QB-2020-004171 - [2025] EWHC 2773 (KB)

It is said that oral permission was given to commence brewing prior to obtaining a licence. The alleged oral permission was not confirmed in writing at the time and is challenged. Further, as recognised by the Claimants in a speaking note of 8 June 2025 at para. 25a, there was limited evidence about the exact circumstances of the original conversation leading to the alleged reassurance of Ms Renton, but it must be assumed for the purpose of a strike out application that there is a case which cannot be decided on this application that oral permission was granted pending the written application being considered There is evidence later in October 2012 of Mr Ansah that he permitted recommencement of operations, whilst disagreeing with the decision as the operation had no approval. The alleged assumption of responsibility and duties said to arise out of such oral permission stand to be scrutinised both by reference to case law and the unchallengeable facts of the instant case.

The starting point is that a public authority does not owe a duty at common law merely because they have statutory powers or duties. This is not a case where the duty relied upon is a statutory duty. In that regard, it is not said that there was a statutory duty of care in that there was nothing in the regulations and statutory powers which imposed the same. The duty is said to be a duty at common law based on an assumption of responsibility. It is the law that public authorities may owe a duty of care where principles applicable to private individuals would impose such a duty provided that there is nothing inconsistent with the duty by the legislation from which their powers and duties are derived. Likewise, there can be an assumption of responsibility unless the imposition of the duty would be inconsistent with the legislation: see especially the quotation above from N v Poole BC at [65].

The most important alleged oral permission was the first one in time in that that is alleged to have created the status quo of trading without a licence. That was the oral permission alleged to have been given by Ms Renton in April 2012, denied by her, but assumed to have been given for the purpose of a strike out application. The Claimants submitted by reference to the case of Kevin So at para. 51 that there would be no reason for them not to trust the advice that the trading could take place on the basis of oral permission. It is claimed that there was reliance on the representations and that this must have been appreciated by HMRC. It is therefore submitted that there was a direct relationship for the purpose of proximity, such that it was equivalent to a contract.

Even if it were correct that oral permission had been granted, the consequences said to flow from this do not stand up to scrutiny. It is said that the consequence of advice given by Ms Renton in April 2012 which she ought to have foreseen would be that any attempts to pay Beer Duty would then be refused, which in turn would have consequences leading to seizure of assets or refusal of registration or prosecution. This is not a sensible analysis. If the advice were inaccurate, then such a short term of continuing without a licence would be expected to be sorted shortly by the provision of a licence. If there was a problem such as not accepting Beer Duty or some other problem, then the brewery would be expected to make an informed decision as to what to do and whether to continue trading. The concept that trading on for years without a licence and without paying Beer Tax in the face of numerous communications from HMRC seeking information, the production of accounts and the regularisation of the position cannot have been sensibly in the contemplation of the person giving such oral permission.

There was no reason for a junior employee like Ms Renton to have had any knowledge that any attempts to pay Beer Duty would then be refused, let alone the possibility of trading thereafter for a long period with no payment of Beer Duty or indeed hardly any taxes. It makes no sense that she would have been or ought to have been in a position to foresee any seizure or refusal of registration more than two years later. In those circumstances, there was no assumption of responsibility for consequences which could not sensibly have been within her contemplation at the time.

Further, it does not follow from an unauthorised permission to brew that the Claimants or LFCP would be granted a licence or registration as alleged or at all or that they would have a legitimate expectation of the same. The question of the grant of the licence or registration would still fall to be considered. The suggestion that this should be a part of the assumption of responsibility would be in conflict with the legislation and the statutory powers in respect of licensing and then collection of tax. It was submitted that this case was not an investigation or a prosecution type case: in fact it was a case in the context of public regulation of the beer industry and touched on licensing, enforcement and prosecution.

Further, and particularly stark in this case, the provision of oral permission to brew would not and could not exonerate LFCP or the Claimants from paying VAT and other taxes, leaving aside Beer Duty. It is not sensible that the person giving oral permission should contemplate or foresee that the trader may go on not only trading but not paying these taxes.

The statement that there was a consequence that the LFCP or the Claimants could not be prosecuted for illegal brewing as a result of the assurance does not arise for consideration because there was no prosecution for illegal brewing, but instead for fraudulent evasion of taxes other than Beer Duty. It therefore follows that the start of the case about Ms Renton’s oral permissions did not have and could not have any of the consequences alleged. It follows that the alleged assumption of responsibility attributed to Ms Renton has no real prospect of success.

