Jersey Unreported Judgments

Leave for Judicial Review.

[2024]JRC070

Royal Court

(Samedi)

28 March 2024

Before     :

R. J. MacRae, Esq., Deputy Bailiff, sitting alone.

 

Advocate N. M. Sanders for the Applicant.

Advocate G. G. P. White for the Respondent.

judgment

the deputy bailiff:

Introduction

1.        The Respondent is the Competent Authority for the purpose of Jersey's compliance with its obligations under, inter alia, the Double Taxation Agreement between Jersey and the United Kingdom which became effective on 19 December 2018. 

2.        The Applicant challenges a Notice issued by the Respondent under Regulation 7 of the Taxation (Double Taxation) (Jersey) Regulations 2010 ("the Regulations").  The Notice was issued by the Respondent on 21 June 2023 and required the Applicant to provide tax information pursuant to a Request made of the Respondent by the Competent Authority of the United Kingdom, namely His Majesty's Revenue and Customs ("HMRC").

3.        There were two issues for the Court to resolve.  First was the Applicant's application too late and accordingly out of time.  Secondly, if the Applicant overcame the first hurdle, should the Applicant be granted leave for judicial review?  Both these matters were contested.  The Respondent said that the Applicant was too late to advance its grounds and in any event those grounds had no realistic grounds of success and accordingly leave ought to be refused.

4.        The two points need to be considered in turn.

The statutory time limit

5.        Regulation 18(3) is mandatory and provides:

"Despite any Rule to the contrary under the Royal Court (Jersey) Law 1948, an application for leave to apply for judicial review may not be made - ...

(b)       by a person, against a requirement made of that person in a third party notice, later than fourteen days after the third party notice was given to that person under Regulation 7; ..."

6.        On any view, the Applicant's application was brought after that fourteen day period elapsed. 

7.        The Respondent received a signed acknowledgment of delivery of the Notice in this case on 24 April 2023. 

8.        The Notice itself (set out in full at paragraph 53 below) was dated 21 April 2023 and states, inter alia, that the Respondent was "in receipt of a request from the Competent Authority of the United Kingdom"; that the Respondent had examined the request and was satisfied that it was constituted in conformity with the Double Tax Agreement with the United Kingdom and that the Respondent had decided to respond.

9.        The Notice went on to require the Applicant to provide tax information within thirty days required "for this purpose in respect of a sample of one to ten workers... that receive payments during the period from 6th April 2010 to 28th April 2023" that met one or more of twelve specified criteria, e.g. holding a bank account, holding a UK National Insurance number, having a home in the UK and so on.

10.     The "tax information" required for any worker meeting "any of the above criteria" was a payslip in tabular form (i.e. on an Excel spreadsheet) to include:

(i)        the name and address of the worker;

(ii)       their National Insurance number;

(iii)      the date of commencement and / or cessation of their employment, if falling within the

(iv)     the total payments of any kind received during this period;

(v)      total expenditure / expenses of any kind incurred during the period; and

(vi)     the individual's bank account details of accounts to which payments were made.

11.     The Notice also stated in clear terms "Under Regulation 18, any application for judicial review must be made no later than fourteen days after this Notice is given.  Despite any application for judicial review being made, the information requested in this Notice must be provided within the time limit specified".  The Appellant confirmed that the material requested has indeed been provided to the Respondent, although not to the UK Competent Authority.

12.     The Notice was delivered by hand to the post box of the Applicant by a member of the Respondent during working hours on Friday 21 April 2023, a telephone call to the Applicant's office having been made, but such calls being unanswered.  The signed acknowledgment of delivery bears the date 24 April 2023 and, accordingly, both parties were content to proceed on the footing that notice was given by the Respondent to the Applicant on Monday 24 April 2023.  Service of the Notice set the fourteen day clock running.

13.     The fourteen day period expired on Monday 8 May 2023.  The Court office was closed on that day and on the following day, Liberation Day, which of course is Jersey's national day.

