HMRC v Ralph Hely-Hutchinson – Court of Appeal - KPMG United Kingdom
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HMRC v Ralph Hely-Hutchinson – Court of Appeal

HMRC v Ralph Hely-Hutchinson – Court of Appeal

The Court of Appeal found in favour of HMRC in this claim for judicial review based on legitimate expectation in reliance on HMRC guidance.


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The Court of Appeal has overturned the decision of the High Court and found in favour of HMRC in the judicial review case of HMRC v Ralph Hely-Hutchinson. The High Court had previously held that a taxpayer who incurred capital losses as a result of the Court of Appeal decision in Mansworth v Jelley and subsequent HMRC guidance had a legitimate expectation that those capital losses would not be denied, granting judicial review of HMRC’s decisions and quashing the closure notices denying the losses. In her decision, Lady Justice Arden states that “the essential question on this appeal is whether HMRC could resile from their previously expressed view in the 2003 guidance in the circumstances of the case”. 

There is no dispute in the case that HMRC created a legitimate expectation when it issued the 2003 guidance that pre-10 April 2003 Mansworth v Jelley losses would be dealt with in accordance with that guidance. The judgment considers the following key issues in reaching its decision:

Was there comparative unfairness by reason of the withdrawal of the beneficial tax treatment of Mansworth v Jelley losses by the issue of the Revenue and Customs Briefs (RBCs) 30/09 and 60/09 for taxpayers with open claims only? 

The Court of Appeal found that there was no comparative unfairness, stating that “the taxpayer’s only legitimate expectation is that he will be taxed according to statute, not concession or a wrong view of the law”. HMRC were not precluded from changing their policy by the fact that not all taxpayers would be able to reopen their loss claims. 

Was the withdrawal of the 2003 guidance otherwise unfair under the law of legitimate expectation or alternatively incompatible with Article 14 of the European Convention on Human Rights?

The withdrawal of the 2003 guidance was not otherwise unfair. The judgment states that to be so “the unfairness has to reach a very high level” and “it had to be outrageously or conspicuously unfair”. In reaching this decision the judge noted that the fact HMRC filed no evidence for the reasons of its decision to issue the corrective 2009 RCBs, claiming legal professional privilege for the legal advice that prompted it, was entirely reasonable. The judge also ruled that the European Convention on Human Rights could not be relied upon in this case. 

Was the decision lawfully taken by the relevant HMRC officer on the basis of the RCBs and the information before her?

The Court found that the decision was lawfully taken. “HMRC carefully considered whether the taxpayer had suffered any detriment and made their decision on the information that the respondent provided… In the present case, the detriment was not caused by any reliance on the 2003 guidance but general financial difficulty due to other reasons.

For further information please contact:

Simon Tremblett


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