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	England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Wallace v Revenue And Customs [2017] EWHC 3115 (Ch) (06 December 2017) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2017/3115.html Cite as: [2018] 2 All ER 833, [2017] EWHC 3115 (Ch), [2018] BTC 2, [2018] STI 88, [2018] STC 790

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IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Rolls Building, Fetter Lane, London EC4A 1NL
		06/12/2017

Chief Master Marsh:

1. This is my judgment arising from an application made by the defendant ("HMRC") under CPR 3.4(2)(a) seeking an order that the claim issued on 31 January 2017 be struck out on the basis that the particulars of claim disclose no reasonable grounds for bringing the claim. The application itself refers to there being no reasonable grounds or evidence for bringing the claim. The additional words are not part of the rule and add nothing. The application was issued on the same day that HMRC filed a short defence and is based on the simple premise that the court has no jurisdiction to entertain this claim.
2. The claimant seeks to recover £215,519.60 as money had and received by HMRC. It arises from what are alleged to be overpayments of tax by the claimant. For the purposes of the application, HMRC proceeds on the basis that the claimant has overpaid income tax and that this was a consequence of a relevant and causative mistake on his part (or on the part of an adviser acting as his agent). The circumstances in which this mistake is said to have occurred are not relevant.
3. The application gives rise to a pure point of law, namely whether the relevant statutory regime permits the claimant to pursue a claim at common law for restitution or, to put the point another way, whether the court has jurisdiction to entertain the claim. They are two sides of the same coin.
4. HMRC's application is based on the following premises. The Taxes Management Act 1970 ("TMA 1970") provides a statutory right for taxpayers to recover overpaid income tax from HMRC in s.33 and Schedule 1AB of TMA 1970. It was the intention of Parliament, in enacting those provisions, to exclude a claim by a taxpayer to recover overpaid income tax by way of a claim in restitution at common law if such a claim falls within the scope of the statutory right of recovery. HMRC says the claim falls within the scope of s.33 and Schedule 1AB of TMA 1970 and so no common law claim is available to the claimant to recover the amount in dispute. Accordingly, the court does not have jurisdiction to hear the claim, and it should be struck out.
5. The statutory regime for the recovery of overpaid taxes changed with effect from 1 April 2010. Although the claims to recover overpaid income tax in this case relate to a period from after that date, Mr Brinsmead-Stockham, who appeared for HMRC, invites the court to have regard to decisions that relate to the previous regime. He does so on the basis that those authorities are entirely clear and, given the scope of the new statutory regime, they strongly support the same outcome being reached. It is necessary, therefore, to set out the position both before and after 1 April 2010. For convenience I will refer to them as the "old regime" and the "new regime".
6. During the course of the hearing, Ms Brown who appears for the claimant made a number of submissions about the court's powers under CPR 3.4(2)(a). She submitted that HMRC failed to reveal the true basis of the application until exchange of skeleton arguments. However, she did not apply to adjourn the hearing and the complaint was not pressed. She also made two further submissions about the court's approach to the application that have greater force. First, she rightly submitted that HMRC's application is confined to the ground in CPR 3.4(2)(a) and it is not open to the court to consider the application on any other basis, such as that the claim is an abuse of the court's process. Secondly, she submitted that not only is the onus on HMRC to satisfy the court that the test under CPR 3.4(2)(a) is met but that the onus is a heavy one because the effect of striking out the claim is to deprive the claimant of an opportunity to pursue the claim and shuts him out from seeking a judicial remedy. She drew attention to an observation made by Lord Browne-Wilkinson in Woolwich Equitable Building Society v IRC [1993] AC 70 (at p 198 G-H) concerning "… the inequalities of the parties' respective positions … even in the case of a major financial institution like Woolwich." To my mind, however, the second submission amounts to no more than saying that in order to succeed HMRC must satisfy the court that the test under CPR 3.4(2)(a) is met; that there are no reasonable grounds for bringing the claim. The threshold is not one that arises from the consequences of making an order to strike out the claim, but rather from the terms of the rule itself. It is to be contrasted with the quite different test under CPR 24.2. Unlike CPR 24.2, the focus under CPR 3.4(2)(a) is on the statement of case. Ms Brown is right that the court will not take a decision lightly to strike out the claim, but it is wrong to say the onus on HMRC is especially or unusually high. The burden placed on a party seeking to establish on a pure point of law that there are no reasonable grounds for bringing the claim is already a heavy one and there is no reason why, in a case such as this, the burden should have additional weight added to it.

