week, I am writing to confirm that the Inland Revenue is resiling from the agreement set out in writing in Angela Slater's letter of the 9th June 2004 which was addressed to Mr Neil Murray at KPMG.

Unless and until a fresh agreement is reached, the existing fixed rate expenses of £525 for air crew and £145 for cabin crew will continue."

I will call the letter of the 30^th November "the November Letter".

36. Mr Braviner does not explain why he reverted to the 1997 FREA levels. Few costs, surely, were then still at 1997 levels and Mr Parker in his witness statement indicates that after "a certain amount of horse trading" on the items (a thing to be expected in the negotiation of a FREA) the emergent figure would be in the region of £700 to £750 for pilots and probably not more than £450 for cabin crew. In the circumstances Mr Braviner presumably reverted to the previous figure for no better or other reason than that it was the previous figure.
37. So far as concerns any extent to which the June Agreement was relied upon by pilots or pilots or cabin crew, Mr Bamber's evidence has three passages which I shall cite in full:-

"In reliance upon the June Agreement, I and many of my colleagues took decisions that we would not otherwise have taken. For instance, in my particular case, my wife went ahead with the purchase of a new kitchen, and we took the children on a cruise. Many of my colleagues bought new cars. Financial resources were committed that otherwise would not have been. In addition to myself, I believe most of my colleagues cleared out expense receipts as these were no longer required. "

"As a result of the Inland Revenue's decision to resile from the June Agreement I have been left with financial liabilities that I would not have incurred had I not relied upon the fact that a written agreement had been reached. Furthermore, in reliance upon the June Agreement, myself and many of my colleagues disposed of expense receipts as they were no longer required. It is now impossible for me and my colleagues to submit a claim in respect of those expenses because we no longer have the supporting documentation. As a result, my family and the families of my colleagues are having to suffer the consequences."

"A number of pilots and cabin staff submitted returns and claims to the Revenue based on the revised, back-dated expense allowances set out in the Agreement of the 9^th June 2004."

That last passage was made good by Mr Bamber's exhibiting correspondence between pilots and the Revenue concerning a number of claims for expenses at the new level minus the old, namely at £2322 minus £525. The Revenue is requiring evidence when expenses are being claimed at above the old 1997 levels.

38. On or about the 8^th February 2005 Mr Bamber applied for leave to seek Judicial Review. The relief sought was (and remains) a quashing of the Revenue decision set out in the November Letter. On the 11^th April 2005 Ouseley J gave permission on a Paper Application. The Revenue put in detailed Grounds of Resistance (undated in my copy) which, in summary, made ten points:-

"(i) The June Agreement was a mistaken exercise of discretion by the officer concerned;

(ii) Retrospectivity is contrary to the policy of the Revenue;

(iii) The June Agreement would lead to allowances being made for items that did not qualify for relief;

(iv) The Revenue had not processed any repayments on the basis of the June Agreement nor had it circularised any employees in connection with it; rather it was BALPA that had circularised on the subject;

(v) No individual had been disadvantaged: any employee who had incurred legitimate expenses for 1997/8 onwards (impliedly above the £525 and £140 levels) still had several years in which he or she was able to claim those expenses;

(vi) No individual taxpayer could reasonably have relied upon the [June] Agreement to his or her detriment. There is no basis upon which an employee could reasonably have destroyed receipts for expenses incurred for years prior to or after the date of the Agreement or reasonably have enter[ed] into financial or other commitments before receipt of any notification by the Inland Revenue of any changes to tax coding and or entitlement to payment of any rebate;

(vii) There was no basis upon which individual taxpayers could reasonably rely upon the prospect of receiving rebates or alterations in the amount of tax payable by them until the Inland Revenue notified them of that fact;

(viii) The June Agreement was "excessively over-generous";

(ix) The "error" was quickly corrected;

(x) All told, the Revenue's resiling from the June Agreement was not so unfair as to represent abuse of power."

