| REVENUE — Income tax — Construction industry — Delay in processing certificate causing financial loss to sub-contractor — Whether sub-contractor having private law claim for damages based on breach of statutory duty or common law duty — Income and Corporation Taxes Act 1988 (c 1), s 561
Neil Martin Ltd v Revenue and Customs Commissioners [2007] EWCA Civ 1041
CA: Chadwick, Smith and Wilson LJJ: 25 October 2007
The legislature did not provide a private law right for damages to a sub-contractor whose application for a tax exemption certificate had not be processed by the Revenue within a reasonable time and who thereby suffered economic loss.
The Court of Appeal so stated when allowing in part the appeal of the claimant, Neil Martin Ltd, from Andrew Simmonds QC, sitting as a deputy High Court judge, who on 29 September 2006 held, in answer to two preliminary issues, that (i) a breach by the defendant, Revenue and Customs Commissioners, of s 561(2) of Income and Corporation Taxes Act 1988 could not give rise to a cause of action for damages by the claimant; and (ii) the revenue did not owe a common law duty of care to the claimant to process its application for a tax certificate with reasonable expedition.
CHADWICK LJ said that although s 561(2) imposed a mandatory duty to issue a tax certificate when satisfied that the relevant statutory conditions were met, it did not specify, in terms, the period within which that duty was to be performed. The legislature did not intend to confer a private law right of action for damages in a case where a certificate ought to have been issued to an applicant, but was not issued. In such a case the legislature conferred a specific remedy under s 561(9) ICTA: the disappointed applicant was given the right to appeal to the General or Special Commissioners against the refusal. A successful appeal could be expected to lead to the issue of a certificate. Absent a duty to issue a certificate within an ascertainable time, there was no need for the legislature to provide a remedy in damages. It was not in dispute that proceedings for judicial review provided a means of enforcing the public law duty; whatever the precise scope of that duty might have been. But the public law duty to act with reasonable dispatch in the issue of a certificate under s 561(2) ICTA arose under the general law: it was unnecessary to read words into the section in order to provide a basis for enforcement of that duty. The legislature, when enacting s 561(9), did not confer powers to award damages in respect of loss suffered by the applicant as the result of a wrongful refusal to issue a certificate (when allowing an appeal from that refusal) because it did not intend to impose a statutory duty to issue a certificate within an ascertainable time. The Revenue did not owe a common law duty of care to process the claimant company’s s 561(1) application with reasonable expedition. However, a common law duty of care was owed to the claimant company by the unidentified employee of the Revenue who chose to complete the declaration in support of an application for a registration card without the authority of Mr Martin or the company. That went beyond an administrative mistake made in the ordinary course of processing the application under s 561(2) ICTA. In completing the declaration in support of an application for a registration card the employee took it upon himself (or herself) to make an application on behalf of the company: an application which it had chosen not to make, and had not made. The employee was not processing an application which had been made: he was assuming an authority to make an application which had not been made. There was no reason why, in assuming that authority, the employee should not be taken to have assumed a responsibility to the applicant. In those circumstances it would be fair just and reasonable that the common law should recognise that a duty of care existed. To that extent the judge's answer to the second preliminary issue should be varied.
SMITH and WILSON LJJ agreed.
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Appearances: Nicholas Bowen and Andrew Willins and Duncan Fairgrieve (a registered European Lawyer) (Gabb & Co, Crickhowell) for the claimant; Michael Kent QC and Jonathan Cannan (David Hogg, Acting Solicitor for HMRC,) for the Commissioners.
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