Upper Tribunal Tax and Chancery Chamber

UT/2024/000060 - [2025] UKUT 00143 (TCC)

Fecha: 11-Feb-2025

Discussion

Discussion

193.

Earlier in this decision we summarised various points from the Supreme Court’s judgment in Friends of the Earth, which Mr Birdling had helpfully referred us to.In particular we set out the relevant principles which apply when assessing whether a decision maker has erred in failing to address factors which are said to be relevant (see [38] onwards above).

194.

In oral argument Mr Firth sought to distinguish the propositions from Friends of the Earth on the basis that they arose from a very different context namely a broad policy driven decision in relation to sustainable development (Friends of the Earth concerned a planning policy statement indicating the preferred location for airport development at Heathrow). He argued that in that case there were many issues of varying relevance and the complaint was of further matters not having been considered. In his submission that situation contrasted with the narrowly focussed discretion to extend time here. We do not agree there is any reason to limit the scope of the analysis in Friends of the Earth in this way. The propositions the Supreme Court set forth are obviously of wider application.

195.

Mr Firth also argued that the inverse of HMRC’s position (that none of the factors were relevant in the sense of it not being established that failing to consider them was irrational), was that a decision maker could take into account nothing relevant. However, if this were a valid criticism it would be one which applied equally to the Supreme Court’s analysis. We should not lose sight of the fact that the ground of claim here is not that HMRC did not take account of anything relevant but specifically that, as in Friends of the Earth, factors that in the Claimant’s view were considered relevant were wrongly not considered.

196.

Returning to the relevant categorisation of factors established in Friends of theEarth, it is clear however that the Claimant faces the following problem. In terms of what had to be taken into account in relation to the decision on Paragraph 13 of the SP, there were no statutory requirements (category one). This leaves the third category of considerations referred to in Friends of the Earth, which only have to be taken into account if it would be irrational to leave them out of account (category two is not relevant as it concerns factors which the statute requires should not be taken into account).

197.

For the reasons below, and in agreement with HMRC, none of the factors the Claimant relies on as relevant come near to constituting points which it would have been irrational to leave out of consideration.

(1)

We have already explained there was no need for agreement of the FNR before the Claim could be made. Nor was there a need to wait for a closure notice bringing the Dividends into the charge to tax, (points 3) and 4) above) (see [145] and [160] onwards above). If HMRC had taken either of these matters into account they would in fact have been proceeding on the wrong basis. It is also argued that HMRC have not considered the purpose of the time limit and the absence of finality concerns, given that the taxpayer’s position remains open under the enquiry. However this overlooks that the legislation has specified a straightforward two year time limit for claims to be made from the relevant accounting period. That stands in contrast to provisions elsewhere, which specify time limits that run for instance from the issue of the closure notice (see [114]). The lack of such similar specification makes it difficult to say that when exercising their discretion to extend the time limit HMRC were irrational in leaving out consideration of the enquiry into the return remaining open.

(2)

The same is true of points 1) and 2). The timing of the Business Brief and of HMRC’s invitation to make a claim are both incapable of accounting for why a claim could not have been made in the intervening period between 2018 when Prudential SC was handed down and when the Business Brief and invitation were later issued.

198.

As regards the point that the language of the SP, in its reference to “may result…”, envisaged a further overall discretion, it is true there was no consideration of this further “may” aspect. However we are doubtful that this is how one should construe that language in light of the fact that there is already a paragraph (paragraph 12 of the SP) which envisages that HMRC will consider the overall circumstances (and no ground is advanced in relation to that). Even if the Claimant were correct that this language imparts an extra discretion then it does not take the Claim further in that the Claimant has not identified anything that would require such discretion to be exercised in its favour.

199.

For the reasons explained above, if it had become necessary to determine Ground Four, then we would have held that it failed.