Fluid Systems Technologies (Scotland) Ltd & Ors, R (on the application of) v The Commissioners for HMRC
[2024] UKUT 322 (TCC)
London Fluid System Technologies Ltd & Ors v His Majesty's Commissioners for Revenue and Customs
1 September 2023
[2023] EWHC 2206 (Admin)
High Court
Companies and individuals sued HMRC over tax repayments. They messed up the paperwork a bit, but the judge let it slide because HMRC knew about the case anyway and the mistake wasn’t a big deal. The judge will now hear the main argument about the money.
Key Facts
- •Claimants (two individuals and two companies) sought repayment under the Disguised Remuneration Repayment Scheme 2020.
- •HMRC issued determinations for income tax and national insurance contributions (NICs) relating to transactions between 2009 and 2013.
- •Settlement agreements were reached with HMRC, with payments totaling £5,373,035.33 (FSTS) and £1,708,319.72 (LFST).
- •The dispute centers on the interpretation of "voluntary restitution" within the Scheme.
- •A preliminary issue arose regarding proper service of the claim on HMRC.
- •Claimants' solicitor served documents via email to the assigned HMRC solicitor and SDES (electronic document transfer system).
- •HMRC argued service was defective, claiming documents should have been sent to a different email address ([email protected]).
- •The Claimants argued their service was acceptable based on a government Press Release and established practice.
Legal Principles
Service of claim form on a government department must be effected on the solicitor acting for that department.
CPR 6.10
The court may extend or shorten time for compliance with any rule, practice direction, or court order.
CPR 3.1(2)(a)
The court can authorise service by a method not otherwise permitted if there is good reason.
CPR 6.15
In determining 'good reason' under CPR 6.15, factors such as claimant's reasonable steps, defendant's awareness, and prejudice to defendant are considered.
R (Good Law Project Ltd) v Health Secretary (CA) [2022] 1 WLR
Principles of estoppel by convention require an expressly shared common assumption, responsibility assumed by the estopped party, reliance by the alleging party, subsequent mutual dealing, and sufficient detriment or benefit.
Tinkler v Revenue and Customs Commissioners [2021] UK SC 39
Outcomes
HMRC's assertion that service was defective was rejected.
The court found that while service wasn't strictly compliant with the Press Release, the claimant took reasonable steps based on a reasonable interpretation of ambiguous guidance, and HMRC suffered no significant detriment beyond losing a limitation defense. The court exercised its discretion under CPR 6.15 to validate service.
Permission to proceed with the substantive claim was granted.
The court found the Claimants' arguments regarding the interpretation of "voluntary restitution" to be arguable.
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