Litigation Success

As for ground 6, that the sending the form AAG6 is ultra vires, I consider that this ground of challenge is arguable.

The argument of the Claimant is that HMRC does not have the power to require GAL to send out the information warning taxpayers about the impact of their involvement in a tax avoidance scheme: see paragraph 10 above. It is arguable that that information is not part of the “prescribed information” that the person making the arrangements should be required to send.

It is arguable that the information in the AGG6 form — identified at paragraph 10 above — falls outwith the various matters set out in regulation 6 of the 2012 Regulations, in that it is not one of the matters listed in that regulation.

I consider that is arguable that the power to “specify the form and manner” in which the information required to be provided under section 312ZA of the Finance Act 2004 (as prescribed by the 2012 Regulations) does not extend to the material referred to in the AGG6. It is arguable that “the form and manner” relates to how the prescribed information is supplied but does not empower HMRC to require additional information – including HMRC’s warnings about the scheme – to be sent to the scheme users.

I do not consider that the Claimant should be refused permission on ground 6 on the basis that it lacks standing to proceed by way of judicial review. The Claimant plainly has an interest in the matter as it is, at least, indirectly affected by the issuance of the SRN and the requirement to send the AAG6 form. Whilst there are parties (GAL, and Umbrella Contracts Limited) who were directly affected, and may be better placed to bring the claim, they have not brought the claim, and so it cannot be said that allowing the Claimant to bring the claim will increase the costs of the litigation: c.f. Jones & Ors v The Commissioner of Police for the Metropolis [2019] EWHC 2957 (Admin) at §62. Furthermore, I consider that the lawfulness of the AGG6 form is a matter of wider interest, and it is important for the rule of law that the arguments should be tested at a substantive hearing.

26. As for ground 6, that the sending the form AAG6 is ultra vires, I consider that this ground of challenge is arguable.

2024 Amendment by HMRC of Form AAG6 following grant of permission in Oculus hearing. Joint agreed statement:

2. Since the time when permission to apply for judicial review was granted, HMRC have modified Form AAG6 such that it no longer contains the wording that Sheldon J thought might be unlawful.

6. The Respondents dispute every stage of the Applicant’s case, save that it is accepted that the Scheme is a composite transaction.

56. The Applicant has failed to show that s.423(3) is satisfied.

66. Mr Kamal objects to the proposed amendments on four grounds, which may be summarised as (1) Henderson v Henderson (2) no real prospect of success (3) limitation and (4) discretion.

142. Whilst the proposed unjust enrichment claim in the present case is not based on failure of basis, the parallels are obvious. Tax planning was at the heart of the Scheme. It was the very reason for the Company’s existence. As Mr Kamal put it, it was the ‘DNA’ of the Scheme. The documentation sent out by the Company to the employees expressly acknowledged that tax laws could change (Exhibit ‘CP1’ page 120). The risk of a change in tax treatment was plainly in the contemplation of the parties at the time of entering the contract.

178. Mr Kamal submits that the courts do not generally make hypothetical declarations, referring me to Argosam Finance Co Limited v Oxby (Inspector of Taxes) and another [1963] AC 2852. This was an application for a declaration in a case involving a hypothetical tax issue.

201. A key issue arising on (c) in my judgment is the counterfactual posed by paragraph 26Ca(iii) DRAPOC. In this regard Mr Kamal referred me to the case of Re One Blackfriars Ltd [2019] EWHC 1516 (Ch) at [67]. Mr Sims sought to play down the impact of the proposed introduction of a counterfactual, claiming that what the Company would have done was a ‘no brainer’. For reasons already explored at paragraphs 126 to 129 of this judgment, however, the position is not as clear-cut as the Applicant would wish it to be. Exploring this issue would require witness evidence and documentary evidence on matters entirely distinct from those required for the s.423 claim.

226. For the reasons set out in this judgment, I shall dismiss the remainder of the Re-Amendment Application.

61. In my judgment, Mr Kamal is right to submit that the Liquidator cannot have it both ways….

83. …That said, there is considerable force in Mr Kamal’s submission that in comparing incoming and outgoing values for such purposes, it would be perverse for the court to take into account the tax liability of one party to the relevant transaction, without also taking into account the tax liability of the other party to that transaction, when both tax liabilities related to the same payment, particularly given the points flagged at Paragraphs 67 and 68 above.

100. For all of these reasons, I propose to order that the claim in respect of the year ending 31 December 2011 be struck out.

‘Nevertheless, three months is a distinctly short period and there is considerable force in Mr Kamal’s submission that, to confine the claimants to the three month time period, particularly in circumstances where, if the Revenue is ever to raise an inquiry or an assessment, then the European law points could be taken anyway within the tax tribunal appeal procedure, is something which would be unfair and contrary to the court’s overriding objective, such that the three month time period ought to be extended….

166. For all those reasons, I am going to decide against the Revenue on the tax exclusivity point but stay the Part 8 claims due to the judicial review exclusivity point.’