The old regime

7. It was and remains the case that a taxpayer may amend a return within 12 months of the filing date for the return being submitted(section 9ZA TMA 1970).
8. Section 33 TMA 1970:

"(1) If a person who has paid income tax or capital gains tax under an assessment (whether a self-assessment or otherwise) alleges that the assessment was excessive by reason of some error or mistake in a return, he may by notice in writing at any time not later than five years after the 31^st January next following the year of assessment to which the return relates, make a claim to the Board for relief. [emphasis added]

(2) On receiving the claim the Board shall inquire into the matter and shall, subject to the provisions of this section, give by way of repayment such relief … in respect of the error or mistake as is reasonable and just: …

(2A) No relief shall be given under this section in respect of –

(a) an error or mistake as to the basis on which the liability of the claimant ought to have been computed where the return was in fact made on the basis or in accordance with the practice generally prevailing at the time when it was made; …

(b) an error or mistake in a claim which is included in the return, or

(c) an error or mistake consisting of the making of a claim under section 809B of ITA 2007 (claim for remittance basis).

(3) In determining the claim the Board shall have regard to all the relevant circumstances of the case, and in particular shall consider whether the granting of relief would result in the exclusion from charge to tax of any part of the profits of the claimant, and for this purpose the Board may take into consideration the liability of the claimant and assessments made on him in respect of chargeable periods other than that to which the claim relates.

(4) If any appeal is brought from the decision of the Board on the claim, the tribunal shall determine the appeal in accordance with the principles to be followed by the Board in determining claims under this section.

(4A) The determination of the tribunal of an appeal under subsection (4) shall be final and conclusive (notwithstanding the provisions of sections 11 and 13 of the TCEA 2007) except on a point of law arising in connection with the computation of profits."

9. There are three crucial elements in section 33(1). First, the taxpayer must have paid the income tax or capital gains tax; secondly, the payment must have been under an assessment and thirdly the taxpayer must allege that the assessment was excessive by reason of some error or mistake in the return.
10. Under subsection (2) the Board was given a broad discretion to make a repayment in respect of the error or mistake such relief as is reasonable and just. However, under subsection (2A), the discretion in the previous subsection was overridden to the extent that, amongst other reasons, the return was made in accordance with the practice generally prevailing at the time when it was made.
11. Subsection (4A) specified that the determination of the tribunal on an appeal was to be final and conclusive.

The new regime

12. Under the new regime, the revised section 33 is very brief and merely states that Schedule 1AB contains provision for and in connection with claims for the recovery of overpaid income tax and capital gains tax. The main provisions of Schedule 1AB need to be set out in full.

"1 Claim for relief for overpaid tax etc

(1) This paragraph applies where –

(a) a person has paid an amount by way of income tax or capital gains tax but the person believes that the tax was not due, or

(b) a person has been assessed as liable to pay an amount by way of income tax or capital gains tax, or there has been a determination or direction to that effect, but the person believes that the tax is not due.

(2) The person may make a claim to the Commissioners for repayment or discharge of the amount.

(3) Paragraph 2 makes provision about cases in which the Commissioners are not liable to give effect to a claim under this Schedule.

(4) Paragraphs 3 to 7 … make further provision about making and giving effect to claims under this Schedule.

(5) Paragraph 8 makes provision about the application of this Schedule to amounts paid under contract settlements.

(6) The Commissioners are not liable to give relief in respect of a case described in sub-paragraph (1)(a) or (b) except as provided –

(a) by this Schedule and Schedule 1A (following a claim under this paragraph), or

(b) by or under another provision of the Income Taxes Acts or an enactment relating to the taxation of capital gains.

2 Cases in which The Commissioners not liable to give effect to claim

(1) the Commissioners are not liable to give effect to a claim under this Schedule if or to the extent that the claim falls within a case described in this paragraph (see also paragraphs 3A and 4(5)).

(2) Case A is where the amount paid, or liable to be paid, is excessive by reason of –

(a) a mistake in a claim, election or notice,

(b) a mistake consisting of making or giving, or failing to make or give, a claim, election or notice,

(c) a mistake in allocating expenditure to a pool for the purposes of the Capital Allowances Act or a mistake consisting of making, or failing to make, such an allocation, or

(d) a mistake in bringing a disposal value into account for the purposes of that Act or a mistake consisting of bringing, or failing to bring, such a value into account.

(3) Case B is where the claimant is or will be able to seek relief by taking other steps under the Income Tax Acts or an enactment relating to the taxation of capital gains.

