Vision HR Solutions Limited, R (on the application of) v The Commissioners for HMRC
[2023] EWHC 1659 (Admin)
Realreed Limited, R (on the application of) v Commissioners for HMRC
26 June 2023
[2023] EWHC 1572 (Admin)
High Court
A company challenged a big tax bill, arguing that the tax authority had previously let them get away with not paying. The judge said the company was responsible for paying taxes correctly and didn't show they were harmed by the tax authority's actions, so they lost the case.
Key Facts
- •Realreed Limited (Claimant) owned Chelsea Cloisters, a block of flats, and provided serviced accommodation in some flats.
- •HMRC (Defendants) decided the Claimant's accommodation supplies were taxable, not exempt from VAT, leading to assessments of over £4.8 million.
- •The Claimant challenged the assessments via judicial review, arguing unreasonableness, breach of EU law, and disproportionate infringement of human rights.
- •HMRC's assessments covered a 4-year period (due to statutory limitations), despite the Claimant operating since 1989.
- •The Claimant argued a legitimate expectation based on HMRC's past practices during inspections, where the exempt status wasn't challenged.
- •HMRC countered that no representation was made, the Claimant didn't disclose all relevant information, and material circumstances changed.
Legal Principles
Substantive unfairness is not a ground for judicial review.
R (Gallaher Group Ltd) v Competition and Markets Authority [2019] AC 96
Legitimate expectation can arise from express or implied representation or practice.
Rowland v Environment Agency [2005] Ch 1
In legitimate expectation cases, the court weighs fairness against overriding interests; detrimental reliance is a relevant factor, not always a prerequisite.
R v North and East Devon Health Authority, ex p. Coughlan [2001] QB 213, CA; R (Aozora GMAC) v HMRC [2020] 1 All ER 803
General principles of EU law (proportionality, legal certainty, retrospectivity, fiscal neutrality, effectiveness of rights protection) were considered but found inapplicable or not supporting the Claimant's case.
Various EU case law cited in sections 109-114
Article 1 of Protocol 1 to the ECHR (peaceful enjoyment of possessions) allows state intervention for tax collection, but proportionality must be maintained.
Article 1 of Protocol 1 to the ECHR; Iofil AE v Greece (2022) 74 E.H.R.R. SE7 184; Bank Mellat v Her Majesty’s Treasury (No 2) [2014] AC 700
VAT is a self-assessed tax; correctness of returns is the taxpayer's responsibility; HMRC can assess unpaid VAT if returns are incomplete or incorrect (within a 4-year timeframe).
Value Added Tax Act 1994, sections 73(1), 77(1)
Outcomes
Claimant's application for judicial review dismissed.
The court found no substantive unfairness, no binding legitimate expectation (due to lack of detrimental reliance and the Claimant's failure to seek clarification), and no breach of EU law or Article 1 of Protocol 1 to the ECHR.
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