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
		22/6/2017

Sir Ross Cranston :

1. This is a renewed application for permission to apply for judicial review after refusal on the papers by Holgate J. Prudential seeks permission to challenge the decision of HMRC in a letter dated 1 September 2016 not to treat it as having made a valid claim for double tax relief on overseas dividend income in respect of its accounting period ending 31 December 2009.
2. Prudential contends that it has made a valid claim based on a legitimate expectation to that effect. The legitimate expectation for 2009 arose from HMRC's practice of meeting Prudential's claims by amending its tax returns with open accounting periods to reflect the correct means of taxing overseas dividends in accordance with the law which was being determined in long running test case litigation. That test case litigation resulted in Henderson J's judgment in Prudential Assurance Co Ltd v Revenue and Customs Commissioners [2013] EWHC 3249 (Ch) (on appeal [2016] EWCA Civ 376).
3. It is trite law that for a legitimate expectation to arise there has to be a clear, unambiguous and unqualified representation.
4. Holgate J accepted HMRC's defence that Prudential could not have any legitimate expectation because:

(a) HMRC made clear to Prudential in without prejudice correspondence in 2012 (8 May, 28 May, 6 September) that, in order for any type of statutory relief to be available, whether relief under section 33 of the TMA, double tax relief under sections 790/806 of the ICTA, or any other form of relief, a proper statutory claim had to be made in accordance with the conditions, including time limits, applicable to the particular relief concerned; and

(b) In further correspondence in late 2012/2013 (24 December 2012, 7 March, 11 June, 21 August 2013), which led to Prudential withdrawing as invalid its claim for relief under paragraph 51 of schedule 18 to the Finance Act 1998, Prudential asserted that it could revise its double tax relief claim by 31 December 2015 for the year 2009, thereby implicitly accepting that it had to make a claim.

5. I agree with Holgate J's conclusion: if Prudential had a legitimate expectation, that was scotched by the correspondence, which made it quite clear on HMRC's part that Prudential's filing a return, and HMRC agreeing not to close the assessment for that year, did not obviate the need for Prudential to comply with the statutory requirements for making a claim for tax relief for that year.
6. At this point I make three additional observations. First, it is well established that without prejudice correspondence is admissible to establish the fact of statements having been made, independently of their truth: e.g., EMW Law LLP v Halborg [2017] EWHC 1014 (Ch), [58], per Newey J. There was some suggestion that other privileged material involving Legal and General might or would throw light on what HMRC said in the correspondence. I fail to see how it could, given that HMRC's statements in the letters are as plain as a pikestaff.
7. Secondly, the 2012/2013 correspondence put paid to any legitimate expectation as to what was said previously, such as HMRC's anodyne statement on 24 November 2011, after Prudential filed its 2009 return, that the effect that the treatment of overseas dividends received prior to 1 July 2009 needed to be resolved in due course.
8. Thirdly, the position in 2009 is different in actual fact from previous years. The evidence is that for previous years Prudential made the requisite claims, which for some reason it did not do for 2009.
9. Before me the application for permission was renewed additionally by reference to material, the full detail of which was not before Holgate J. In the main these were extracts from the written submissions and from the hearing transcripts of the test case litigation before Henderson J. That material had in fact been referred to in part in Prudential's statement of grounds but I was taken to the source material.
10. In the relevant passages HMRC's counsel treated 2009 along with previous years and assured the court that there was no difference between the years, and asserted the HMRC would close the returns from the various years still open when it had an answer from the court as to the correct basis of proceeding. The transcripts were of hearing days in 2014. Thus it was submitted that what was said then superseded whatever had been in the 2012/2013 correspondence.
11. Reference was also made to passages in Henderson J's judgment in the test case litigation ([2013] EWHC 3249 (Ch)), essentially to the effect that following the decision on the common areas of law, his Lordship expected that the principle would then be applied in a pragmatic manner to all the relevant years.
12. In my view none of this constitutes a clear, unambiguous and unqualified representation by HMRC that Prudential did not have to make a valid claim for double taxation relief in 2009, as it had in other years, but could simply rely on the position still being open for that year. The issue in the litigation concerned the principle; it was never an issue of years and whether 2009 would be treated at the end of the day the same as other years. It was simply assumed that the position for all the years was the same.
13. In my view the assumption when counsel for HMRC and Henderson J coupled 2009 with the other years was that valid claims had been made for the purpose of ultimate assessment for all years. In all the material I was shown I failed to see any clear, unambiguous and unqualified representation or agreement that HMRC would treat Prudential's 2009 open return as encompassing as well a claim for the relevant tax relief.
14. I dismiss the renewed application.