“The purpose of this letter is to make representations undersection 222 of the Finance Act 2014 as we consider that HMRC should withdraw the APNs, using the power to do so in sections 222(4) and 227 Finance Act or otherwise. In the case of Mrs Archer, the representations are made under section 222(2)(a) on the basis that none of Conditions A, B or C in section 219 is met in respect of her APN. In the case of Mr and Mrs Archer, the representations are made under section 222(2)(b) on the basis of objecting to the amount specified under section 220(2)(b). Our representations are made on the same basis as the application for the judicial review Case Number CO/5544/2014, namely that we consider the APNs to have been issued without HMRC having power lawfully to do so, and we append a copy of the sealed Claim Form, statement of facts and detailed statement of grounds for ease of reference. We put you on notice that should HMRC wish to confirm that APNs under section 220(2), we have our clients’ instructions to apply for interim relief in the judicial review proceedings to restrain this course of action. As an alternative to expensive and protracted judicial review proceedings, our clients propose that following these representations, the parties agree that there be a stay on proceedings provided that HMRC does not confirm the APNs under section 220(4) or at all (such that they do not become payable) and issues a closure notice so that an appeal could be made to the First Tier Tribunal without any further delay.”
“Where both spouses play a part in avoidance arrangements, as in the case of your clients, best practice requires that all the circumstances of those arrangements including the involvement of both spouses should be considered before approval is given to the issuing of notices to both. In this case, my clients regret that best practice was not followed. Having now considered all the circumstances of your client’s arrangement, HMRC have decided to withdraw the notice issued to Mrs Archer. Please note that the notice is withdrawn without prejudice to HMRCs position that Mrs. Archer is liable to tax in respect of her involvement in the Certificates of Deposit scheme…”
“The Defendant argues that the issue of proceedings for judicial review was premature because representations in response to the APN were not forthcoming until almost three weeks after the issue of the claim. As the effect of these was to require the Defendant to either confirm or withdraw the APN the submission of representations was therefore a clear alternative step for the Claimant and one which had not been taken at the time the claim was issued. The Claimant disagrees but no clear explanation for this has been given other than submissions which suggest the claimant’s had limited confidence in the process of representations as an alternative remedy. However, it is significant that these submissions do appear to accept that only after consideration of representations and a decision by the defendant to confirm or withdraw the APN could judicial review be “the only form of legal redress” i.e. a remedy of last resort. On balance I am not persuaded that the issue of a claim at the material time was justified. The claimants point to a desire to act promptly but this virtue by itself did not override all other considerations and whether a claim for judicial review was at this stage truly a last resort, as it should be, is of course a matter of judgment and one to be reached taking into account all of the circumstances. On any objective analysis it would seem that there was at the point of issue a very significant potential for the situation to be resolved without the additional upheaval of costly proceedings; an alternative course to litigation had still to be played out as events in the following three weeks swiftly demonstrated. By this time the dispute had been running many years and the relationship between what were clearly two very well-resourced parties was a well-established one. Progress between them was clearly ongoing and at an advanced stage as both parties must have realised. In this context the lawyers involved were under a heavy obligation to resort to litigation only if it was really unavoidable.”
“The real issue in this cost appeal is whether [the Appellant] had an alternative to judicial review proceedings, at the time she issued the Claim Form.”
“However, in addition to recourse to this court, an individual affected by such a decision may have other avenues of redress. The availability of an alternative forum and so a potential alternative remedy – and the nature of that remedy – may have a substantial effect on the exercise of the court's discretion in these circumstances. I should emphasise that the availability of a such a potential alternative remedy does not – indeed, cannot – exclude the supervisory jurisdiction of the court; but there are circumstances in which the availability of an alternative course will result in the court exercising restraint in the exercise of that jurisdiction, notably when considering whether the court should accept and hear the claim (i.e. prior to, or no later than at, the permission stage), but also when considering relief if unlawfulness is proved. In either event, there is no hard-edged question concerning jurisdiction, but rather the exercise of discretion on the basis of the circumstances of the particular case. In deciding whether to exercise restraint in the face of an alternative remedy, the court will consider the potential for the alternative to provide a means of redress, taking into account relative convenience, expedition, cost and effectiveness; and exercise its judgment to determine whether the alternative remedy is more suitable, so that the court proceedings should be dismissed, or at least stayed, to allow it to proceed to a conclusion.”