14.     The Applicant's application for leave was served by email at 2:38 pm on Wednesday 10 May 2023. 

15.     The Respondent's position is simple.  It argues that the time limits under Regulation 18 are strict.  They cannot be waived.  Accordingly, the application should have been submitted no later than Monday 8 May 2023 and if the Applicants are correct that they were required to submit documents on a day on which the Court was open, they should have submitted the application before close of business on Friday 5 May 2023 when the Court was open. 

16.     The Respondent relied upon the decision of the Royal Court in Minister for Planning and Environment v Herold [2014] JRC 020, where Sir Michael Birt, Bailiff, considered an appeal under the Planning and Building (Jersey) Law 2002, where there was a fixed time limit of fourteen days after service of a particular notice. 

17.     Reliance was placed on Royal Court Rule 1/5 which gives the Royal Court a general power to extend or abridge time.  However, both in that case and indeed this case, the clear wording of the statute excludes the application of this rule in my judgment.  Having reviewed the relevant authorities, the Court, in Herold, held at paragraph 40:

"That there is no inherent jurisdiction in the Court to extend a time limit for appeal fixed by a statute unless the statute itself allows for this.  The provision is of course different where the time limit is fixed by rules of Court, because under RCR 1/5 the Court has the power to extend any period in which a person is required to do something by 'rules of Court' or by any 'judgment, order or direction'.  That rule does not however give power to extend a statutory time limit."

18.     Sir Michael Birt said

"41.    A similar conclusion was reached in the Guernsey case of Carr v States of Guernsey Housing Authority (15th August 2012) where McMahon DB construed the appeal provisions of the Housing (Control of Occupation) (Guernsey) Law 1994 which provided that an appeal " ... shall be served upon the President of the Authority within a period of 2 months immediately following the date of the notice giving the decision of the Authority".  He had regard to the decision in Mucelli and held that he had no jurisdiction to extend the time period in the statute.

42.      In my judgment, the time limit in Article 114(7) - although somewhat unusually expressed by reference to what is to be contained in a notice from the Minister - is clear and unambiguous.  A third party may appeal but only within 14 days.  The Master considered the use of the word 'may' was significant.  I must respectfully disagree.  The only right of appeal conferred on a third party is the statutory right contained in Article 114.  The only reference to that is in Article 114(7)(b) which states that the notice from the Minister to the third party must inform him that he may appeal within 14 days of service of the notice and then goes on to provide that such a person 'may appeal to the Royal Court accordingly' [emphasis added].  That can only be a reference back to the immediately preceding passage and incorporates the 14 day period.  Thus a person may appeal, but only within 14 days.  No other right of appeal exists.

....

45.      In reaching these conclusions, I would echo some remarks of McMahon DB at pages 7-8 of his judgment in Carr.  It is very important for the rule of law that courts should not exceed their proper role which, in this context, is to interpret statutes passed by the legislature.  As the late Lord Bingham said in his book, The Rule of Law at 168:-

"We live in a society dedicated to the rule of law; in which Parliament has power, subject to limited, self-imposed restraints, to legislate as it wishes; in which Parliament may therefore legislate in a way which infringes the rule of law; and in which the judges, consistently with their constitutional duty to administer justice according to the laws and usages of the realm, cannot fail to give effect to such legislation if it is clearly and unambiguously expressed."

If the States wish to give the courts a discretion to extend a time limit, it is of course easily done by inserting a specific provision to that effect in the legislation.  If the legislature has chosen not to and if it has inserted a clear and unambiguous time limit, it is not permissible for the courts to invent a power of extension merely because they consider that the absence of such a power has led in a particular case to a result which is unjust or unfair.  To do so would be to exceed the role which our constitutional model gives to the courts.""

