Diverted Profits Tax: Application for judicial review refused

Timothy Brennan QC and Georgia Hicks successfully resisted an application for judicial review in the first Diverted Profits Tax (“DPT”) case: Glencore Energy UK Ltd v HMRC [2017] EHWC 1476 (Admin) and [2017] EWHC 1587 (Admin).

In a judgment handed down on 29 June 2017 the High Court (Green J) rejected Glencore’s application for permission to apply for judicial review in the first DPT case to come before the courts.

DPT, introduced by the Finance Act 2015, has a unique statutory structure and context, aimed at preventing erosion of the UK tax base. It counters the use of aggressive tax planning deployed by multinational corporate groups seeking to divert from the UK profits which would otherwise have been subject to corporation tax. The subtle and nuanced statutory structure provides for a preliminary notice and a charging notice. Once a charging notice has been issued, the tax must be paid without postponement (s 98). Parliament has deliberately deprived the taxpayer of the benefit of keeping the tax while the matter is litigated; a similar approach is taken in relation to accelerated payment notices and partner payment notices.

Glencore contended that a charging notice imposing DPT of over £20m, issued under s 95 of the Act, was unlawful. The judge refused permission on multiple bases: Glencore had an effective alternative remedy under ss 101-102; while the grounds were given public law labels, the “real issues” could effectively be determined in the statutory review process and subsequent appeal; the grounds were all “weak” or “very weak”; even were there errors as alleged, the likelihood was that in their absence HMRC’s decision would not have been substantially different (see the Senior Courts Act 1981, ss 31(3C)-(3D)). In coming to the conclusion that there was an adequate statutory remedy, which therefore excluded judicial review, the judge relied, in part, on the Court of Appeal decision in CC&C Ltd v Revenue and Customs Commissioners [2014] EWCA Civ 1653 in which Timothy Brennan QC and Marika Lemos appeared on behalf of HMRC.

To read the full judgment on the judicial review application, click here.

On permission being refused, Glencore sought from the High Court permission to appeal to the Court of Appeal. In a separate judgment on a discrete point of law upon which there is no previous authority, Green J held, accepting HMRC’s submissions, that the High Court had no jurisdiction to grant permission to appeal its own decision on such an application (see CPR 52.8). To read the full judgment on permission to appeal, click here.

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