West Law Report

REFSON v REVENUE & CUSTOMS COMMISSIONERS

Posted in Westlaw Reports by mrkooenglish on June 25, 2008

Last Updated: 6:11PM BST 25/06/2008
Chancery Division HHJ Pelling QC June 18, 2008
Business expenses – Legitimate expectation – Tax returns – Travelling expenses Conduct of Revenue giving rise to legitimate expectation that certain costs were legitimate – Proper jurisdiction of commissioners and court

FACTS

The appellant taxpayer (R) appealed against a decision of the commissioners that he was liable to pay back taxes on certain expenditures. In the past R had claimed the costs of travelling between two properties as a legitimate expense for the purposes of his tax return. He had also contacted the office of the Revenue to enquire as to the formal position in relation to those expenses; he was told that, provided the expense was reasonable, he would be entitled to label them as a legitimate expense when completing his tax return. Subsequently, the Revenue refused to allow R to claim such travelling costs as a legitimate expense. R refused to pay the requisite tax and complained to the commissioners. The commissioners concluded that R’s travelling costs were not a legitimate expense and that he should pay the relevant taxes. R submitted that he could rightfully claim his travelling costs as a justifiable business expense because he could establish a legitimate expectation that the Revenue would not object. The Revenue argued that the commissioners did not have the requisite jurisdiction to entertain a claim in legitimate expectation and, accordingly, the instant court had no jurisdiction to hear the claim premised on the same ground on appeal.

ISSUES

(1) Whether R could rightfully claim his travelling costs as a justifiable business expense because he could establish a legitimate expectation that the Revenue would not object.

(2) Whether the commissioners of the Revenue did not have jurisdiction to entertain a claim premised on legitimate expectation.

HELD (appeal dismissed)

The jurisprudence was unanimous: the commissioners did not have the jurisdiction to examine cases involving the principle of legitimate expectation. The correct remedy lay in a claim for judicial review, Demibourne Ltd v Revenue and Customs Commissioners [2005] STC (SCD) 667 and Venables v Hornby (Inspector of Taxes) [2001] Pens LR 17 Sp Comm applied. Accordingly, R’s appeal fell to be dismissed for want of jurisdiction because, like the commissioners, the instant court was precluded from considering the same matter on appeal.

The appellant appeared in person. Timothy Buley (instructed by in-house solicitor) for the respondent.

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