(4) Case C is where the claimant –

(a) could have sought relief by taking such steps within a period that has now expired, and

(b) knew or ought reasonably to have known, before the end of that period that such relief was available.

[Cases D to F omitted]

(8) Case G is where –

(a) the amount paid, or liable to be paid, is excessive by reason of a mistake in calculating the claimant's liability to income tax or capital gains tax (other than a mistake in a PAYE assessment or PAYE calculation), and

(b) liability was calculated in accordance with the practice generally prevailing at the time.

(9) Case H is where –

(a) the amount paid, or liable to be paid, is excessive by reason of a mistake in a PAYE assessment or PAYE calculation, and

(b) the assessment or calculation was made in accordance with the practice generally prevailing at the end of the period of 12 months following the tax year for which the assessment or calculation was made.

(9A) Cases G and H do not apply where the amount paid, or liable to be paid, is tax which has been charged contrary to EU law.

(9B) for the purposes of sub-paragraph (9A), an amount of tax is charged contrary to EU law if, in the circumstances in question, the charge to tax is contrary to –

(a) the provisions relating to the free movement of goods, persons, services and capital in … the Treaty on the Functioning of the European Union, or

(b) the provisions of any subsequent treaty replacing the provisions mentioned in paragraph (a).

3 Making a claim

(1) A claim under this Schedule may not be made more than 4 years after the end of the relevant tax year."

[remainder of paragraph 3 is omitted]

13. The new regime has important differences from the old regime including:

i. there is no need for the taxpayer to have paid the tax;

ii. the taxpayer must believe that the tax was or is not due;

iii. any tax that has been paid does not need to have been assessed;

iv. there is no need for there to have been an error or mistake in a return in order for a claim to be made.

v. the broad discretion in section 33(2) to "… give by way of repayment such relief … as is reasonable and just" is replaced.

14. The way in which claims for relief under the new regime are structured is that under paragraph 1 of Schedule 1AB the taxpayer has an entitlement to relief by making a claim for repayment or discharge of the amount overpaid. This can be seen in paragraph 4(1) of Schedule 1A (which provides general supplementary provisions to Schedule 1AB). It requires, subject to some exceptions, an officer of the Board to give effect to a claim for repayment as soon as practicable. But the entitlement to relief is mitigated by paragraph 2 of Schedule 1AB which sets out a number of cases in which the Commissioners are not liable to give effect to the claim. One of the cases, Case A, applies where the amount paid or liable to be paid is excessive by reason of a mistake in a claim, election or notice. This is the equivalent of section 33(2A)(b) and (c). Furthermore, there is a fixed four-year period by way of limitation and this period is not related to discovery or knowledge of tax having been overpaid (see Schedule 1AB paragraph 3(1)).
15. Paragraph 1(6) of Schedule 1AB is entirely new. The scope of this provision is important for the purposes of this application. HMRC's case is that it amounts to an express exclusion of a remedy other than that contained in the new regime with the effect that the only way in which a taxpayer is entitled to relief is by making a claim under Schedule 1AB paragraph 1(2). Consequently, the court has no jurisdiction to grant a common law remedy.
16. The amendments to s.33 TMA 1970 were made in the Finance Act 2009 s.100 and Schedule 52. Explanatory Notes to the Finance Act 2009 were prepared by HMRC in conjunction with HM Treasury "… to assist the reader in understanding the Act. They do not form part of the Act and have not been endorsed by Parliament".
17. Notwithstanding the limited purpose for which the Notes were prepared, they provide some useful insight into the workings of the new regime. Paragraph 4 of the Notes to Finance Act 2009 section 100 explains the effect of paragraph 1 of Schedule 1AB by saying that:

"… provides that a person may make a claim for repayment of an amount they have overpaid by way of income tax or CGT or discharge of an amount that has been over-assessed, subject to restrictions. It also provides that the Commissioners for HM Revenue and Customs (HMRC) are not liable to give relief except under this provision or any other provision relating to income tax or CGT." [emphasis added]

18. Later in the Notes there is a section headed "Background Note". It seems clear from the way in which this part of the Notes is drafted that they are making reference to the Bill rather than the Act. This is because these paragraphs refer to the "current rules" and the "new rules". The current rules are plainly intended to describe section 33 prior to the implementation of the Finance Act 2009 and the new rules refer to the position post implementation. The material paragraphs are as follows:

"27. Error or mistake relief is intended to provide a final opportunity for taxpayers to reclaim overpaid tax.

