Key Facts
- •Appeal concerns the interpretation of extra-statutory concession (ESC) B18 by HMRC.
- •ESC B18 allows UK resident beneficiaries of non-resident trusts to claim credit for UK income tax paid by the trustees.
- •The dispute is whether this credit applies only to income arising within six years before the year of assessment.
- •Appellants, beneficiaries of a Guernsey trust, claim credit for tax paid on income arising over many years.
- •HMRC granted credit only for the last six years, rejecting claims for earlier years.
- •Appellants brought judicial review proceedings, which were dismissed by Chamberlain J.
- •The appeal concerns the interpretation of various versions of ESC B18 (1978, 1994, 1999).
Legal Principles
HMRC has wide discretion in tax collection.
R v Inland Revenue Commissioners, Ex p National Federation of Self-Employed and Small Businesses Ltd [1982] AC 617
HMRC can formulate policy in the interstices of tax legislation.
R (Wilkinson) v Inland Revenue Commissioners [2005] UKHL 30
Formally published HMRC statements can be binding if a case falls clearly within their terms.
R v Inland Revenue Commissioners, Ex p M.F.K. Underwriting Agents Ltd [1990] 1 WLR 1545
A taxpayer's claim to benefit from an ESC is a claim to a legitimate expectation.
R (Accenture Services Ltd) v Revenue and Customs Commissioners [2009] EWHC 857 (Admin)
Court interprets the meaning of an ESC.
R (Accenture Services Ltd) v Revenue and Customs Commissioners [2009] EWHC 857 (Admin)
The meaning of an ESC is assessed by how it would reasonably be understood by those to whom it was directed.
R (Association of British Civilian Internees: Far East Region) v Secretary of State for Defence [2003] EWCA Civ 473
The hypothetical representee is the ‘ordinarily sophisticated taxpayer’.
R (Davies) Revenue and Customs Commissioners [2011] UKSC 47
An ESC should not be construed as a statute.
R (Greenwich Property Ltd) v Customs and Excise Commissioners [2001] EWHC Admin 230
For HMRC to be bound, a statement must be clear, unambiguous and devoid of relevant qualification.
R v Inland Revenue Commissioners, Ex p M.F.K. Underwriting Agents Ltd [1990] 1 WLR 1545
Outcomes
Appeal allowed.
The court found that Concession 3 in ESC B18 (1999) is not subject to a six-year income limit. The wording of ESC B18 (1999) strongly supports the appellants' case, and consideration of EU law and earlier versions of the concession reinforces this interpretation.