39. A number of these arguments are not such, in my view, that any substantial weight should be attributed to them. The June Agreement was not the product of any "mistake" in the sense in which that word is used in the law in, for example, rectification cases. There had been no misleading of the Revenue. There is no suggestion that all or any of KPMG, BALPA and MyTravel acted otherwise than in good faith and no suggestion either that anyone knew that the Revenue did not intend or could not have intended to make the Agreement in the form in which it was made. There are no accidental or typographical errors in the June Agreement. There is nothing in it that the Revenue did not at the time intend to put in it. Nothing was excluded from it that the Revenue had at the time intended to exclude. As Mr Southern puts it, that the Revenue may regret making it is not to say that it was mistaken in any relevant sense.
40. Nor is a FREA necessarily improper because it grants a relief to someone not truly entitled to that sort of relief. It is of the essence of a FREA that there is, to use Mr Parker's phrase, "horse-trading"; the fact, for example, that employees' luggage, if entitled to relief at all, was entitled to relief only by way of capital allowance rather than by way of being an expense in the computation of PAYE is, as I see it, exactly the sort of modest deduction that could find its way into a FREA as a result of entirely reasonable and pragmatic negotiations with a view to the parties minimising bureaucratic expense and delay on both sides. No doubt a point could be arrived at when, by reference either to the nature or the amount of the relief, it could plainly be seen that the parties had moved from a permissible area into an impermissible one but it is not suggested that that was obviously here the case as to luggage.
41. Nor do I see it as right to discount any reliance by employees on the basis that it was not the Revenue but only BALPA and MyTravel that informed the employees of the June Agreement. Unless the Revenue assert that their agreements are inherently not to be relied upon and that that is notorious (which they do not say) then I do not see it as unreasonable for MyTravel and BALPA to have taken them at their word and to have told the employees the good news. Nor would I see it as unreasonable for employees, not expecting to be misled by either MyTravel or BALPA, to act on the footing that, as a responsible company and a responsible Trade Union, they must have had sufficient indication from the Revenue of the June Agreement to understand it to have been intended to be acted upon by the Revenue and to have been capable of being relied on by the employees. Neither BALPA nor MyTravel had been told not to tell employees of it, nor that they should await the Revenue's issue, direct to employees or otherwise, of fresh codings or repayment instructions.
42. The fact that the Revenue had not actually processed any repayments has no significance, as I see it, beyond it being the case that there was therefore no unfairness as between employees (some processed and repaid, some not). Nor do I see it as unreasonable for an employee to have entered into a financial commitment or to have spent as otherwise he would not have done on the basis of the June Agreement but before receipt of some specific notification by the Revenue of the change in his or her coding or as to some specific repayment. An employee would have known what he had already claimed for earlier years (mainly, I would think, at the 1997 FREA levels) and what he could claim under the June Agreement. The computation of what he was to receive was not difficult. On the face of things it was at least as reliable as, say, an employer's indication that bonuses would be paid at such and such a level.
43. If I am right so far then the grounds upon which the Revenue relies to justify resiling from the June Agreement are, numerically at least, considerably reduced. But before I turn to the remaining possible justifications I need first to see what the law is in this area. Mr Southern referred me to the leading cases.


 


44. I should add that the Claimant applied for permission to add to his claims an averment that the November letter, if not quashed, would represent a deprivation of a possession of his, namely a legitimate expectation that the June Agreement would be honoured, and that such deprivation would breach Article 1 of the First Protocol as set out in Part II of Schedule 1 to the Human Rights Act 1998. I granted that permission. However, the new averment was never framed word for word and when the time came to argue it Mr Southern expressly abandoned the point. Accordingly Mr Lewis never needed to argue it and I do not need to rule upon it.

The Law

45. Reg. –v- IRC, ex parte Preston [1985] 1 AC 835 H.L., a case between the Revenue and one identified individual taxpayer, established that the Revenue was susceptible to Judicial Review when there was what amounted to abuse of power – per Lord Scarman at p. 851h and Lord Templeman at p. 864 where, at g, he said:-

"The Court can only intervene by Judicial Review to direct the commissioners to abstain from performing their statutory duties or from exercising their statutory powers if the Court is satisfied that "the unfairness" of which the applicant complains renders the insistence by the commissioners on performing their duties or exercising their powers an abuse of power by the commissioners."

