Judicial Review of HMRC Decisions: A Guide to the Application Process

The Administrative Court Judicial Review Guide 2024 has been released, providing comprehensive guidance for those involved in judicial review claims. This guide is a useful procedural resource for any claimant, particularly in tax disputes against public bodies like HMRC.

If you are a taxpayer and you have no right of appeal to the First Tier Tax Tribunal, a judicial review may provide your only route to challenge HMRC’s decision. It is critical that legal advice is sought early and any claim is filed urgently. There are strict time limits to adhere to.

Who can apply for Judicial Review of a HMRC decision?

For most tax disputes there are appeal procedures for assessments or penalties to the First Tier Tribunal (Tax). But in some cases there is no right of appeal to the tribunal against HMRC actions.

Examples of where judicial review could be sought include:

• Where the decision made relates to a discretionary matter, for example a decision on whether a late claim should be accepted.
• Where there is no statutory right of appeal.
• If a HMRC officer is not carrying out, or is delaying in carrying out their duties, or has assumed powers to which they were not entitled.
• Where a taxpayer is misdirected by HMRC and submit a wrong return, for example there is disadvantage as a result of replying on incorrect advice from HMRC.
• If a taxpayer believes a HMRC officer has not listened properly or at all to their representations.
• When the First Tier Tax Tribunal has refused a late appeal (and there is no appeal on a point of law of Tribunal decision).

What is Judicial Review?

Judicial Review is a legal mechanism allowing courts to review decisions made by public bodies, including HMRC, to ensure their actions are lawful. It is primarily used when there is no other adequate remedy available.

Where is a Judicial Review against a HMRC decision filed?

Judicial review claims must be filed promptly (and in any event within 3 months) at the Administrative Court. This court is a specialised division of the High Court, dealing with judicial review claims aimed at challenging the lawfulness of decisions by public bodies.

When can a Taxpayer Challenge a HMRC Decision?

To bring a judicial review claim against HMRC, you need to show that their decision or action meets one of the following grounds:

1. Illegality:
   HMRC acts beyond its lawful powers, also known as ultra vires.
2. Irrationality:
   Often referred to as “Wednesbury unreasonableness,” this occurs when a decision is so unreasonable that no sensible person could have made it.
3. Procedural Impropriety:
   This involves a breach of fair procedures, such as bias or not giving you a fair hearing.
4. Breach of Legitimate Expectations:
   If HMRC’s actions contradict a clear promise or established practice, you might have grounds for a judicial review.
5. Breach of Human Rights:
   Under the Human Rights Act 1998, public authorities must respect your rights. If HMRC’s actions violate your human rights, this could also be a valid ground for judicial review.

Is There a Time Limit for Filing a Judicial Review Claim?

Yes, a judicial review claim must be filed promptly and in any event within three months from the date the decision or action you are challenging occurred. Delays beyond this timeframe may prevent you from taking legal action, so it is critical to act quickly.

If you believe that an HMRC decision has adversely affected you or your business, time is of the essence. Reach out to our expert team immediately to avoid missing crucial deadlines.

Special Considerations for Businesses and VAT Disputes

For businesses involved in VAT and tax disputes with HMRC, the guide provides a roadmap for challenging unfair assessments. From VAT penalties to closure notices, we can consider whether judicial review is the most appropriate means to dispute wrongful tax assessments or compliance checks.

For more information on challenging VAT deregistration decisions, see our case study here.

Can a company seek judicial review of a decision to cancel a VAT registration?

Generally it can be argued that cancelling the VAT number of a business that makes taxable supplies can be disproportionate. Arguments could be made that such a disproportionate action is incompatible with rights under the European Convention on Human Rights, contrary to section 6(1) of the Human Rights Act 1998.

What Remedies Can the Court Order in a Judicial Review Against HMRC?

If your judicial review claim against HMRC is successful, the court has several powerful remedies at its disposal to address unlawful actions by the tax authority. These remedies can vary depending on the specifics of your case, but they typically include:

• Quashing Order:
  This is one of the most common remedies in judicial reviews. A quashing order nullifies HMRC’s decision, effectively cancelling it as though it never existed. This is typically used when HMRC’s decision is found to be unlawful or made without proper authority.
• Prohibitory Order:
  A prohibitory order prevents HMRC from continuing or repeating an unlawful action. This remedy is often sought when HMRC is exceeding its legal powers and needs to be stopped from continuing the illegal conduct in the future.
• Mandatory Order:
  This order compels HMRC to perform a specific legal duty that it has failed to do. If HMRC has neglected an obligation, the court can direct them to fulfil their legal responsibility, such as reconsidering your case or making a new decision.
• Injunction:
  An injunction is a court order that either compels or restrains HMRC from taking certain actions while the judicial review process is ongoing. This can be a critical interim remedy to prevent further harm while your case is being heard.
• Declaration:
  A declaration is a formal statement by the court that clarifies the law or declares HMRC’s decision unlawful. While not directly enforcing any action, a declaration provides important legal clarity and may guide future decisions by HMRC.
• Damages:
  Although judicial review is not typically used to seek compensation, in cases where HMRC’s unlawful actions have caused financial loss or damage, the court may award damages. This can happen if your claim includes a separate cause of action, such as breach of statutory duty or misfeasance in public office.

These remedies ensure that HMRC’s unlawful actions are corrected and that they comply with the law going forward, protecting your rights and interests.

Download the Administrative Court Judicial Review Guide 2024 Here

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We have decades of experience successfully representing clients in judicial reviews against HMRC. Our team includes qualified tax solicitors and barristers with in-depth knowledge of tax law, HMRC practices, and judicial review procedures. We have first-hand experience in both tax litigation and advocacy, ensuring your case is handled with the highest level of expertise.

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The new Administrative Court Judicial Review Guide 2024 emphasises the importance of professional legal advice in these complex cases. If you believe HMRC has acted unfairly or unlawfully, contact us today to ensure your rights are fully protected and your case is handled effectively.