28. However, the current rules only apply to tax overpaid on assessments as a result of a relevant mistake in a return. The claim must be made within time limits. On receiving a claim, HMRC determine what amount is just and reasonable to repay and may take into account any liabilities that have not been assessed.

29. Claims under the new rules will apply to all overpayments of tax, ensuring there is a single route to obtain redress and that, as far as possible, disputes are dealt with through the tribunal. [emphasis added]

30. A claim will be possible only if no other statutory steps are available to recover an overpayment when a person first becomes aware, or might reasonably be expected to be aware, that they have overpaid.

31. The person must also have used any appeal rights that were available and the claim will have to be made within time limits."

19. Paragraph 29 of the notes is of considerable importance. On the one hand, it emphasises that there is a single route to obtain redress, but then goes on to say that "as far as possible" disputes are dealt with through the tribunal. There is an apparent inconsistency between, on the one hand, there being one route to obtain redress but, on the other hand, there being the possibility of disputes being dealt with other than through the tribunal. It is difficult to conceive that the words "as far as possible" are dispensable.
20. The leading decision on the old regime concerning whether or not section 33 is inconsistent with a right given by the common law is Monro v Revenue and Customs Commissioners [2008] STC 1815. In that case, the taxpayer made a self-assessment tax return in which he declared a gain arising out of the proceeds of sale of certain shares and paid the tax thereupon. The computation of the gain was made in accordance with the practice then prevailing. A subsequent decision of the Court of Appeal concluded that such a computation was wrong in law. The issue in the claim was whether section 33(2A) precluded a claim in such circumstances. The Court of Appeal affirmed the decision of the Chancellor at first instance. In the course of giving the leading judgement in the Court of Appeal, Arden LJ made a number of observations:

i. The purpose of section 33 is to protect public finances. "If there was no control over claims for repayment, there would always be the risk that a very substantial amount of tax would become repayable as a result of developments in case law possibly many years after it had been spent. That would create understandable difficulty." [6]

ii. Arden LJ regarded section 33 as creating its own code for repayments and described it as a "… parallel universe to the common law remedy." She observed that in many respects the provisions of section 33 are more restrictive than those of the common law. One example of this is that the limitation period is five years. Furthermore, an appeal lies to the special commissioners and thence to the High Court on a point of law only. She attributed the differences between section 33 and the common law to the public policy in conserving public finances and managing the risk thereto created by error claims. [7]

iii. "There is, however, one provision which is conspicuous by its absence in section 33, and that is a provision which takes away common law rights." She goes on to contrast the position under s80(7) of the Value Added Tax Act 1994 and which contains a clear exclusionary provision. [8]

iv. "… under domestic law principles rights can only be taken away by express language or necessary implication (see R v Secretary of State for the Home Dept, ex parte Simms [1999] 3 All ER 400 at 412, [2000] 2 AC 115 at 131 per Lord Hoffmann). Mr Monro also has on his side the fact that in two recent decisions the House of Lords has found that common law causes of action lie in the field of tax notwithstanding the existence of statutory remedies: see Deutsche Morgan Grenfell Group plc v IRC and the Attorney General [2006] UKHL 49, [2007] STC 1, (referred to below as 'DMG') and Revenue and Customs Comrs v Total Network SL [2008] UKHL 19, [2008] STC 644." [9]

v. "In my judgement, the authorities which provide greatest assistance on the issues to be determined on this appeal are first, as to the general approach, an extract from the speech of Lord Hoffmann in Johnson (see [2003] 1 AC 518 at [37]) and as to the specific application of the principle to section 33, the speech of Lord Walker in DMG (see [2007] STC 1 at [135], [2007] 1 AC 558 at [135]), which is set out by the Chancellor. I would base my decision on these issues on those two passages." [20]

vi. The passage in DMG to which Arden LJ makes reference is at [135]:

"When Parliament enacts a special regime providing special rights and remedies, that regime may (but does but does not always) supersede and displace common law rights and remedies (or more general statutory rights and remedies). Whether it has that effect is a question of statutory construction: [citations omitted]. Where section 33 of the Taxes Management Act 1970 … applies it does no doubt displace any common law remedy for tax paid under a mistake. But in Woolwich tax was demanded under a regulation which was void. There was therefore no valid assessment and the statutory regime was simply not engaged: see Lord Goff in Woolwich Equitable Building Society v IRC [1992] STC 657 at 675, [1993] AC 70 at 169."