“According to this scheme the addressee could make representation about all of the matters which go to the computation of the tax… and all matters going to quantum. The Revenue has a duty to consider such matters. And then the Revenue is under a duty whether to determine whether to confirm the APN or amend it or withdraw it.”
“As I see it, Parliament has taken the view that the new powers to exact accelerated payments should only be available if the designated officer forms the view that the tax scheme does not work having diligently weighed up to the appropriate extent all the information available and not before, and the designated officer has no reason to doubt that information.”
“110. HMRC's position is that the duty of fairness is satisfied by giving the taxpayer the right to make representations on the amount of any APN/PPN. In general, on HMRC's submission, the duty of fairness only requires a person affected by the decision to have the right to make representation on the matters actually decided, which in this case excludes the question whether the scheme is effective. But it is implicit in the decision that HMRC has a case which as a public body it can properly pursue at that stage and so in my judgment the duty to act fairly means that the taxpayer must have the right to make representations at that level. ” 111. The crucial question is whether the taxpayer can make representations on the question of effectiveness. In my judgment, the duty of fairness requires that he can do so since I have concluded that it is the designated officer's obligation to form a view on this (on the information available to him) before an APN/PPN can be issued. As I see it, the FA 2014 does not say that a taxpayer cannot make any further representations, and, when Parliament limits the designated officer's knowledge base to the best of his information and belief, it does not say that the information can only be provided by HMRC. In those circumstances, it seems to me that it must follow that a taxpayer can provide further representations on this point although the designated officer, of course, must reach his own view and is not bound to accept the contentions made by the taxpayer. 112. The appellants contend that HMRC should have explained the basis of their liability. This must in principle follow from the fact that in my judgment they are entitled to make representations on the question whether their scheme was effective for tax purposes. However, I do not accept that the appellants were in doubt about the basis on which HMRC did not accept that that was so in their cases. In Rowe the appellants know the nature of HMRC's case as their cases have reached the stage of appeal proceedings. In the case of Vital Nut also, HMRC had already given a warning through Spotlight 6 and there could be no doubt thereafter as to HMRC's opinion on the effectiveness of the scheme in question. 113. Contrary to a submission by Ms Simor, I do not consider that the exercise of considering representations from taxpayers and deciding to issue a PPN/APN can be dismissed as a "tick box exercise" simply because HMRC decides on a rational basis to proceed to issue an APN/PPN despite having received submissions on the merits of the scheme.”
“55. An issue arising is whether in principle section 101 FA 2015 is capable of amounting to an "alternative remedy". The Claimant observes that the review process is neither judicial nor independent (of HMRC). I consider that the review procedure is capable of amounting to an alternative remedy for the following reasons. First, the review process is designed to work in conjunction with the statutory appeal procedure. It is a compulsory (unavoidable) precursor to a right of appeal which can only be triggered upon expiry of the review process. In terms of Parliamentary intent, it is an integral part of the alternative remedy: Parliament has created the review process as a form of mandatory mediation or ADR prior to litigation. I consider that an important purpose behind section 101 is to narrow to the greatest possible degree evidential and legal disputes between the parties prior to the commencement of litigation. The review process could obviate the need for litigation entirely, or, if not, at least focus the issues in dispute which will enhance the efficiency (reducing costs and time) of the appeal and facilitate settlement. Second, the review process has been set by Parliament to work to a fixed timetable. It commences 30 days after the issuance of the Charging Notice and expires 12 months thereafter with the possibility of earlier termination in defined circumstances (cf. sections 101(2) and 98(2)). The duration of the process is not open ended; it reflects Parliament's judgment as to what is reasonable for the resolution of the sorts of issues that might arise in cases involving DPT. Third, section 101 imposes a duty on HMRC to engage in the review. Mr Grodzinski QC, for the Claimant, complained that it was not an exercise conducted by an independent party and could not therefore be impartial. In one sense he is correct but I do not accept that this is an answer. Although not express in the FA 2015, it is implicit (and in any event a duty imposed by the common law) that the process must be pursued in good faith by HMRC. The review process is a species of mandatory inter-partes mediation. HMRC is incentivised to act sensibly by the fact that otherwise it faces a statutory appeal within a short time frame. To criticise the process for not having the hallmarks of judicial of independence and impartiality is to miss the point of the exercise. Section 101 was never intended by Parliament to have those hallmarks. It is created as a more informal dispute resolution mechanism which takes account of the fact that the process leading up to the imposition of the Charging Notice was a "summary" procedure (to adopt Mr Brennan QC's terminology) which permitted the taxpayer to make representations in response to a Preliminary Notice only on limited and constrained grounds. I endorse the observation of Lord Justice More-Bick in Wilford (see paragraph [52] above) that it is important to bear in mind Parliament's intent. 56. More broadly, non-judicial alternatives can suffice as an adequate and effective alternative remedy. A review of the case law is set out in De Smith's Judicial Review (7th ed.) at paragraph [16-21]. Case law shows that the following have been treated as alternatives: a statutory complaints procedure; an express right to make objections to a Minister proposing to issue a penalty; the possibility of bringing a private prosecution; and the ability to make a request to a Minister to exercise default powers.”