At p. 866h-867 he added that the Revenue would be guilty of unfairness amounting to abuse of power if their conduct:-

"….. would, in the case of an authority other than Crown authority, entitle the Appellant to an injunction or damages based upon breach of contract or estoppel by representation. In principle I see no reason why the Appellant should not be entitled to Judicial Review of a decision taken by the commissioners if that decision is unfair to the Appellant because the conduct of the commissioners is equivalent to a breach of contract or a breach of representation. Such a decision falls within the ambit of an abuse of power for which in the present case Judicial Review is the sole remedy and an appropriate remedy."

He accepted, though, in the very same passage, that there may be circumstances in which the Court in its discretion does not grant Judicial Review:-

"…. notwithstanding conduct which savours of breach of contract or breach of representation."

46. In R –v- Inland Revenue Commissioners ex parte MFK Underwriting Agencies Ltd and related applications [1989] STC 873 C.A. Bingham LJ at p.891 adopted as his starting point the passage from Lord Templeman's speech in Preston which I have cited above. MFK was not a case where the representation made by the Revenue was ultra vires. At p. 891g-h he said:-

"So if, in a case involving no breach of statutory duty, the Revenue makes an agreement or representation from which it cannot withdraw without substantial unfairness to the taxpayer who has relied on it, that may found a successful application for Judicial Review."

47. His introduction of the word "substantial" indicates that there may be cases where notwithstanding some unfairness to the taxpayer the taxpayer may be refused Judicial Review. At p.892 Bingham LJ continued:-

"No doubt a statement formally published by the Revenue to the world might safely be regarded as binding, subject to its terms, in any case falling clearly within them. But where the approach to the Revenue is of a less formal nature a more detailed inquiry is, in my view, necessary. If it is to be successfully said as a result of such an approach the Revenue has agreed to forego, or has represented that it will forego, tax which might arguably be payable on a proper construction of the relevant legislation it would, in my judgment, be ordinarily necessary for the taxpayer to show that certain conditions had been fulfilled. I say "ordinarily" to allow for the exceptional case where different rules might be appropriate, but the necessity in my view exists here. First, it is necessary that the taxpayer should put all his cards upwards on the table. This means he must give full details of the specific transaction on which he seeks the Revenue's ruling ……"

I do not need to complete Bingham LJ's reference to cards being on the table as, in the case before me, it's not suggested that they were not. At p.892h Bingham LJ continued:

"Secondly, it is necessary that the ruling or statement relied on should be clear, unambiguous and devoid of relevant qualification."

The June Agreement, as it seems to me, is clear, unambiguous and devoid of relevant qualification. At p. 894j Bingham LJ continued, for the reasons that he had given:-

"I do not accordingly find any abuse of power. I would therefore refuse relief. Had I found that there was unfairness, significant enough to be an abuse of power, I would not exercise my discretion to refuse relief."

The use of the words "significant enough" shows that there can be unfairness without necessarily there being Judicial Review. At p.896 Judge J said:-

"The Revenue is not bound to give any guidance at all. If however the taxpayer approaches the Revenue with clear and precise proposals about the future conduct of his fiscal affairs and receives an unequivocal statement about how they would be treated for tax purposes if implemented, the Revenue should in my judgment be subject to Judicial Review on grounds of unfair abuse of power if it peremptorily decides that it will not be bound by such statements when the taxpayer has relied on them. The same principle should apply to Revenue statements of policy. "

Judge J agreed with Bingham LJ that the case before them did not establish abuse of power by the Revenue but he added that:-

"….. I have recognised that it is only in an exceptional case of this kind that the process of Judicial Review is permitted and the Court should be extremely wary of deciding to be unfair actions which the commissioners themselves have determined are fair."

That, of course, does not mean that the Revenue is itself the only arbiter of what is fair and what is unfair but it emphasises, where the Revenue has responsibly considered whether its actions are, in all the circumstances, fair, that due weight is to be given to that evaluation.