vii. "In my judgement, the authorities give clear guidance that if Parliament creates a right which is inconsistent with a right given by the common law, the latter is displaced. By 'inconsistent', I mean that the statutory remedy has some restriction in it which reflects some policy rule of the statute which is a cardinal feature of the statute. In those circumstances, the likely implication of the statute, in the absence of contrary provision, is that the statutory regime is an exclusive one." [22]

viii. "Undoubtedly, Mr Monro paid money under mistake of law, and a remedy at common law in general exists in that situation. Such a right can, however, be excluded by express words or necessary implication. In this case, the implication arises because Parliament has created a specific remedy with a limitation to exclude payments made under generally accepted practice. That limitation would be defeated if the court permitted an action to be brought at common law. That principle applies even though the statute is a taxing statute which must be interpreted so as not to impose burdens on the taxpayer unfairly. I have already discussed the obvious purpose of sub-s (2A). It would make a nonsense of that purpose if it was possible to bring an action at common law for the recovery of money in circumstances where s33(1) applies." [23]

ix. "It follows that the present claim cannot be brought. It also follows from the proposition of law which I have formulated above that my conclusion is not confined to a case where the claim leads to no relief because of section 33(2A). The same would in my judgement apply whenever a case which could have been brought under section 33 cannot succeed because of some restriction on such claims which reflects a policy rule of the statute and constitutes an important feature of it." [26]

21. In R (Child Poverty Action Group) v Secretary of State for Work and Pensions [2011] 2 AC 15 the Supreme Court considered whether the Secretary of State was able to recover overpaid social security payments pursuant to an erroneous award solely under section 71 of the Social Security Administration Act 1992 or whether there was an entitlement to pursue a restitutionary claim at common law as money paid by mistake of law or fact. The Act did not contain an express exclusion of common law remedies. In his judgment, Lord Dyson considered whether the test for exclusion was one of necessary implication. Having considered amongst other authorities DMG and cases arising in the field of human rights, Lord Dyson rejected necessary implication as the appropriate test.

"31. … I do not accept the submission that the Child Poverty Action Group have to surmount the high hurdle erected by Lord Hutton in the B (A Minor) case or Lord Hobhouse in the Morgan Grenfell case. Rather the question is whether, as a matter of statutory interpretation, section 71 is an exclusive code for recovery of overpayments. That question is to be answered not by applying any presumptions or by saying that the common law remedy in restitution is not displaced unless, in Lord Hobhouse's words, as a matter of logic, it cannot coexist with the statutory regime for recovery.

32. The importance of the tax cases is that they show that the test is whether in all the circumstances Parliament must have intended a common law remedy to coexist with the statutory remedy."

22. Later in his judgement he says:

"33. If the two remedies cover precisely the same ground and are inconsistent with each other, then the common law remedy will almost certainly have been excluded by necessary implication. To do otherwise would circumvent the intention of Parliament.

…

34. The question is not whether there are any differences between the common law remedy and the statutory scheme. There may well be differences. The question is whether the differences are so substantial that they demonstrate that Parliament could not have intended the common law remedy to survive the introduction of the statutory scheme. The court should not be too ready to find that a common law remedy has been displaced by a statutory one, not least because it is always open to Parliament to make the position clear by stating explicitly whether the statute is intended to be exhaustive. The mere fact that there are some differences between the common law and the statutory positions is unlikely to be sufficient unless they are substantial.

…

The question is whether, looked at as a whole, a common law remedy would be incompatible with the statutory scheme and therefore could not have been intended by [sic] coexist with it."

23. It is necessary to make three further references to the authorities that dealt with the old regime because they cast light on how the new regime may be interpreted:

i. In DMG the House of Lords concluded that section 33 did not bar a claim for restitution that arose from EU law. The claim in that case arose from the payment of Advance Corporation Tax (ACT) deducted from distributions made by companies that were resident in the UK. The ACT paid by the taxpayers was not the subject of an assessment by the Revenue. The taxpayers made a claim in restitution to take advantage of the longer limitation period under section 32(1)(c) of the Limitation Act 1980. The House of Lords held that there was no bar, in principle, to making a claim against the IRC based on a mistake of law and that time started to run from the date of the judgment of the European Court of Justice in Metallgesellschaft Ltd v IRC and Hoechst AG v IRC (Joined cases C-397 and 410/98) [2001] Ch 620. Their Lordships gave consideration to section 33 TMA 1970 but it appears to have been accepted that it had no application because the tax had not been paid "under an assessment". Lord Hoffmann described a submission by leading counsel, that even though section 33 had no application it nevertheless had the effect of excluding a remedy, as going much too far and after making the observation cited in Monro stated at [19]:

"But the question is in the end one of construction. When a special or qualified statutory remedy is provided, it may well be inferred that Parliament intended to exclude any common law remedy which would or might have arisen on the same facts … But I see no reason to infer that Parliament intended to exclude a common law remedy in all cases of mistake … in which the revenue was unjustly enriched but did not fall within section 33."

