Judicial Review of HMRC Decisions: Grounds, Legitimate Expectation & Procedure

HMRC is a statutory body exercising public functions. Its decisions are subject to judicial review where no adequate alternative remedy exists and there is a public law ground of challenge. JR is not a general avenue for unhappy taxpayers, the courts require the statutory appeal route to be used where it exists. But for decisions outside the statutory appeal framework or where HMRC has acted on a clearly unlawful basis, judicial review is often the only available remedy. This guide analyses the grounds, the leading cases on legitimate expectation, the duty to give reasons and the CPR Part 54 procedure.

Why This Matters

HMRC makes thousands of decisions that fall outside or alongside the statutory appeal framework, decisions on whether to open a COP9 criminal investigation, whether to grant a Time to Pay arrangement, how to interpret and apply its own published guidance, whether to use the Contractual Disclosure Facility, how to conduct an enquiry, whether to disclose information to a taxpayer and how to operate collection and management discretions. For these decisions, the only public law remedy is judicial review.

Even where a statutory appeal exists, there are categories of HMRC conduct, promises made, settled practices departed from without notice, fairness obligations in the conduct of investigations, where judicial review supplements the tribunal route. Practitioners who understand the JR landscape can deploy it strategically to protect clients from arbitrary or unlawful HMRC conduct that no tribunal can address.

When Judicial Review Is (and Is Not) Available

Judicial review is available where:

• HMRC has made a public law decision , one made in its capacity as a statutory body exercising public functions under statute (CRCA 2005, TMA 1970, VATA 1994 etc.);
• The claimant has sufficient interest (standing), the taxpayer directly affected by the decision always has standing;
• There is a public law ground of challenge (illegality, irrationality, unfairness, legitimate expectation); and
• There is no adequate alternative remedy , the claim is not refused permission solely because a statutory appeal is available.

Judicial review is not available as:

• A general appeal against the correctness of HMRC’s tax assessment or penalty, those are reviewed by the FTT on the merits;
• A substitute for a statutory appeal where the taxpayer has not used (or has missed) the appeal right;
• A vehicle for challenging HMRC’s evidence-gathering or assessment in cases where the tribunal is the proper forum.

The Alternative Remedy Bar

The most significant limitation on JR in the tax context is the rule that the Administrative Court will ordinarily refuse permission where there is an adequate alternative remedy. Where Parliament has provided a right of appeal to the FTT (for example, against income tax and CGT assessments under s 31 TMA 1970 or against VAT assessments under s 83 VATA 1994), the taxpayer is expected to use that route. The court will only entertain JR in exceptional circumstances, such as where the FTT cannot provide an adequate remedy, where there is a pure point of law of public importance or where HMRC has acted in a way that the FTT lacks jurisdiction to address.

Important categories where the alternative remedy bar does not block JR include:

• COP9 and criminal investigation decisions: The decision to commence a criminal investigation or to issue a COP9 notice, carries no statutory appeal right. JR is the only public law remedy.
• Accelerated Payment Notices: As confirmed in R (Rowe) v HMRC [2017] EWCA Civ 2105, there is no appeal to the FTT against an APN; JR is the only formal challenge route, albeit on narrow grounds (see the related guide on APNs and Follower Notices).
• Collection and management discretions: HMRC’s decisions on whether to write off a debt (s 51 CRCA 2005), grant a statutory concession or apply a settled practice fall outside the tribunal’s jurisdiction.
• Legitimate expectation claims: Where the taxpayer relies on a representation made by HMRC that is inconsistent with the technical legal position, the tribunal cannot enforce that expectation, only a court can.

The Grounds of Review

The classic formulation of judicial review grounds was given by Lord Diplock in Council of Civil Service Unions v Minister for the Civil Service [1985] AC 374, the “GCHQ case”: illegality, irrationality and procedural impropriety. To these, legitimate expectation has developed as a fourth distinct (though related) ground. Each is considered below in the HMRC context.