As for the alleged repetition of the oral permission by Mr Ansah in March 2013 and by Mr Snazel during the visit of 6 August 2014, which permission is denied, it will be assumed for the purpose of a strike out application that the permissions were granted. Many of the above points apply. In particular, there was no reason to believe that the trading without a licence would continue for months. Further, it does not follow from this that the licence or the registration would be granted. Any oral permission to brew would not and could not exonerate LFCP or the Claimants from paying VAT and other taxes apart from Beer Duty. Here too, the question of prosecution for illegal brewing does not arise because there was no such prosecution. The notion that hardly any other taxes would be paid could not have been contemplated at least on the back of the putative oral permission to continue to trade.

In any event, there is a disconnect between the alleged oral permissions and the search warrant, arrest and prosecution not for illegal trading but for non-payment of VAT and taxes other than Beer Duty.

The case that HMRC created a “sufficiently special relationship between the Claimants and the Defendant to impose a common law duty of care” is not sustainable. The core problem is that there are not sufficiently compelling special circumstances (to use the language of Sir Anthony May P. in Desmond quoted above) such as to give rise to a common law duty of care or to give rise to an assumption of responsibility with that consequence. As was pointed out in HXA v Surrey County Council, there can be a high level of generality in referring to an assumption of responsibility. The problem which arises when seeking to define the particular respects in which it is alleged that the defendant has assumed responsibility. When the Claimants have sought to define the duty of care, the case it encounters insuperable problems of definition. When defined, the alleged duties either are an exorbitant consequence of the alleged conversations or give rise to conflicts with public law functions.

There was nothing in the relationship which was different from other relationships such as to create a duty to process the applications with reasonable care and expedition or to give “accurate not misleading advice”. This is contradicted by established case law. The case of Neil Martin Ltd v Revenue and Customs Commissioners is particularly apposite. In that case, there was no common law duty of care to process applications without a reasonable time or take care to avoid delay. There was no assumption of responsibility to provide correct information. There was a common law duty of care about something so far removed from administrative matters as to take the case into a different realm, namely where an application was processed by the employee without the authority of taxpayer such that public body was assuming an authority to make application which had not been made.

This is entirely consistent with that which was said in Jain about not imposing a duty which would or might inhibit the exercise of statutory powers and be potentially adverse to the interests of the public at large. Further, if there was a departure from what would be expected of the public body, then the starting point would be to consider alternative remedies such as an appeal process or judicial review. This too would be inconsistent with the finding of a duty of care at common law.

Likewise, the notion that there was an assumption of responsibility or a special relationship to impose a duty on the public authority to put in place sufficient administrative systems so as to enable the Beer Duty to be paid is far removed from a private law duty. The structure of the administrative systems and whether it ought to be able to collect the Beer Duty without registration was a matter for the public authority subject to judicial review or some other public method of complaint.

In short, the case about the special relationship or the assumption of responsibility has consequences which are at odds with established case law. They give rise to potential conflicts in respect of the licensing function, the investigative function and enforcement. If there is the need for redress, then in an appropriate case, this could be dealt with by judicial review or some statutory appeal method or complaint. There is no reason for this to be the subject of a common law duty of care.

It is said that HMRC has been in breach in failing to process compliant applications and/or in failing to grant a brewing licence to which LFCP was entitled as a matter of public law. The remedy is not in private law but through the statutory scheme and/or judicial review. Likewise, it is said that excessive information was sought which was unreasonable or irrational in a public law sense. There is no reason why such consequences cannot be addressed by public law challenges such as obviates the need for a private law duty.

Further, this is not a case which requires a trial in order to consider whether the suggested route 2 and the novel duty of care is something which is fair, just and reasonable. Before getting there, it is obvious for the reasons given above that the proposed duty is not justified and so no detailed investigation is required in order to assess the fairness, justice and reasonableness of the proposed duty.

It is said that by reason of emails from Ms Laker dated 8-20 October 2014 that the VAT Unit would “…do everything…to help you and Paul” and that “I’m sure with us all working together we will get there...”, HMRC assumed a duty of care to provide the Claimants with assistance and/or forbearance which it breached by offering insufficient assistance and/or “aggressively commencing enforcement action in criminal law”: see RRAmPoC paras. 109 - 110.

The Claimants allege that breaches of these duties led C1 and/or LFCP to “believe there was no immediate urgency to resolve the outstanding VAT and other tax matters”: see RRAmPoC para. 110A. They allege that but for such assurances, they would have acted with urgency such that they would have resolved these matters before 2 December 2014.

The Claimants say that:

“The liquidation of LFCP and the financial losses claimed herein were caused by the said malicious, misfeasant and negligent acts which brought about the destruction of a thriving and fast growing brewing business which, had it not been destroyed by the defendant’s acts and omissions would have continued to be profitable and been valued in today's market at a figure in the region of £50 million and or would have been subsequently taken over/sold by a large brewing business.”