Both Lord Hope and Lord Walker note that section 33 was not engaged because there had been no assessment [54 and 135].

ii. Section 33 was also considered in Test Claimants in the FII Group Litigation v Revenue and Customers Commissioners [2012] 2 WLR 1149 ("FII"). The issue in FII concerned the recovery of tax that had been levied contrary to EU law. The taxpayers made a claim in restitution and, for present purposes, the relevant issue was whether section 33 excluded claims to recover ACT paid under section 18 (schedule D, Case V) of the Income and Corporation Taxes Act 1988. The approach adopted by the Supreme Court can be seen from the judgement of Lord Sumption at [204]:

"[Section 33] confers a right subject to highly restrictive conditions to invoke what is essentially a discretionary power of the commissioners to grant a refund of overpaid tax. No one suggests on this appeal that such a limited remedy could possibly be enough in itself to satisfy the virtually unqualified obligation of the United Kingdom to provide an effective means of recovering tax overcharged contrary to EU law.

…

However, it is axiomatic that the courts cannot imply an exclusion of unrestricted rights of action at common law where that would be inconsistent with an overriding rule of EU law that an unrestricted right must be available. Section 33 cannot therefore be an exclusive right to recover tax overcharged contrary to EU law. Whether it is an exclusive right in other circumstances, is not a point which needs to be considered on this appeal."

Lord Walker approached the question in the following way:

[117] "The issue on section 33 is whether it is an obstacle to the test claimants and if so, whether it can be given a conforming interpretation under the Marleasing principle … . In terms of the amount of tax at stake, this issue is relatively minor in the context of the litigation as a whole, as it extends only to tax charged under Schedule D, Case V, pursuant to section 18 of ICTA 1988. But it is still a point of some general importance. Before Henderson J HMRC argued, but only it seems quite briefly, that the decision of the Court of Appeal in Monro v Revenue and Customs Comrs [2009] Ch 69 established that section 33 was an exclusive remedy which left no room for any common law claim in unjust enrichment. The judge …. rejected that on two grounds: first that section 33 did not extend to tax levied otherwise than by an assessment; secondly that in any event the national legislation must, in a San Giorgio claim, yield to the principle of effectiveness. It now seems to be common ground that the first of these reasons does not hold good for tax under Schedule D Case V."

[119] … In my view the Marleasing principle can be applied in a simpler and more natural way by not construing section 33 as impliedly setting itself up as an exclusive provision (which it did not do expressly, unlike section 80 of the Value Added Tax Act 1994). The test claimants submit that the application of Marleasing cannot rework section 33 in a way that serves any relevant purpose. But to read it as non-exclusive does not go against its grain. It would merely exclude an implication which is itself no more than a process of statutory construction. In practical terms the effect is the same as that which Henderson J reached by the second limb of his reasoning."