Illegality

Illegality means that HMRC has acted outside its legal powers (ultra vires), has misunderstood the scope of its discretion, has taken into account irrelevant considerations or has ignored relevant ones. In the tax context, examples include:

• HMRC applying its powers under Sch 36 FA 2008 to purposes not authorised by the statute (for example, using an information notice to obtain documents relevant to a different taxpayer’s affairs, not the person to whom the notice is addressed);
• HMRC treating a discretionary concession (such as an ESC) as having statutory force and applying it rigidly or conversely, refusing to apply a concession it had previously applied to similarly situated taxpayers;
• HMRC misunderstanding its own policy by applying it in a way the policy does not support.

In Revenue and Customs Commissioners v Cotter [2013] UKSC 69, the Supreme Court confirmed that HMRC has powers under the collection and management legislation (CRCA 2005 s 5) that supplement and interact with the TMA 1970 framework and that the scope of those powers is a question of statutory interpretation on which JR is appropriate.

Irrationality (Wednesbury Unreasonableness)

A decision is irrational if it is so unreasonable that no reasonable public body could have reached it, the Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 standard. The threshold is deliberately high: the court does not substitute its own view of the merits. It asks whether the decision falls outside the range of decisions a reasonable authority properly directing itself could make.

In practice, a successful irrationality challenge against HMRC requires demonstrating that HMRC has reached a conclusion that is manifestly perverse on the material before it, not merely a conclusion with which the taxpayer disagrees. Cases where irrationality has been found include decisions where HMRC wholly failed to consider material evidence or applied a policy in a way that was entirely inconsistent with the policy’s stated purpose.

Procedural Unfairness

The duty of procedural fairness (sometimes called natural justice) has two components: the right to know the case against you and the right to a fair hearing. In the tax investigation context:

• The right to know the case: HMRC must give a taxpayer who is being investigated sufficient information about the basis of the investigation to enable meaningful representations. A COP9 notice or enquiry that proceeds entirely on undisclosed grounds, without enabling the taxpayer to understand and respond to HMRC’s suspicions, may be procedurally unfair.
• The right to make representations: Where HMRC makes a decision that adversely affects a taxpayer, for example, declining to apply a concession or issuing a certain type of notice, and the taxpayer has not had an opportunity to make representations, there may be a procedural unfairness ground.
• Bias: Actual or apparent bias by HMRC in the conduct of an investigation is a ground of review, though it rarely arises in practice in tax cases given the quasi-judicial standards imposed on HMRC officers.

In Oxfam v Revenue and Customs Commissioners [2009] EWHC 3078, the High Court considered whether HMRC had applied its procedures fairly in relation to charitable VAT. The case illustrates that even bodies with a wide discretion in conducting investigations must observe basic fairness principles.

Legitimate Expectation

Legitimate expectation is perhaps the most frequently litigated JR ground in the tax context. It arises in two forms:

Procedural Legitimate Expectation

A taxpayer who has been promised a hearing or an opportunity to make representations before a decision is made has a procedural legitimate expectation that this will be honoured. If HMRC then makes the decision without giving the promised opportunity, the decision can be quashed.

Substantive Legitimate Expectation

More significantly, a taxpayer may have a substantive legitimate expectation that HMRC will act in accordance with a clear, unambiguous and unconditional representation it has made, typically a promise to treat the taxpayer in a particular way or not to pursue a particular liability. This is the harder form to establish: the representation must be clear and unequivocal, made by someone with authority to make it and the taxpayer must have acted to their detriment in reliance on it.

R v CIR ex p Preston [1985] AC 835

The House of Lords confirmed that HMRC can be bound by a settlement representation if it would be “an abuse of power” for HMRC to resile from it. A taxpayer who had agreed a tax settlement in reliance on the Inland Revenue’s assurance that no further investigation would be conducted was entitled to hold HMRC to that assurance. The Revenue was not entitled to reopen the settled matter under a new enquiry.

R v HMRC ex p Unilever plc [1996] STC 681

One of the most important HMRC legitimate expectation cases. HMRC had, for many years, accepted late loss-relief claims from Unilever notwithstanding strict statutory time limits, as part of a settled administrative practice. HMRC then, without notice, refused to accept a late claim. The Court of Appeal held that HMRC was bound by its consistent prior conduct and had to accept the claim. The case is particularly significant because it establishes that a settled administrative practice , not just an individual promise, can generate a legitimate expectation.

