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Court of Appeal rejects HMRC's appeal and application for a stay in judicial review proceedings

12 August 2015

The Court of Appeal (Arden LJ, Black LJ and Floyd LJ) recently confirmed the circumstances in which the Court will exercise its case management powers and grant a stay where a taxpayer is pursuing both an appeal before the First-tier Tribunal ("FTT") and judicial review ("JR") proceedings in the Administrative Court.


In The Queen on the application of Veolia ES Landfill Limited and Others v The Commissioners for Her Majesty's Revenue and Customs1, the taxpayers issued judicial review proceedings and tax appeals concerning overpaid landfill tax. The issue in the tax appeal was whether the taxpayers were liable for overpaid landfill tax. The judicial review concerned whether the taxpayers had a legitimate expectation of being entitled to a repayment of overpaid landfill tax.

HMRC applied for the judicial review proceedings (JR proceedings) to be stayed whilst the tax appeal against the relevant assessments in relation to the same landfill tax were resolved. They considered the key point for the justice system to determine was whether there was a liability to tax in the first place, and the proper place for that issue to be resolved was in the FTT.  The JR proceedings may therefore be unnecessary should it transpire that there is in fact no liability to tax.

In addition, HMRC submitted that if both the JR proceedings and tax appeal proceed at the same time, there may be different findings of fact. They also raised concerns about the division of resources if both proceed, for what might turn out to be a valueless duplication of effort.

On 7 July 2014, Thirlwall J granted the taxpayers permission to proceed with their judicial review application. HMRC's application to stay the JR proceedings was however refused on the basis that the stay would merely cause delay and the JR proceedings could proceed on the assumption that HMRC were right in law in respect of the underlying landfill tax liability. 

The judge's decision to refuse a stay was appealed by HMRC and its appeal came before the Court of Appeal for determination.

Shortly before the appeal came on for hearing, HMRC applied for permission to amend its grounds of appeal in the JR proceedings and to rely on a new witness statement. It submitted that the change of case was due to developments in the FTT proceedings since the date of the court order refusing a stay. In the witness statement, HMRC also raised a logistical point noting the difficulties it was experiencing with resourcing due to the overwhelming number and variety of claims for repayment being made by landfill site operators.

Court of Appeal's decision

The first question the Court had to decide was whether to allow HMRC's application for fresh evidence and permission to amend their grounds. Taking into account all the circumstances, including the fact that this was an interim appeal and that the parties had made reasonably full submissions on the evidence, the court granted HMRC's applications.

The Court then went on to consider whether there should be a stay of the judicial review proceedings. In reaching its decision on this issue, it considered there would have to be strong reasons for restricting the taxpayers' right to pursue both claims. In response to HMRC's contention regarding logistics and resourcing, the Court considered that these difficulties could not possibly constitue strong reasons for restricting the taxpayers' right to pursue both claims.

Lady Justice Arden commented that significant duplication of fact could be sufficient to justify a stay, as the same issues of fact should not be decided by different tribunals in disputes involving the same parties. Duplication wastes time and costs and is contrary to the interests of justice. She noted that in some cases the risk cannot be avoided, however, she did not consider the present case fell into that category. The question then was whether a decision to allow both proceedings to proceed would result in the Administrative Court making findings of fact which would have to be determined in the tax appeal.

The Court dismissed HMRC's appeal for the principal reason that it did not consider HMRC had made it clear precisely what its case would be in the judicial review proceedings. In the circumstances, it was not clear to the Court whether there was any overlap between the JR proceedings and the tax appeal.


For most taxpayers in dispute with HMRC, pursuing their appeal to the FTT will be sufficient. However, in some cases, as in present case, a taxpayer will have an issue that falls within the jurisdiction of the FTT, and another issue which should be determined by way of judicial review. It will of course depend on the facts and circumstances of the case which issue should be decided first2. However, it is clear from this case that where there are two sets of proceedings, HMRC will not be able to secure a stay of the judicial review proceedings by simply claiming resource issues, or asserting duplication of fact.

The Court of Appeal made it clear that there has to be strong reasons for restricting a taxpayer's right to pursue both claims.

To read the full judgment click here.

1 [2015] EWCA 747

2 R (on the application of Davies & Another) v HMRC [2011] UKSC 47; R (on the application of Gaines-Cooper) v HMRC [2011] STC 2249.