Vital Nut Co Ltd & Anor v HMRC – application for judicial review

Vital Nut Co Ltd & Anor v HMRC

This application for judicial review of the issue of Accelerated Payment Notices has been dismissed.

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In this case, HMRC served the taxpayers with Accelerated Payment Notices (APNs), requiring them to pay sums of corporation tax that HMRC argue is due. The taxpayers claim that the tax is not due because of claims for relief for payments made to Employer-Financed Retirement Benefits Schemes (EFRBS). They challenged the validity of APNs on several grounds in this application for judicial review. 

The APNs state that the conditions for their issue are met because a tax enquiry under s.219(2)(a) is open and because: ‘the return is made on the basis that a tax advantage results from the ‘Disclosure of Tax Avoidance Schemes (DOTAS) arrangements’. HMRC emphasised the point that Parliament intended to remove the cash flow advantage of participating in DOTAS arrangements and to change the presumption of where the tax sits during a dispute. They argued on this basis, relying on the response to consultation which was issued before the legislation was introduced, that they did not have to form the view that the DOTAS arrangements were ineffective in order to be able to issue an APN. 

The judge rejected this argument on the basis of the legislation itself but found, on the evidence, that HMRC as a department had in fact formed this view even though the technical issue had not been considered by the designated officer personally. The judge was however somewhat critical of the fact that the underlying technical issue (relating to the pre-2011 treatment of EFRBS contributions) has still not been litigated by HMRC.

The other two grounds argued in the High Court were based on an attempt to distinguish this case on the facts from the previous unsuccessful challenges to APNs in Rowe and Walapu, but again failed on the evidence. 

The case is likely to be appealed to the Court of Appeal, where the taxpayers may also be arguing on other grounds which could not be argued in the High Court because of the Rowe and Walapu precedents.


For further information please contact:

Stephen Whitehead

Tel: +44 20 73112829


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