Revenue and Customs Commissioners v Davies and James [2011] EWCA Civ 1156

The Court of Appeal confirmed that legitimate expectation in the tax context is subject to the overriding principle that HMRC cannot lawfully make a representation that would bind it to act in breach of its statutory duty to collect taxes due. A representation that, if honoured, would result in the systematic under-collection of tax may not create an enforceable expectation. This limits substantive legitimate expectation: it is not a general “promise” doctrine that allows taxpayers to negotiate away their statutory liabilities.

The Duty to Give Reasons

There is no general common law duty to give reasons for all administrative decisions. However, a duty to give reasons can arise:

• Where the decision is of significant consequence to the person affected and fairness demands an explanation;
• Where the decision departs from a settled practice or the person’s legitimate expectation;
• Where a statutory or policy obligation to give reasons exists;
• Where the decision is one affecting a person’s fundamental rights.

In the HMRC context, HMRC has a general obligation to explain the basis for significant decisions that affect taxpayers. A refusal to grant a Time to Pay arrangement, a decision to conduct a criminal rather than civil investigation or a decision to issue a COP9 notice without explanation can each be challenged where HMRC has failed to give adequate reasons.

HMRC’s published Compliance Handbook and Code of Practice documents impose internal obligations on officers to explain decisions. Where HMRC departs from these without explanation, there is both a duty-to-give-reasons argument and a potential irrationality or legitimate expectation argument.

Key Cases Summary

• R v CIR ex p Preston [1985] AC 835 , HMRC bound by settlement representation; abuse of power to reopen.
• R v HMRC ex p Unilever plc [1996] STC 681 , settled administrative practice generates legitimate expectation; no-notice departure unlawful.
• R v CIR ex p Matrix Securities Ltd [1994] STC 272 , limit on legitimate expectation where HMRC officer lacked authority to bind the Revenue on a complex tax scheme.
• Revenue and Customs Commissioners v Cotter [2013] UKSC 69 , scope of HMRC’s collection and management powers; JR available where statutory appeal is inadequate.
• R (Oxfam) v HMRC [2009] EWHC 3078 , procedural fairness in VAT investigation; HMRC’s wide discretion constrained by fairness obligations.
• R (Davies and James) v HMRC [2011] EWCA Civ 1156 , legitimate expectation cannot override HMRC’s statutory duty to collect.
• R (Ingenious Media Holdings plc) v HMRC [2016] UKSC 54 , HMRC’s disclosure of confidential taxpayer information at a press briefing was unlawful.
• R (Rowe) v HMRC [2017] EWCA Civ 2105 , APN regime compatible with ECHR; JR the only challenge route for APNs.

CPR Part 54 Procedure

Judicial review claims against HMRC are brought in the Administrative Court (King’s Bench Division) under CPR Part 54:

1. Pre-action Protocol: Before issuing, the claimant must comply with the Administrative Court Pre-action Protocol by sending a letter before claim to HMRC. HMRC has 14 days to respond (extendable). The protocol is not strictly mandatory but non-compliance affects costs and may be raised against the claimant.
2. Issue claim form (N461): Filed with the Administrative Court Office, supported by a statement of facts and grounds, evidence in support (usually a witness statement) and copies of the relevant correspondence and decisions. The claim form must set out the decision challenged, the remedy sought and the grounds.
3. Permission stage: The court considers on the papers whether to grant permission. The test is arguability, whether there is an arguable case with a realistic prospect of success. HMRC can file an acknowledgement of service with grounds of defence within 21 days of service.
4. Substantive hearing: If permission is granted, a full hearing is listed. HMRC files detailed grounds of defence and evidence. The hearing is usually in open court; duration depends on complexity (typically half a day to two days).
5. Time limit: The claim must be filed promptly and in any event within three months of the date of the decision challenged. Time limits in tax cases can be critical, a missed deadline is fatal to the claim unless the court extends time.

