Judicial Review: Does the disguised remuneration loan charge breach EU law?

This is the question that may soon be put before the Administrative Court. A fund has been launched to challenge HMRC‘s controversial disguised remuneration loan charge with 85% of the £180,000 legal funds raised. The loan charge policy is designed to recoup taxes HMRC claim individuals avoided paying between December 2010 and April 2019 by using disguised remuneration loan schemes.

MPs in the Loan Charge All-Party Parliamentary Group have previously raised the concern that many of these individuals caught up in such schemes do not have the ability to re-pay sums owed. In particular, the retrospective elements of the loan charge have caused concern. Funds are being raised by the Loan Charge Judicial Review EU (LCJREU) group to challenge whether the policy breaches EU law.

If you need HMRC Tax Investigation advice, we are available to aid you at every stage of the HMRC investigate process. Members of our legal team have first-hand experience and knowledge of the internal workings of HMRC. We can provide you with the very best representation in negotiations with HMRC and defending all forms of HMRC fraud, tax inquiry, tax fraud investigation, criminal tax evasion and HMRC enquiries and investigations. Our team specialises in successfully challenging HMRC decisions and will assist you in every aspect of the investigation.

Judicial Review of the Loan Charge

The group are raising funds to seek judicial review of the Loan Charge and state:

“We believe that LCJREU is the last and best hope of challenging the loan charge legally and urge people facing the loan charge to chip in and fund it, to make it happen… “This is the only judicial review that, if it succeeds, would stop enforcement of the loan charge. Other judicial reviews can only challenge certain decisions made relating to it, but would leave the loan charge in place. So we urge all those facing the loan charge to contribute to LCJREU to allow this challenge to happen.”

Loan Charge Judicial Review EU (LCJREU) group

What is judicial review?

Judicial review is the procedure whereby the court can consider the lawfulness of a decision made by a public body. A judicial review claim may be bought against legislation or public bodies, including HMRC.

Judicial review is generally only available where there is no adequate alternative remedy.

What claims would lend themselves to Judicial Review?

HMRC have a duty to act fairly and lawfully at all times. However, more and more taxpayers are finding that HMRC are falling short of this mark.

A claim for judicial review may be brought by an individual if any of the following criteria are met:


Where a public body such as HMRC acts ultra vires (beyond the powers conferred on them) then they would have acted illegally.


This is also known as Wednesbury unreasonableness. One formulation of this test is that to be considered unreasonable or irrational it must be:

“So outrageous in it s defiance of logic or accepted moral standards that no sensible person who had applied his mind to the question to be decided could have arrived at it”.

Council of Civil Service Unions -v- Minister for the Civil Service [1985] AC 374

Procedural impropriety

There are two fundamental pillars to procedural impropriety described as the rule against bias and the right to be heard. Additionally, there is a right to be given the reasoning for a decision made by a public body. The courts must determine that there is a real possibility of bias.

The question is whether the fair-minded and informed observer, having considered the facts, would conclude that there was a real possibility that the tribunal was biased.

Magill -v- Porter [2001] UKHL 67 103

A breach of legitimate expectations

This is a discrete ground of judicial review where a party is given an expectation that a public body will act in a certain way. This expectation can arise from previous conduct of that body or because of express statements made by them.

For a successful legitimate expectation claim in judicial review, there must have therefore been a clear promise or evidence of regular practice made by the public body.

Breach of Human Rights

This is governed by the Human Rights Act 1998 and may give rise to a judicial review claim:

it is unlawful for a public authority to act in a way which is incompatible with a Convention right.

Section 6(1) Human Rights Act 1998

If you believe that a decision made by HMRC fulfilled any of the above criteria, you should contact our expert team now.

Is there a time limit to bring a judicial review claim?

A judicial review claim must be made promptly and in any event no later than 3 months after the grounds to make the claim arose (CPR 54.5(1)). Note that this date cannot be extended by agreement between parties.

Therefore, if you believe that you may have a claim against HMRC for judicial review, then you should seek legal advice promptly.

What are the available remedies for a Judicial Review claim?

The following are remedies which the High Court or the Upper Tribunal can provide at a judicial review hearing:

  • declaration– this is a statement made by a High Court judge which clarifies the law through stating the law as an order;
  • prohibitory order – an order preventing a public body from acting beyond its powers in the future;
  • quashing order – sets aside the decision of a public body on the basis that it is invalid ;
  • an injunction – this is sought as a form of interim relief during proceedings which essentially compel a party to act or prohibit them from acting;
  • mandatory order – this is an order requiring the defendant to carry out a duty that it is obliged to do by law; or
  • damages– whilst there is no right in judicial review to claim damages for losses caused by an unlawful administrative action, it is possible to claim damages if there is another cause of action. If this established cause of action is separate to the grounds under which judicial review is sought, then damages may be a remedy the court will consider. Examples may include: breach of statutory duty, misfeasance in public office or private action in tort.

Instruct Specialist HMRC Judicial Review Solicitors

We have decades of experience in negotiating with HMRC and managing appeals against their decisions at all levels. Members of the team include qualified Tax Solicitors and Tax Barristers whom have vast experience of tax laws and first hand commercial, litigation and advocacy experience including previously working at HMRC as senior Tax Counsel.

Want legal advice from Tax Solicitors on your case?

Our simple enquiry form goes immediately to our tax litigators in Middle Temple, London. Call us on +442071830529 from 9am-6pm.

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