48. As was Preston supra, MFK was a case between the Revenue and a relatively small number of identified taxpayers, in that case Lloyds Underwriting Agents and Syndicates. So also was Al Fayed and Others –v- Advocate General for Scotland (representing the Inland Revenue Commissioners) [2004] STC 1703 in the Inner House of the Court of Session, where there were three individual petitioners. At p. 1725 the Lord President said:-

"The authorities clearly showed that the respondents have a managerial discretion, and that there are circumstances in which they have power enter into an agreement with the taxpayer for the payment of a sum of money in respect of the taxpayer's tax liability, even where it may be said that they have foregone the collection of some part of the total amount of tax which was due."

Where the Revenue wishes to escape what has been argued to be an obligation upon it, the argument that, if escape is permitted, not all will be got in by the Revenue that, on a strict view of the taxing legislation, could be got in is thus not an argument that should necessarily succeed. There will often have been, as Mr Parker put it, some "horse-trading" that has led, for good and practical reasons, to some departure from the strict requirements of the taxing statutes. But nor is it to be assumed that the Revenue's escape will prejudice the taxpayer. On the subject as to whether the taxpayer in Al Fayed had been prejudiced the Lord President at p. 1734, paragraph 105 said:-

"It was argued that prejudice was inevitable, but in our opinion in a case of this nature prejudice cannot be assumed, particularly in view of the undertaking given by the respondents that they will take steps to prevent unfair prejudice. "

49. Next, of the cases to which Mr Southern took me, was Matrix-Securities Ltd -v- Inland Revenue Commissioners [1994] STC 272 HL. In that case the taxpayer was granted a clearance on the basis of its letter to the Revenue of the 15^th July 1993. But that letter, said Lord Templeman at p.283e, had been inaccurate and misleading. Because it was such the Revenue was entitled to withdraw the clearance which it had given as a result of the letter. The taxpayer accordingly lost in the House of Lords. An unusual feature of the case was that the taxpayer had deliberately approached not the Specialist Tax Division which could have been expected to deal with the taxpayer's particular position but an individual inspector. The applicant knew that the Specialist Tax Division was not prepared to approve the scheme which, as it transpired, the inspector approved. On the facts of the case the Revenue were entitled to resile from the clearance which they had given. It is one thing, said Lord Griffiths at p.284, to hold the Revenue to a clearance that has been acted on in good faith, but quite another to permit the correction of an error before it has been acted on.
50. In R –v- Inland Revenue Commissioners ex parte Unilever plc and related application [1996] STC 681 CA Sir Thomas Bingham MR at p.690, after making the point that "unfairness" in public law was not used in a loose general sense and that it was necessary to show a recognised form of unfairness such as a departure from a ruling on which the taxpayer had relied, made the point, at p. 690 (f) that the categories of unfairness are not closed and that precedent should act as a guide and not a cage. Each case, he said, must be judged on its own facts, "bearing in mind the Revenue's unqualified acceptance of a duty to act fairly and in accordance with the highest public standards". Unilever were there asserting a long and undisputed practice which the Master of the Rolls took to have been such as could not properly be resiled from by the Revenue without clear advance notice having been given. Without that the Revenue's action would be "so unfair as to amount to an abuse of power" – p. 691h.
51. Simon Brown LJ was concerned to preserve flexibility; at p. 695a he said:-

"'Unfairness amounting to an abuse of power' as envisaged in Preston and the other Revenue cases is unlawful not because it involves conduct such as would offend some equivalent private law principle, not principally indeed because it breaches a legitimate expectation that some substantive decision will be taken, but rather because either it is illogical or immoral or both for a public authority to act with conspicuous unfairness and in that sense abuse its power. As Lord Donaldson MR said in R -v- ITC, ex p. TSW: 'the test in public law is fairness, not an adaptation of the law of contract or estoppel'."

On the same page at e-f he said:-

"Public authorities in general and taxing authorities in particular are required to act in a high-principled way, on occasions being subject to a stricter duty of fairness than would apply as between private citizens."

52. The Judge below, in the Unilever case, MacPherson of Cluny J, had said at first instance that he believed that a jury of reasonable men and women would be as persuaded and impressed as he was that in all the circumstances the whole of the picture in the case did smack of abuse of power. He had added that the evidence of the applicants in that case that they had in fact been misled was genuine and that no one suggested that was not the position. Simon Brown LJ, whilst saying that it was perhaps unhelpful for the Judge below to introduce the jury concept, said:-

"I can think, however, of no surer guide than MacPherson of Cluny J when it comes to determining the border between on the one hand mere unfairness – conduct which may be characterised as "a bit rich" but nevertheless understandable – and on the other hand a decision so outrageously unfair that it should not be allowed to stand."

