An umbrella that was named on HMRC’s published list of tax avoidance schemes and promoters has lost their bid for a judicial review to challenge their inclusion on the ‘name and shame’ list.
Brief summary of the case
Easyway Umbrella Limited argue against their inclusion in HMRC’s list (section 86 notice) stating the following grounds against HMRC:
- Unfairly failing to provide an opportunity for Easyway Umbrella Limited to make representations;
- Inadequate and unlawful reasons for publishing the section 86 notice;
- Irrational decision to publish the section 86 notice;
- Violation of article 1, first protocol to the European Convention on Human Rights “by interfering with Easyway’s right to protection of property” by publishing the section 86 notice.
A section 86 notice may be published where HMRC suspects that a proposal or arrangement avoids tax and/or defers payment of tax. Easyway Umbrella Limited’s director argued that he had not received the original notification from HMRC, and was unaware of the section 86 notice until after it’s publication. However, the judge felt that if Easyway Umbrella had made representations the outcome would not have been substantially different, i.e. that HMRC “would have still published the section 86 notice having considered and rejected any representations”.
In addition, the judge concluded that the European Convention on Human Rights ground would fail because their interests are protected by having the right to make representations. In order to be successful, the measure itself would need to be disproportionate not just the use of the statutory power in this case.
You can read the full judgment here.
Is there any point challenging inclusion in the list?
This is the second such challenge that I am aware of since the list’s inception back in April 2022. The other challenge also lost. In both cases the judge examined whether the conditions (in section 86 of the Finance Act 2022) required for publishing details on the list had been met, and concluded they had. Both cases submitted many other arguments however the judges felt that these did not have a realistic prospect of success.
So perhaps the only way future challenges could be successful would be if HMRC did not meet the required conditions for publication, which in itself is very unlikely.