None of this case raises a reasonable cause of action. First, whatever was said by Ms Laker who was involved in civil VAT collection could not have given rise to a fetter on a criminal investigation or how the registration process would be completed. No comments made by her in the context of VAT recovery could extend to wider taxation matters and in particular whether there were reasonable grounds for suspecting criminal conduct. These were matters outside the remit of those who collected VAT and could not give rise to the duties alleged by the Claimants. It is not pleaded that Ms Laker and Ms Thomas themselves did not provide assistance.

In any event, the suggestion that such unspecific language as used by Ms Laker would give rise to some assumption of responsibility has no real prospect of success. There was no specific commitment to give a particular time or to halt steps being taken by the VAT for collection of unpaid taxes or to any particular assistance. If there was an offer to assist, it was not intended to enable the Claimants to delay providing the required information to pay the outstanding VAT and other taxes. There was no representation about the brewery being registered or that a criminal investigation would not proceed.

The suggestion that there was a belief that there was no immediate urgency is unrealistic to a high degree in the light of the history of the accumulating indebtedness going back over a period of almost two years. It is important to note what this means as regards VAT, namely that the taxpayer was bound to account for the VAT received subject to any inputs, and yet each quarter it paid virtually nothing. In other words, it used the VAT for itself and did not account and pay to HMRC. It accumulated over £727,000 of taxes in this way irrespective of Beer Duty. It faced numerous communications from HMRC which would obviously connote urgency, but it met them by purported excuses about management systems and accountants not doing their job. In my judgment, it is unrealistic to suggest that such unspecific remarks against this background had the effect that there was no urgency about payment of these taxes.

A submission on behalf of the Claimants is that without inaccurate advice or reassurance, the brewing would not have re-started before a licence had been obtained. Then there would have been no outstanding Beer Duty and the business would not have been destroyed. This does not provide an answer to what occurred because it does not explain the failure to pay hundreds of thousands of pounds of VAT and taxes other than Beer Duty over a period of about two years. It was this and not alleged advice or reassurance that led to the search warrant and the prosecution. Further, it does not explain why after trading, the Claimants and the brewery businesses failed to respond adequately or at all to the numerous requests for accounts, for information and for explanations over such a vast period of time. The case that all of this occurred because of the alleged advice or reassurance does not stand to scrutiny. Likewise, the vague statements of Ms Laker and Mr Thomas did not amount to a promise not to take collection and enforcement action.

A related submission throughout in respect of the cases of misfeasance and negligence is that HMRC by their representations and by the failure to process the brewing licence lulled the Claimants into a false sense of security via the oral permission to brew. This case is not sustainable. HMRC had RPC to believe that there was no excuse for the non-payment of vast sums of VAT over about a two-year period. They had RPC that there was a fraudulent evasion of tax on the part of the businesses, and no genuine excuse for the numerous requests over the first half of the period of time going unheeded with inadequate excuses about accountants and business management systems.

Further, the assertion that the payments would have been made but for such statements or assurances is also devoid of reality. When a new accountant was said to have come on board in late November or early December, it was said that the new accountant would need until July 2015 to sort out matters. There is no rational basis for submitting that in these circumstances matters could have been sorted out earlier. When it was that there was negotiation much later for payment of arrears, this was only on a condition that a prosecution would be dropped. There is no evidence at any time over the period of almost two years of any urgency or engagement on the part of the LFCP or the Claimants or at any time thereafter to pay what was due. There is also no specific evidence of how LFCP or the Claimants were at that time in a position to make payments or, if they were in a position to pay, why they did not. If they were in a position to pay, there has been no particularisation of the resources from which payment would have been made and by when it is said that such payment would have been made, and why they chose not to resolve these matters.

There are other points to be made about VAT. Insofar as the Claimants have made out a case to the effect that there was an assumption of responsibility or a duty of care in respect of registration and Beer Duty, this is not an answer to the non-payment of vast sums of VAT and other taxes.

In the discussion of case law about summary judgment and strike out applications, it was stated that whilst the Court cannot weigh evidence and ought not to engage in a mini-trial, a court is not bound to accept at face value and without analysis everything that a claimant says in his statements before the court. In some cases, it may be clear that there is no real substance in factual assertions. These statements are of that nature. They do not found a case with a real prospect of going anywhere at a trial even allowing for anything which might develop between now and a trial. In the light of all of the above, the case that HMRC in some way made the position of the Claimants worse is not made out.