53. The word "outrageous", it would seem, Simon Brown LJ was there deriving from Lord Diplock's speech in Council of Civil Service Unions –v- Minister for the Civil Service [1985] AC 374 at 410. It is, again, implicit in Simon Brown LJ's judgment that there can be forms of unfairness, even those which had led to a detrimental reliance, that nonetheless are not to be set aside.
54. In Regina –v- North and East Devon Health Authority, ex parte Coughlan [2001] 1 QB CA the judgment of the Court, handed down by Lord Woolf MR, included, at p. 242c as follows:-

"Where the Court considers that a lawful promise or practice has induced a legitimate expectation of a benefit which is substantive, not simply procedural, authority now establishes that here too the Court will in a proper case decide whether to frustrate the expectation is so unfair that to take a new and different course will amount to an abuse of power. Here, once the legitimacy of the expectation is established, the Court will have the task of weighing the requirements of fairness against any overriding interest relied upon for the change of policy."

A little later on the same page the judgment continued:-

"….. the Court has when necessary to determine whether there is a sufficient overriding interest to justify a departure from what has been previously promised."

55. Again, as in other cases, there was reference to matters being "so unfair as to amount to an abuse of power" - see e.g. p.250 paragraph 78. Again the language suggests that there can be lower degrees of unfairness which are not sufficient, when balanced against whatever contrary interest there was, on the Crown's part, to undo or resile from or to justify a quashing of the exercise of power in issue.
56. To the cases cited by Mr Southern to which I have already referred Mr Lewis added three namely Regina –v- Secretary of State for Education and Employment, ex parte Begbie [2000] 1 WLR 1115, Rowlands –v- Environment Agency [2005] Ch 1 and a very recent decision, Nadarajah and Anor –v- Secretary of State for the Home Department, unreported [2005] EWCA Civ 1363 handed down only on the 22^nd November 2005. In Begbie there had been a misrepresentation or misunderstanding of Government policy on its own part – per Laws L.J.. But the complainant had not altered her position in reliance upon the misrepresentation. Had there been reliance and detriment Laws LJ would have been prepared to hold that it would be abusive of the Secretary of State not to make good his earlier representation. He continued:-

"…… but there has not. Bitter disappointment, certainly; but I cannot see that this, though it excites one's strongest sympathy, is enough to elevate the Secretary of State's correction of his error in to an abuse of power. We do not sit here to publish public authorities for incompetence, though incompetence may most certainly sometimes have effects in public law."

Notably, the successful appellant, the Secretary of State, was left with no order as to costs in his favour.

57. In Rowlands supra Peter Gibson LJ at paragraph 96 echoed the view of Begbie supra that the Courts should be slow to fix a public authority permanently with the consequences of a mistake.
58. In Nadarajah supra Laws LJ embarked on an analysis of "legitimate expectation" cases, seeing to emerge therefrom that the abiding principle which underpinned the cases was the Court's insistence that public power should not be abused – paragraph 52. At paragraphs 67 and 68 Laws LJ, though seeing his comments to be obiter, nonetheless continued as follows:-

"The search for principle surely starts with the theme that is current through the legitimate expectation cases. It may be expressed thus. 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."

He continued:-

"Accordingly a public body's promise or practice as to future conduct may only be denied, and thus the standard I have expressed may only be departed from, in circumstances where to do so is the public body's legal duty, or is otherwise, to use a now familiar vocabulary, a proportionate response (of which the Court is the judge, or the last judge) having regard to a legitimate aim pursued by the public body in the public interest. The principle that good administration requires public authorities to be held to their promises would be undermined if the law did not insist that any failure or refusal to comply is objectively justified as a proportionate measure in the circumstances."

Proportionality, he added, had to be judged by the respective force of the competing interests in the case; the cases had to be judged in the round. Thomas LJ and Nelson J agreed.