24. The starting point for HMRC's case is that section 33 TMA 1970 both under the new and under the old regime provides a statutory right for taxpayers to recover overpaid tax from HMRC. It is, to adopt the expression used by Arden LJ in Monro, a parallel universe to the common law remedy. Properly construed, the intention of Parliament in enacting those provisions was to exclude any claim by taxpayers to recover overpaid income tax by way of a claim in restitution at common law, if such a claim falls within the scope of the statutory right of recovery. There is, however, no authority that deals with the new regime.
25. The position under the old regime is clear from the decision in Monro but the extent to which that decision is of any assistance to me is a matter in issue between the parties. HMRC's case, however, proceeds on the basis that the new regime is wider in scope than the old regime and it must follow if under the old regime a taxpayer could not pursue a claim for restitution for overpaid income tax other than under section 33, the same effect must obtain under the new regime. Ms Brown accepts the first point, but not the second.
26. Section 33 did not prove to be a bar to taxpayers obtaining a remedy in restitution in the three decisions of the House of Lords to which reference has been made. The reasons for that outcome in each case were different. In Woolwich, there was no lawful basis for the demand of tax made by the revenue. The demand was ultra vires and therefore a nullity with the consequence that section 33 was simply not engaged. In DMG, it appears to have been accepted by the House of Lords that because the tax had not been paid under an assessment, section 33 had no application. And in FII, section 33 could not be an exclusive right to recover tax overcharged contrary to EU law because of the overriding rule of EU law that an unrestricted right of recovery must be available. Section 33 was construed in a manner which gives effect to EU law. It is of note that Lord Sumption expressly left open the question of whether section 33 is an exclusive right in other circumstances.
27. Ms Brown's starting point is that the old regime and, in particular, the decision in Monro has no direct, or indirect, relevance to the proper construction of the new regime. She submits that Monro is not binding on me because it deals with the old regime. It is therefore open to the court to review the new regime afresh and to depart from the approach adopted by the Court of Appeal in Monro in dealing with section 33 as it was.
28. The claimant's position has four headline points. First, it is said that paragraph 1(1)(a) of Schedule 1AB has a subjective element and the paragraph only applies where the taxpayer "believes that the tax was not due". Ms Brown submits that the claimant was never within this provision because at no time within the limitation period under the new regime was his state of mind such that he believed that the tax was not due. If this submission is correct, time only starts to run for the purposes of the new regime when the taxpayer has the necessary belief and the exclusionary effect of sub-paragraph 1(6) was not operative. Secondly, Ms Brown points to the heading to paragraph 1 of Schedule 1AB which refers to a claim for "relief for overpaid tax" and to sub-paragraph 1(6). She submits that "relief" has a technical meaning in the context of a tax statute that is quite different to a claim at common law for restitution. Although it would be conventional to refer in particulars of claim to the "prayers for relief", the grant of a remedy by way of restitution is not properly described as the grant of relief in the sense it is used in the TMA 1970. Thirdly, she places particular reliance upon paragraph 29 of the Explanatory Notes and the words "as far as possible". If the intention of Parliament is to provide that there is a single route to obtain redress and, as far as possible, disputes are dealt with through the tribunal, that leaves open the possibility of claims being dealt with elsewhere. Fourthly, the court should construe the new regime against HMRC because the balance of power lies with HMRC. It is only if the clearest possible words are used a common law remedy is excluded.

