Assessment - Judicial review - Seafarers

Cameron and others v Revenue and Customs Commissioners: Queen's Bench Division, Administrative Court (London) (Mr Justice Wyn Williams): 8 May 2012

There were two separate sets of proceedings raising the same issue. The first claimant from the first set of proceedings (the first claimant) worked as a seafarer between 1974 and 2007. In 2006, Seatax Ltd, a company with the specific aim of providing advice to seafarers about their personal taxation, submitted the first claimant's tax return for the tax year ended 5 April 2006.

In the tax return, the first claimant claimed seafarer's earnings deduction (hereinafter referred to as SED) in the sum of £72,936. Section 378(1) of the Income Tax (Earnings & Pensions) Act 2003 made it clear that SED was allowed only if three criteria were met. One of those criteria was that the person making the claim performed duties as a seafarer 'in the course of an eligible period'. Section 378(2) explained what was meant by the phrase 'eligible period'. An eligible period was calculated by reference to 'days of absence from the UK'. A person was absent from the UK only if section 378(4) was satisfied.

Under that subsection, a person was regarded as being absent from the UK on any day only if he was absent 'at the end of the day.' In order to determine the meaning of 'at the end of the day', the defendant Revenue and Customs Commissioners (the Revenue) in 1987, published a document, form S203 (New). That was followed by form P84 and then 'the Blue Book'. It was stated was that a voyage which did not extend a foreign port might still count towards a day of absence (the broad concesion).

The claimant in the second set of proceedings (the second claimant) was a seafarer since about 1975. For each of the tax years from 2001-2007 the second claimant made claims for SED and its predecessor, Foreign Earnings Deduction (FED). Following an enquiry, the Revenue disallowed the entirety of the claims in respect of both claimants. The claimants brought judicial review proceedings challenging the lawfulness of the Revenue's decisions to disallow their claims for SED/FED. The claimants argued, inter alia, that at the time they made their claims to the deduction they held a legitimate expectation that the Revenue would uphold them on the basis of the broad concesion.

The Revenue argued, inter alia, that even if the broad concession properly founded a legitimate expectation upon which the claimants relied they should not be bound by the concession once they had written to the claimants denying the existence or application of the broad concession.

The issues were whether if the claimants acquired a legitimate expectation that he would be taxed in accordance with the broad concession, whether there came a time when the legitimate expectation ceased. The applications would be allowed.

A taxpayer was entitled to rely upon a statement made in a formal publication unless and until the statement was revoked, withdrawn or altered in a prescribed manner. If a taxpayer legitimately relied upon a statement made by the Revenue which was contained within a document published by the Revenue and aimed at a class of taxpayers of which the taxpayer was one, reliance upon the document ought not to regarded as unreasonable simply because an employee of the Revenue expressed a view which was contrary to that contained in the document (see [73], [74] of the judgment). ­

In the instant case, on any fair reading of the contents of Form S203 (New), it included a statement of the broad concession. Further, the Blue Book set out the terms of the broad concession unequivocally. As from the date of the first publication of the Blue Book at the very latest there was in being a clear statement of the broad concession published in a document which was specifically intended to assist seafarers who wished to claim FED. There was nothing in the evidence which suggested that sometime thereafter the Revenue published a document aimed at eligible seafarers which revoked or altered the effect of the broad concession or suggested that the Blue Book was obsolete or superseded (see [78], [79], [81], [86] of the judgment).

Both claimants would succeed in their claim for judicial review (see [90], [91] of the judgment).

Jolyon Maugham (instructed by Michael Welch & Co) for the claimants; Daniel Margolin (instructed by The Solicitor's Office HM Revenue & Customs) for the Revenue.