 


59. By way of summary, I have no need to deal with the special arguments that can arise where the public body in question has acted ultra vires or where what it has held out has been uncertain or ambiguous. Nor need I deal with the cases where there has been bad faith, a want of candour, inadequate disclosure or conscious manipulation of some public-side weakness on the private side. Nor, either, do I expect that the categories are closed in which, on either side, such special arguments will arise. But even outside those special cases, it is not everything which, if done by a private body, would be or be akin to a breach of contract, an estoppel by representation or a denial of a legitimate expectation such as would to lead to a grant of relief against it which would necessarily lead, where the defendant is a public body, to such relief. Where there is a substantial public interest in the public body behaving as it has done or as it intends to do then, absent the marked degree of unfairness or of disproportionality illustrated by the cases, relief of the character of Judicial Review against the public body can properly be and is, indeed, likely to be, withheld. The cases show – see references in paragraphs 45-47, 50 and 52-55 above – that the mere presence of some unfairness may not suffice to lead to relief that prefers the private to the public interest. Moreover, the Court can be expected to require detailed evidence to substantiate whatever unfairness is relied upon – Al Fayed supra at paragraph 105.

Applying the law to the facts

60. As I have already mentioned, there was no ambiguity or unclarity about the June Agreement; no abuse of good faith nor any sharp practice on the part of KPMG, MyTravel or BALPA is alleged and the cards were face up on the table and, to continue the metaphor, the game had been played for almost three months. There was no mistake in the sense of some error of expression or forgetfulness. In the circumstances as I have described them, the question before me could be, to adopt, Simon Brown LJ's phrases, whether it is merely "a bit rich" for the Revenue, by way of the November Letter, to resile from the June Agreement or, whether worse, than that, it would be illogical, immoral or outrageously unfair, having regard to the legitimate aims pursued by the Revenue in the public interest? Lest that reference to immorality may be thought to be taking the law and the Courts into areas both normally stay clear of in fiscal matters, the question may instead be, to use Laws L.J.'s language, whether a resiling would here be a proportionate response, having regard to a legitimate aim pursued by the Revenue in the public interest?
61. Whichever is the right question (and they may not differ in practice) an ability to give an answer, as it seems to me, requires me now to look in more detail at two broad areas. Firstly, having regard to such of the nine matters listed in paragraph 38 above with which I have not yet dealt, can it be said, as the Revenue urges, that there is, cumulatively, a case such as requires or at least enables the Revenue to resile, in the public interest, from the June Agreement? The second is this: first taking Mr Bamber's case to be an attempt to bar escape from the June Agreement not merely as between himself and the Revenue but generally, has there been proof of such reliance upon the June Agreement and such consequential detriment which is both immitigable and significant that allowing the Revenue to resile from it would amount to an abuse of power? I shall look at these two questions in the order in which I have raised them.
62. Mr Lewis insists that, on my approaching that first question, I have to accept Mr Parker's assertion in his witness statement that retrospectivity "would not accord with HMRC policy". However, if only because Mr Parker does not vouchsafe what he means by a "policy" and does not amplify how it is said to have come to exist, I feel free to decide whether there is such a policy for myself. The outcome, for the reasons I shall next give, is that I shall not approach that first question on the basis that in June 2004 the Revenue had a policy properly-so-called against FREAs being agreed and allowed to work retrospectively. To fit such a description "a policy" would, in my view, need to have been reduced to writing, if only so as thereby to achieve uniformity of application. It would need to have been circulated to Revenue offices and to have found its way into Revenue manuals. When, at any point in time, a policy is said by the Revenue to have been already established, then one could reasonably expect that in addition to the foregoing, practical examples of its application in a consistent way as a matter of policy would be given and, perhaps, instances where, as a matter of policy, departures from it had been resisted.
63. But I have been shown no writing that existed in June 2004 as to retrospectivity of FREAs, no evidence of any writing (or even oral messages) having been circulated to Revenue offices on the subject, no examples (no doubt, anonymised) of FREAs that are not retrospective and no examples (again anonymised) where retrospectivity has been refused on the basis that it would be contrary to an existing policy. Indeed, 2 of the examples of FREAs which Mr Loome gave to Miss Slater are understood to have been in part retrospective and none of those dealing with the negotiation of the new MyTravel FREA on the Revenue's part seemed to know of there being a policy on the point. It is true that the Revenue's EIM32725 now has a heading "Retrospection" that says that FREAs should only apply for the current and future years but it is accepted that that post-dates June 2004 and, indeed, has been introduced as a result of this case.
64. However, whilst there has been, in my view, no "policy" properly-so-called on the subject, I am prepared to accept on the evidence that it has been the Revenue's practice, not a wholly invariable but an almost universal practice, to allow FREAs to apply only for what are in each case the current and future years. To that extent the June Agreement was quite exceptional in permitting not only some retrospectivity but a retrospectivity of some 6 years duration. There is thus, as I see it, a public interest in the Revenue not permitting and not being seen to have permitted an agreement, such as the June Agreement, so out of accord with its general practice.