Discussion

29. It is plainly right that it is not open to the court to take an over-simplistic view and seek to apply, or purportedly apply, Monro to the new regime and conclude by that the new regime is exclusionary because (a) the old regime was held to exclude the taxpayer making a claim for restitution and (b) the wider scope of the new regime makes the same conclusion inevitable. The decision in Monro itself is only binding on this court so far as the old regime is concerned. However, the approach of the Court of Appeal in Monro to the question of exclusivity and the Supreme Court in Child Poverty Action Group are of profound importance. The court has to construe the scope and purpose of the new regime and decide whether the co-existence of a common law right is compatible with that regime. Those decisions demonstrate that even if the exclusionary nature of a statutory regime is not explicit, the court may conclude in appropriate circumstances that a statute removes common law rights.
30. I do not consider that it is necessary to dwell on the submission that the new regime, and the sub-paragraph 1(6) of Schedule 1AB, only apply to the grant of "relief". It is said relief is not the same as common law rights and, therefore, they are not caught by the sub-paragraph 1(6). There are two points that deal with this submission. First, similar wording applied under the old regime. Section 33(1) under the old regime refers to a taxpayer making a claim for relief and subsection (2) refers to the Board giving such relief as is reasonable and just. The notion of relief was deeply embedded in the old regime and it remains embedded in the new regime. It was not a point that merited consideration in Monro; the new regime does not lend it any new weight. Secondly, use of the word relief does not mark out the statutory regime as being different when it is compared to a common law claim. Relief refers to the outcome of a claim, not the basis for the claim. It is used in the same sense in the statute as it is in a common claim. The relief is the repayment of tax or relief from liability. The prayers for relief in the particulars of claim in this case include a request that the claimant is paid a sum of money that is equivalent to the tax he says he overpaid. It is a claim for relief for overpaid tax.
31. There is more force in the submission that arises from paragraph 1(1)(a) and (b) of Schedule 1AB which define the circumstances in which a claim for relief for overpaid tax may be made. The provision applies where a person has paid an amount of income tax or capital gains tax, or has been assessed as liable etc but "believes" that the tax was not due. In (1)(a) the past tense is used. The tax has been paid but the taxpayer believes it was not due. In (1)(b), the present tense is used because the tax has been assessed or determined to be due but has not been paid. Why is the belief of the taxpayer relevant? Is it the case, as Ms Brown submits, that the taxpayer is outside the scope of the paragraph until he forms the belief that the tax is not due? The answer to my mind becomes clear when sub-paragraph (1) is read with sub-paragraphs (2) and (3). There is normally a three-stage process. First, the taxpayer must have the belief that tax paid, or tax assessed as liable, is not due. Secondly, the taxpayer may make a claim for repayment, if the tax has been paid, or discharge of the liability, where there has been an assessment. Thirdly, the Commissioners must decide whether the claim falls within one of the cases in which they are not liable to give effect to a claim.
32. The belief by the taxpayer that tax was, or is, not due is referable to the entitlement, or indeed the ability, to make a claim for repayment or discharge of the amount that the taxpayer believes was, or is, not due. Any other construction leads to an extremely odd outcome. The new regime has a strict limitation period under paragraph 3 of schedule 1AB that runs for four years from the end of the relevant tax year. That period is unrelated to the taxpayer's state of mind. The period is an absolute one. I do not consider it is open to the claimant to sidestep the exclusionary effect of sub-paragraph 1(6) by reference to the date upon which he came to believe the tax was or is not due. That could mean in many cases a detailed factual enquiry would have to be made about the taxpayer's state of mind, an enquiry that is very largely dependent upon information solely in the hands of the taxpayer. It is impossible to conclude that Parliament intended such an approach to be the relevant trigger for a claim for making relief.
33. I accept Mr Brinsmead-Stockham's submission the date of belief does not assist the claimant. Whatever his belief may have been in the past, at the date he issued this claim he believed he had paid tax that was not due. That is the operative date for assessing whether sub-paragraph 1(6) applies. At that date he fell within sub-paragraph 1(1) and, therefore, he was within the exclusionary provision of sub-paragraph 1(6).
34. Sub-paragraph 1(6) of schedule 1AB contains plain and clear language concerning the liability of the commissioners to give relief in respect of a case described in sub-paragraphs (1)(a) or (b). It provides in terms that the Commissioners are not liable to give relief save in the two circumstances that are described. It is right that the exclusion does not say in terms that all common law claims are excluded but it does not need to do so. There is no liability to grant relief save as provided. And, as I have indicated, "relief" cannot be distinguished from a common law cause of action. The provision in the rule is wide enough to exclude the claim made in this case.
35. The proviso used in the Explanatory Note ("as far as possible") is curious. It is not clear what types of claim might not be caught but it is clear that this claim is part of the single route to redress. Mr Brinsmead-Stockham suggested the draftsman of the Note may have had in mind the possibility of an EU claim which might fall outside the new regime. It is, however, unnecessary to conjecture what may have been intended. It suffices for the court to be satisfied that on the proper construction of the new regime, a claim for restitution of the type made here is not permitted.
36. In my judgment, the principles applied in Monro are binding on this court. Even if they are not strictly binding, they provide a powerful basis for analysing the new regime. The key points are:

i. The new regime is plainly intended to be a "parallel universe" when set alongside the common law. It is a regime that provides special rights and remedies. This can be seen from the provisions that are set out earlier in this judgment.

ii. The same policy considerations that were noted by Arden LJ in Monro apply to the new regime. Claims in relation to tax repayments are regulated for the reasons that are explained in her judgment.

iii. It is common ground that the new regime is wider than the old regime. It is less restrictive than the old regime and offers a clearer and more beneficial basis for the making of a claim for relief. One example of this is that the Revenue no longer has a broad discretion to grant relief on a basis that is reasonable and just. If the old regime is exclusionary, then it is likely to follow that the new regime is too. Put another way, is there a basis upon which the court could conclude that the new regime leaves the common law universe open to a taxpayer when the Court of Appeal in Monro has decided that statutory universe is exclusionary? There is nothing in the language of the new regime that might suggest a different approach should be adopted.

iv. The final nail in the coffin, but really the central point, is that Schedule 1AB contains an express exclusionary provision at sub-paragraph 1(6). The Commissioners are only liable to give relief for a claim falling within subparagraphs (1)(a) or (b) under the terms of Schedule 1AB. There is no doubt in my mind that the claimant's claim falls within sub-paragraph (1)(a). The position is therefore clear. The claimant is excluded from bringing a common law claim. He had an opportunity to bring a claim for relief under the new regime but failed to meet the statutory limitation period. His claim cannot be resurrected by bringing a claim for restitution.

37. The court has no jurisdiction to entertain this claim and, therefore, the claimant has no reasonable grounds for bringing it. The claim will be struck out.