A tax case of location, location, locationby
A company director and HMRC failed to persuade the Kings Bench Division to agree to move a hearing from Manchester to London.
This was a relatively mundane judicial review about logistics, brought to life by some wry observations from the Honourable Mr Justice Fordham and the surprising twist of seeing HMRC and the taxpayer on the same side, for now.
The next stage in this saga will see HMRC and the claimant, Adam Bale, go head-to-head over a £124.9m penalty, but in this judicial review the tax authority and the taxpayer were united in their desire for said battle to take place down south.
North vs South
Bale, who lives in Wirral, Merseyside, was the director of an employment company based in Liverpool. He was issued with a personal liability notice in July 2023 for his alleged responsibility for the company’s inaccurate PAYE returns. The notice included a penalty of £124.9m against which Bale was appealing.
Despite his northern roots and having instructed solicitors in Liverpool, Bale filed his claim in London, the administrative court venue for the South East region.
On the claim form, Bale’s legal representatives answered “yes” to the question: “Have you issued this claim in the region with which the claim is most closely connected?” Neither Bale nor HMRC provided any explanation as to why that answer had been given, and the judge found it to be incorrect, stating: “The claim is plainly most closely connected with the North West region.”
In the absence of any justification for the case to be heard in a region other than that with which the claim was most closely connected, a minded transfer order was made to transfer the case to the administrative court venue for the North West region, Manchester.
Bale and HMRC both sought to resist the proposed transfer and asked the judge to consider a number of reasons for that opposition.
First, Bale asserted that there was no particular public interest for the claim to be heard in Manchester. To this the judge responded: “There is a general public interest that claims should not ‘default’ to the regional venue for the South East region, just because it is the capital, or by reason of some hierarchical perception about the London administrative court as a national venue or its judges as the A-Team.”
To allow the case to be heard in London with no valid explanation as to why would, according to the judge, “undermine the integrity and ethos of the administrative court as a national court operating through regional venues.”
Time and cost
It was accepted that in some circumstances the financial and time cost of displacement could be accepted as valid reasons to hear a case in a different region.
Bale submitted that although the company was based in Liverpool he spent “a considerable amount of time in London”, not least visiting his counsel no doubt. The judge accepted that Bale’s counsel – and indeed HMRC’s – who is London-based, would need to travel to Manchester for the hearing. However he was keen to emphasise that instructing counsel in the capital had been the claimant’s choice.
HMRC could have asked for a speedy determination of venue before instructing counsel, although it was possible that the claimant’s erroneous statement on the claim form (that the claim was most closely connected with London) had caused HMRC to miss the potential venue issue.
It was noted that the option was available to HMRC to switch to Manchester-based counsel should they so desire.
The judge ended with what he eloquently described as “a final reality check” adding pointedly: “On the face of it, this claim is worth £124.9m.”
The suggestion that the hearing should be held in London to avoid the additional displacement cost was somewhat negated by the value of the claim; the fact that Bale had chosen and had the means to instruct top-notch legal counsel; and that he was “perfectly happy to travel to London and stay there”. Transporting his legal counsel to Manchester would not have been significantly (if at all) more expensive than the claimant and/or his solicitors travelling to London.
The claim was transferred to Manchester.
So, the next time HMRC’s and Bale’s counsel come face to face they’ll be on opposing sides of the argument, but at least they’ll be united in disgruntlement about the location of the hearing. Perhaps they can share their grumbles over an Upper Crust baguette on the train from Euston to Manchester.
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Consulting Tax Editor for AccountingWEB.
I have spent the last 10 years teaching the accountants of the future, mainly ICAEW advanced level corporate reporting. I also cover tax news and write and edit tax updates for other publishers including PTP Limited.