65. Further, it is apparent from the figures in the June Agreement and the comments on them, not least those by MyTravel and BALPA when the employees were circulated, that the June Agreement represented a deal (even leaving aside retrospectivity) that was of unusual generosity in comparison with similar deals made for employees of other airlines. Even though direct comparisons may, for the reasons I mentioned, be difficult, those other airlines would be looking for consistency in the Revenue's attitude to aircrew expenses and would, no doubt, be soon pressing for corresponding generosity to be available to their own employees. The measure of tax which, on a strict view, should be recovered but which, were there to be FREAs negotiated with other airlines at MyTravel's level, would be left unrecovered could, in that way, hugely exceed the £4.6m or so which the Revenue feared it would have to pay out if the June Agreement itself were fully to be implemented even only down to 2005. No figure has been given to me for the estimated figure were the June Agreement to be industry-wide and durable but I think I can take it to be a very large figure indeed. It is one thing for the Revenue to negotiate and implement FREAs where its manpower and similar concerns make them not merely practical but economic and quite another where there is a real risk that taxes truly payable will, in substantial amounts, be left unrecovered. To this extent there is a substantial public interest pointing towards the Revenue being entitled to resile from the June Agreement. I am enjoined also – see paragraph 47 above – to give some weight to the Revenue's own evaluation that there is a public interest that supports a resiling from the June Agreement as being fair.
66. What is to set against that? Next, and leaving aside the Claimant, Mr Bamber, for the moment, I need to consider the effect of any resiling from the June Agreement upon MyTravel employees; it would vary from one description or group of them to another.
67. Those who in any of the relevant years incurred and paid expenses above the June Agreement levels can be expected to have retained vouchers and receipts for such years (which I shall call "expense evidence") as without them they would not be able to claim whatever deductions, above the June Agreement levels, they say are appropriate. They suffer nothing in respect of those years from a failure to quash the November letter. They will be able to claim whatever their expense evidence suggests is appropriate.
68. Those who in any of the relevant years did not incur and pay expenses even as high as the 1997 agreed FREA levels would not have been likely to keep expense evidence as they would have been able to get a full deduction without it. If the Revenue is permitted to resile from the June Agreement they would lose something of a windfall, namely the ability to obtain deductions for expenses at what, strictly speaking, would have been the inappropriately high June Agreement levels. As what would thus be lost would be something of a windfall it would be difficult to regard its loss as truly a painful hardship to the employee save, perhaps, where the windfall can be shown to have been deliberately used up, ahead of its receipt, by way of the employee, in reliance on the June Agreement, spending the windfall or incurring a liability, in either case in a way which he would not otherwise have embarked upon. But he would still have what, to him, was the generous 1997 level of relief and if, in circumstances not yet apparent, he could show that the loss of the windfall in his individual case was so unfair or would cause such hardship as to make its withdrawal an abuse of power, he would still be able so to assert in proceedings between him and the Revenue, unbound by anything I say in these proceedings, to which he is a stranger. It is difficult to regard the predicaments of the persons falling within this last description of employees, they still having available to them relief appropriate to their individual circumstances, as of real weight as against the public interest of the Revenue as I have described it.
69. Those who in the relevant years incurred and paid expenses at levels between the 1997 levels and the June Agreement levels can be expected to have kept their expense evidence at least until June 2004 as without it they would have been reduced to enjoying deductions only of the size appropriate to the 1997 agreed FREA levels. If they have continued to keep their expense evidence they will lose minor windfalls (the difference between the June Agreement level and the level demonstrable by their expense evidence) but will, as above, be able to seek relief, if, in their respective individual cases, a resiling from the June Agreement levels would work such unfairness or hardship upon them as to amount to an abuse of power. Those who disposed of or destroyed expense evidence after June 2004 because they felt it unnecessary to keep it upon learning of the June Agreement will lose a larger windfall than those who kept their expense evidence as they will fall back to the 1997 FREA levels but, again, each would be able, by reference to his individual circumstances, to claim deductions above the 1997 levels should abuse of power be capable of being shown in any respective case.
70. It is clear from the cases – see references in paragraph 59 above – that where there is a public interest going one way but some degree of unfairness going the other then it is not that any unfairness will serve to outweigh that public interest. The unfairness needs to be such as evinces an abuse of power on the public authority's part. To that extent, unfortunate as it may be, there will be cases in which lesser unfairness goes unrelieved. Bitter disappointment, of itself, is unlikely to suffice. But if, as I believe is the case, an employee who, by reference to his individual circumstances, can show illogicality, immorality or outrageous unfairness (Simon Brown L.J. supra) or disproportionality (Laws L.J. supra) on the Revenue's part in his or her own case can thereby keep the June Agreement in force between himself and the Revenue, then that is a strong argument against barring the Revenue from resiling from the June Agreement in the general way that I am now considering. In the circumstances as I have explained them, the Revenue's legitimate aim of recovering, in the public interest, tax that, strictly speaking, ought by statute to be recovered, in my judgment outweighs any contrary argument that the June Agreement should in a general way be kept in force.