Remedies

On a successful judicial review, the court may grant:

• Quashing order (certiorari): The impugned decision is quashed. HMRC must remake it, typically with proper process or without the unlawful element. This is the most common remedy where a decision has been procedurally unfair or unlawful.
• Mandatory order (mandamus): The court directs HMRC to perform a duty it has unlawfully failed to perform, for example, to process an application or to provide reasons.
• Prohibiting order (prohibition): Prevents HMRC from taking a step it has no power to take, for example, taking enforcement steps on a debt that is the subject of a dispute HMRC has agreed to resolve by another mechanism.
• Declaration: A declaration that HMRC’s conduct or policy is unlawful, useful where the conduct has ceased but a declaration is needed for future guidance or as a precursor to damages.
• Damages: Rarely awarded in tax JR claims; damages require a separately recognised cause of action (such as misfeasance in public office or a Human Rights Act claim).

Practitioner Strategy

Identify Whether JR Is the Right Route

Before advising on JR, confirm that: (a) the decision is a public law decision; (b) no adequate statutory appeal exists or it is exhausted; (c) there is a genuine public law ground (not merely disagreement with the outcome); and (d) the three-month time limit has not passed. JR without a proper ground is a costly exercise that courts take seriously, failed permission applications carry adverse costs consequences.

Send the Pre-Action Protocol Letter Promptly

The letter before claim is not merely procedural, it often produces a result. HMRC may reconsider its position when faced with a formal JR threat. The letter should identify the decision, the ground, the remedy sought and the deadline for response. HMRC’s Legal Department handles JR correspondence and has authority to settle or review decisions that legal advisers in HMRC’s operational teams may not.

Preserve Evidence of Representations

Legitimate expectation cases turn on the exact words used by HMRC. Preserve all correspondence, emails, meeting notes and telephone attendance notes. For an oral representation, a contemporaneous attendance note made immediately after the conversation is critical. Later-reconstructed notes carry far less weight.

Act Within the Three-Month Window

Three months runs from the date of the decision, not the date the client tells you about it. A client who comes to you two months after the event allows only one month for the pre-action process and drafting. If the claim is borderline on time, file a protective claim form and then apply to amend or discontinue if the pre-action response resolves the matter.

Worked Example: Broken Settlement Promise

Following a lengthy enquiry, HMRC’s officer wrote in March 2024 confirming that the enquiry into 2020/21 was closed on the basis of an agreed payment of £45,000 and “no further investigation will be taken in relation to the years 2019/20 to 2021/22.” The taxpayer paid the £45,000. In January 2026, a different HMRC officer opens a new enquiry into 2020/21 relying on CRS data received from a Swiss bank in 2025.

• Ground: Legitimate expectation based on the March 2024 letter, following R v CIR ex p Preston. The representation was clear, unequivocal and made in the context of a settlement, the taxpayer paid £45,000 in reliance on it.
• Pre-action letter: Sent to HMRC Legal in February 2026, identifying the representation, the payment made in reliance on it and inviting HMRC to withdraw the new enquiry notice.
• HMRC response: HMRC argues the new CRS data was not known at the time of the settlement and could not have been the subject of the representation. The letter said “no further investigation” but arguably this was limited to information then available.
• JR claim: Permission granted; the court will consider whether the representation was sufficiently clear to cover subsequently discovered material. Even if the court ultimately accepts HMRC’s argument, at minimum HMRC may be required to apply the settlement payment against the new liability and to give credit accordingly.

Practitioner Checklist

1. Identify the decision being challenged , date, decision-maker, content. Note the three-month time limit from that date.
2. Confirm no adequate alternative remedy exists, if a statutory appeal right is available, use it or explain why it is inadequate for this ground.
3. Identify the public law ground: illegality, irrationality, procedural unfairness or legitimate expectation.
4. Preserve all evidence of representations , correspondence, emails, meeting notes, telephone attendance notes.
5. Send a pre-action protocol letter promptly, identifying the decision, ground and remedy. Allow 14 days for response.
6. File the claim form promptly if the pre-action response is unsatisfactory, allow time for preparation within the three-month window.
7. Consider urgent interim relief if HMRC is about to take irreversible enforcement steps.
8. Assess costs exposure: JR permission refusals attract costs orders, only bring claims with a proper public law ground.

Frequently Asked Questions