Negligence

Taxpayer alleged customs giving negligent advice re VAT - no right to compensation on judicial review for unlawful administrative action - possible private law claim in negligence against customsR v Customs and Excise Commissioners, ex parte F & I Services Ltd: QBD (Carnwath J):14 April 2000

In March 1998 the applicant obtained an indication from the commissioners that car dealers participating in a voucher-based promotion scheme of their devising would not have to account for VAT on the sale of vouchers for a series of discounts on the purchase of goods and services from other named retailers, provided that the vouchers were sold (at the same time as a customer purchased a car from the dealer) at or below their face value.In June 1998 the commissioners realised that their initial advice was wrong in law and informed the applicant that the car dealers would have to account for VAT in respect of the vouchers.

The applicant sought judicial review of the commissioners' decision to resile from their earlier advice and compensation for losses incurred on preparatory expenditure for the voucher promotion; subsequently it sought to amend its claim to include an allegation that, where the commissioners assumed an obligation to provide specific advice to a taxpayer in response to an enquiry as to the fiscal treatment to be applied to a particular scheme, a duty to exercise reasonable care and skill was owed to that taxpayer.Michael Kent QC and Rupert Anderson (instructed by Solicitors, Customs & Excise) for the commissioners.

Roderick Cordara QC and Perdita Cargill-Thompson (instructed by Hutchinson Mainprice) for the applicant.Held, dismissing the application for judicial review but granting permission for the proceedings to continue as an action and for the pleadings to be amended accordingly, that the applicant had established no legal basis for its claim to compensation as there was no general right to damages for unlawful administrative action in English law; that it could not be categorically stated that the applicant's negligence claim could never succeed; and that, although it was common ground that by February 1998 the officer responsible had been in possession of sufficient facts to enable her to reach a correct conclusion as to the VAT consequences of the scheme but she had failed to do so, it was impossible to resolve all the factual issues raised by the negligence claim at the present hearing and consequently the proper course was to allow the proposed amendment and direct that the proceedings to continue as an action.