“54. In order to evaluate these submissions, it is necessary to consider the basis for the suitable alternative remedy principle. The principle does not apply as the result of any statutory provision to oust the jurisdiction of the High Court on judicial review. In this case the High Court (and hence this court) has full jurisdiction to review the lawfulness of action by the Designated Officer and by HMRC. The question is whether the court should exercise its discretion to refuse to proceed to judicial review (as the judge did at the permission stage) or to grant relief under judicial review at a substantive hearing according to the established principle governing the exercise of its discretion where there is a suitable alternative remedy. 55. In my view, the principle is based on the fact that judicial review in the High Court is ordinarily a remedy of last resort, to ensure that the rule of law is respected where no other procedure is suitable to achieve that objective. However, since it is a matter of discretion for the court, where it is clear that a public authority is acting in defiance of the rule of law the High Court will be prepared to exercise its jurisdiction then and there without waiting for some other remedial process to take its course. Also, in considering what should be taken to qualify as a suitable alternative remedy, the court should have regard to the provision which Parliament has made to cater for the usual sort of case in terms of the procedures and remedies which have been established to deal with it. If Parliament has made it clear by its legislation that a particular sort of procedure or remedy is in its view appropriate to deal with a standard case, the court should be slow to conclude in its discretion that the public interest is so pressing that it ought to intervene to exercise its judicial review function along with or instead of that statutory procedure. But of course it is possible that instances of unlawfulness will arise which are not of that standard description, in which case the availability of such a statutory procedure will be less significant as a factor. 56. Treating judicial review in ordinary circumstances as a remedy of last resort fulfils a number of objectives. It ensures the courts give priority to statutory procedures as laid down by Parliament, respecting Parliament's judgment about what procedures are appropriate for particular contexts. It avoids expensive duplication of the effort which may be required if two sets of procedures are followed in relation to the same underlying subject matter. It minimises the potential for judicial review to be used to disrupt the smooth operation of statutory procedures which may be adequate to meet the justice of the case. It promotes proportionate allocation of judicial resources for dispute resolution and saves the High Court from undue pressure of work so that it remains available to provide speedy relief in other judicial review cases in fulfilment of its role as protector of the rule of law, where its intervention really is required. 57. In my judgment the principle is applicable in the present tax context. The basic object of the tax regime is to ensure that tax is properly collected when it is due and the taxpayer is not otherwise obliged to pay sums to the state. The regime for appeals on the merits in tax cases is directed to securing that basic objective and is more effective than judicial review to do so: it ensures that a taxpayer is only ultimately liable to pay tax if the law says so, not because HMRC consider that it should. To allow judicial review to intrude alongside the appeal regime risks disrupting the smooth collection of tax and the efficient functioning of the appeal procedures in a way which is not warranted by the need to protect the fundamental interests of the taxpayer. Those interests are ordinarily sufficiently and appropriately protected by the appeal regime. Since the basic objective of the tax regime is the proper collection of tax which is due, which is directly served by application of the law to the facts on an appeal once the tax collection process has been initiated, the lawfulness of the approach adopted by HMRC when taking the decision to initiate the process is not of central concern. Moreover, by legislating for a full right of appeal on fact and law, Parliament contemplated that there will be cases where there might have been some error of law by HMRC at the initiation stage but also contemplates that the appropriate way to deal with that sort of problem will be by way of appeal.”