Can you hold HMRC to what it agreed, in the tribunal, without also running a judicial review? Oxfam opened a narrow door, and it is cited far more widely than it deserves. The answer depends entirely on how the particular appeal right is drafted.
On this page
Full name: Oxfam v Revenue and Customs Commissioners
Citation: [2009] EWHC 3078 (Ch); [2010] STC 686
Court: High Court, Chancery Division (Sales J)
Judgment: 27 November 2009
Subject: Whether the tribunal can consider public law arguments; legitimate expectation in a VAT appeal
Result: The legitimate expectation claim fell within the tribunal’s jurisdiction under s83(1)(c) VATA 1994.
Why This Case Matters
Taxpayers regularly want to argue that HMRC should be held to something it said, agreed or published: a ruling, an agreed method, a statement of practice, a course of dealing. That is a public law argument about legitimate expectation, and the traditional answer was that it belonged in the Administrative Court on judicial review, not in the tax tribunal, which is a creature of statute with only the jurisdiction Parliament gave it.
Running two sets of proceedings in parallel is expensive and procedurally awkward. Oxfam opened a narrow door.
The Facts
Oxfam is a charity with both business and non-business activities, which meant it had to apportion input VAT between them. In October 2000 it agreed a method of apportionment with HMRC, recorded in a letter from HMRC which Oxfam countersigned.
The method governed recovery of VAT incurred on the costs of securing unrestricted charitable donations. Oxfam operated on that basis for several years.
In January 2007 HMRC wrote amending the terms of the agreed method. Oxfam challenged that decision, contending among other things that it had a legitimate expectation that the agreed method would continue to apply.
Because of doubt about whether the tribunal could entertain a public law argument, Oxfam issued judicial review proceedings in parallel with its statutory appeal, precisely the duplication the case is remembered for addressing.
The Ratio Decidendi
The reasoning
Sales J approached the question by asking what the statutory appeal right actually covered. Section 83(1)(c) is drafted in wide terms, the amount of input tax which may be credited. If a legitimate expectation, properly established, affects the amount that may be credited, then determining the appeal necessarily requires the tribunal to consider it.
On that analysis the tribunal is not exercising a judicial review jurisdiction at all. It is deciding the statutory question in front of it, and applying whatever legal principles bear on that question, including public law principles where they are relevant.
The Limits, and What Came After
This is the part practitioners most need, because the door Oxfam opened has been narrowed.
- No general judicial review jurisdiction. The FTT has repeatedly been held to have no free-standing supervisory jurisdiction over HMRC. It cannot entertain a complaint that HMRC behaved unfairly at large; it can only decide the appeal it has been given.
- Direct tax appeals are different. The appeal rights in the direct tax legislation are generally framed around the correctness of an assessment or amendment, and the courts have held that this does not admit public law arguments in the way s83(1)(c) does. A legitimate expectation argument in a direct tax dispute therefore still belongs in judicial review.
- The width of the particular appeal right is everything. The correct question is never “can the tribunal consider public law?” in the abstract. It is “what does this appeal right require the tribunal to decide, and does the public law point bear on that?”
- Supervisory jurisdictions are different again. In restoration and approval appeals in the excise context the tribunal reviews the reasonableness of HMRC’s decision, a supervisory function conferred expressly by statute, which is not what Oxfam is about.
Obiter and Wider Observations
- Remarks on procedural duplication. Sales J’s observations about the undesirability of parallel tribunal and judicial review proceedings are policy commentary. They remain persuasive and are worth deploying when arguing that a point should be dealt with in one forum.
- The relationship with the Administrative Court. The discussion of how the two jurisdictions interact, and of when a protective judicial review claim remains prudent, is guidance rather than rule.
- What establishes a legitimate expectation was not the focus. The substantive requirements (a clear, unambiguous and unqualified representation, reliance, and unfairness amounting to an abuse of power) come from the general public law authorities, including R v IRC, ex parte Preston.
Practitioner Application
Deciding where to run the argument
- Identify the exact appeal right. Read the statutory provision conferring the right of appeal and ask what it requires the tribunal to determine.
- Ask whether the public law point bears on that question. If a legitimate expectation would change the amount the tribunal must find, Oxfam supports running it in the appeal. If it would only show that HMRC behaved badly, it does not.
- For direct taxes, assume judicial review is required unless there is a specific reason to think otherwise.
- Consider a protective claim. Judicial review has a three-month promptness requirement. Where jurisdiction is genuinely doubtful, issuing protectively while the appeal proceeds may be necessary, which is exactly what Oxfam did.
- Do not let the tribunal be the reason you miss the JR deadline. This is the practical trap: advisers run the point in the tribunal, lose on jurisdiction, and by then the three months has long gone.
Building the underlying argument
- Find the representation and prove it. A clear, unambiguous and unqualified statement, in writing where possible. An agreed method, a ruling, a countersigned letter.
- Evidence the reliance and what the taxpayer did differently because of it.
- Show the unfairness. The threshold is high, conduct amounting to an abuse of power, as Preston establishes.
- Use subject access and Freedom of Information requests to establish what HMRC said internally and when it changed its position: see Dawson-Damer.
Frequently Asked Questions
Can the tax tribunal consider legitimate expectation?
Sometimes, and it depends entirely on the appeal right. In Oxfam Sales J held that a legitimate expectation claim fell within s83(1)(c) VATA 1994, because that right of appeal concerns the amount of input tax that may be credited and the expectation went directly to that question. The tribunal was not exercising a judicial review jurisdiction; it was deciding the statutory question before it.
Does the FTT have a general judicial review jurisdiction?
No, and Oxfam is frequently cited for a broader proposition than it supports. The FTT is a creature of statute with only the jurisdiction Parliament gave it. It cannot entertain a complaint that HMRC behaved unfairly at large. The correct question is never whether the tribunal can consider public law in the abstract, but what this particular appeal right requires it to decide.
Does Oxfam apply to income tax and corporation tax appeals?
Generally not. The direct tax appeal rights are framed around the correctness of an assessment or amendment, and the courts have held that this does not admit public law arguments in the way s83(1)(c) VATA does. A legitimate expectation argument in a direct tax dispute should be assumed to require judicial review unless there is a specific reason to think otherwise.
What is the practical trap?
Missing the judicial review deadline. Advisers run the public law point in the tribunal, lose on jurisdiction, and by then the three-month promptness requirement has long expired. Where jurisdiction is genuinely doubtful, issue a protective judicial review claim while the appeal proceeds, which is exactly what Oxfam itself did.
What do I need to establish a legitimate expectation?
A clear, unambiguous and unqualified representation by HMRC, reliance on it by the taxpayer, and unfairness in departing from it amounting to an abuse of power. Those requirements come from the general public law authorities including R v IRC, ex parte Preston, not from Oxfam, which is about forum rather than substance.