HMRC have the luxury of writing the legislation they rely on when they put themselves in dispute with a taxpayer.
In a recent example Client was a Registered Dealer in Controlled Oil (“RDCO”) so that he had a licence to trade in Red Diesel, parafin and burning oil. He had held the licence for several years but found himself under increasing pressure from HMRC who were using spot checks and assurance visits to build a case of non-compliance against him.
More owing to good fortune than planing on the part of Client, HMRC acted a little too prematurely in revoking Client’s RDCO licence. He was given just 14 days to close down his operations, sell his fuel and dismiss all of his 27 staff.
The remedy for Client was to pursue an appeal in the First Tier Tax Tribunal – a procedure that could take up to 18 months to conclude. Given that he would not have been able to trade in the interim period this was really no option at all. HMRC had left Client with nowhere to go.
As it was the decision making process of HMRC was fundamentally flawed in that they moved too quickly up the chain of escalating non-compliance. In short HMRC had given client too little warning of their likely decision to revoke the RDCO licence.
Added to this, HMRC’s decision to revoke the RDCO licence effectively concluded the matter. It was immaterial that Client had a right to appeal the decision in the First Tier Tax Tribunal because by the time a Tribunal Judge got to determine that issue the business would be long gone – customers would have found a different supplier, employees would have found different jobs and the landlord would have required continuing payment of rent.
Fortunately, Judicial Review is a perfect mechanism for precisely this situation. It allows the High Court to intervene in circumstances where a Public Authority acts unreasonably or irrationally and there is no alternative Court in which the dispute can be heard. Added to this the power of the High Court encompasses the power to grant an injunction which meant that in this case this RDCO trader could continue trading until the First Tier Tax Tribunal could eventually get around to deciding whether this trader was in fact a “fit and proper” person to hold such a licence.
To discuss any dispute you have with the tax authorities please email firstname.lastname@example.org or telephone 07460 005 769.
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