Conclusions

71. In the circumstances in which the June Agreement came into effect, as I have described them, it is, to use Simon Brown L.J.'s phrase, at least "a bit rich" of the Revenue to resile from it as it does but the Revenue has already apologised for doing so and I do not doubt that I shall hear more as to that apology when I come to deal with costs. Regarding Mr Bamber's application for the moment as an attempt to bar the Revenue from resiling from the June Agreement not in own his case but in all other employees' cases, for the reasons I have given I do not feel able to grant him the relief he seeks. So far as his application seeks that general effect it is dismissed.
72. Moving, then, to regarding Mr Bamber's application as an attempt to bar the Revenue from resiling from the June Agreement but only as between himself and the Revenue, his evidence, even regarding it with the lenience appropriate where it has been chiefly shortcomings on the Revenue's part that have led to there being a case between him and the Revenue, is not in my view sufficient to prove that detrimental reliance which opens the door to relief on the ground of substantial unfairness. He could reasonably have been expected to give evidence as to when his new kitchen was ordered, when his cruise was booked and their respective costs relative to the size of whatever greater rebate would have come his way under the June Agreement than will now come to him upon his no longer having such expense evidence as he had kept until learning of the June Agreement but of which, upon his learning of it, he had felt able to and did dispose. If a case of substantial unfairness was intended to be made out then evidence of his means generally and of the difficulties, not otherwise likely to have arisen, which the new kitchen and the cruise have led him into should have been adduced.
73. For want of such detail I am minded to dismiss Mr Bamber's application but it may be that, on reflecting on this judgment generally, he would wish to have an opportunity to supplement the very little and general evidence so far adduced as to his personal case of reliance, detriment and unfairness by fresh evidence on those subjects. If, by himself, his Solicitors or Counsel, he indicates to the Revenue and to the Court by the end of January 2006 that he wishes to adduce further evidence as to his personal position only then I will then adjourn his application for Judicial Review generally but so far only as it seeks relief only between him and the Revenue, with liberty for that application to be restored to me by either party for directions not later than 16^th February 2006. If Mr Bamber does not so indicate by the end of January next or in the meantime indicates to the Revenue or the Court that he does not so wish to adduce further evidence then his application (for relief only between himself and the Revenue) will be dismissed as if from today's date.