Recent Developments in Tax Law: Vires Revisited

Abstract

A major constriction of the legitimate expectations doctrine is the ultra vires principle: that an expectation lacks legitimacy where it requires a public body to act outside its statutory powers. However, recent HMRC actions appear to challenge this orthodox position. In essence, HMRC will give effect to representations beyond its power in limited exceptional circumstances. This piece seeks to elaborate on this initial proposition and is accordingly divided into three parts. The first details the orthodox position, as well as the academic and judicial responses to this issue. The second part explores, and thereafter critiques, the evidence of HMRC effectuating unlawful representations. The final segment seeks to synthesize the former discussions, using the first part to explain HMRC’s approach, namely that the body is giving effect to Paul Craig’s “balancing” theory. To this end it is further proposed that HMRC’s actions accord with the principles of both the common law and ultra vires theorists and that such actions by HMRC are prima facie desirable.

Note: This material was first published by Sweet and Maxwell [Stephen Daly, 'Recent Developments in Tax Law: Vires Revisited' (2016) 2 Public Law 190-198] and is reproduced by agreement with the Publishers.

Keywords: HMRC powers, Legitimate expectation, Ultra vires