19.     The Court, in Herold, went on to caveat its decision where rights of a person under the European Convention on Human Rights were in play.  Having considered the relevant authorities, the Court concluded:

"51.    In my judgment, this Court should adopt the principles established in Mucelli and Pomiechowski.  I would summarise the position as follows:-

(i)        Subject to (ii), where a statute provides a fixed time limit for an appeal, the Court has no discretion under RCR 1/5 or under its inherent jurisdiction to extend that period.  It has no jurisdiction to hear an appeal brought out of time. If the States wishes to confer a discretion on the Court to extend the time limit, it may of course do so by specifically conferring such a power in the relevant statute; but if it does not do so, that is the end of the matter. 

(ii)       However, where an appeal involves the determination of a 'civil right' for the purposes of Article 6 ECHR (but not otherwise) the Court may read down the provisions of the statute in accordance with Article 4(1) of the Human Rights (Jersey) Law 2000 so as to give effect to the statute in a way which is compatible with Convention rights.  This involves asserting a discretion to extend the time limit in the case before it if it concludes that application of the time limit to the particular facts would 'impair the very essence' of the right of access to the Court for the appeal. 

(iii)      Such a discretion can only arise in exceptional circumstances and where the appellant personally has done all he can to bring the appeal timeously (i.e. within the prescribed time limit).  Adesina indicates how difficult it may be for an appellant to convince the court that his circumstances are exceptional and emphasises that the scope for departure from the time limit is extremely narrow."

20.     This is not a case where the Convention rights of the Applicant have been infringed so as to justify exercising such an exceptional jurisdiction and nor was it seriously contended that it was.  Further, it is not a case where it can be said that the Applicant had done all it could to bring the application timeously so as to give rise to the Court's exercise of an exceptional discretion in its favour.

21.     The Respondents went on to say that it was the intention of the States when adopting the Regulations that the Respondent and, correspondingly, the competent authority of the requesting jurisdiction should be entitled to assume that if no valid application for leave to apply for judicial review within the statutory time limits laid down in the regulations is made, then the tax information should be exchanged forthwith.  There was a clear public interest in the Respondent not having to engage in litigation in respect of an application made, prima facie, out of time.  Further, in the case of Larsen v Comptroller of Taxes and States of Jersey [2016] (2) JLR 198, the Court had specifically considered the effect of a fourteen day time limit and said:

"29.    We do not accept that the imposition of a tight period of time for initiating a challenge (here 14 days) creates an obstacle to access to the courts, or is such as to preclude access to the courts. These applicants were able to meet that timetable and, as the Commissioner observed, "ought to be able, if sound case for challenge they have, to institute proceedings within 14 days." This is a long way from the Fast Track Rules considered and found wanting in R. (Detention Action) v. First-tier Tribunal (Immigration & Asylum Chamber) (11) ([2015] 1 WLR 5341, at para. 49), because they did not "strike the correct balance between (i) speed and efficiency and (ii) fairness and justice" in part because notice of appeal had to be given "not later than two working days after the day on which notice of the refusal decision is given." In passing, it is to be noted that in that case there was recognition that it was "well established that the prompt and effective determination of asylum claims is in the public interest and a legitimate government policy objective." We can well understand that promptness and the reduction of delay in relation to TIEA notices is in the public interest in Jersey."

22.     The Applicant also relied on Rule 16/2 of the Royal Court Rules, which says that "An application for leave must be made ex parte to the Bailiff, sitting as sole judge and constituting the Inferior Number of the Royal Court, by filing with the Bailiff" (my emphasis) certain documents as listed in Rule 16/2.  The Bailiff works on every Liberation Day, but the Applicant argued that this did not mean that the Court office was open to receive filed documents.  The Applicant argued that the reference to "filing with the Bailiff" required the Court office to be open. 

23.     The Respondent said that it was a bit rich for the Applicant to rely upon this provision in this case when not only had it filed its application for leave by email on 10 May 2023 but had only ever filed its application electronically and never followed up with a paper application.  It had simply sent an email.

24.     The Applicant places reliance on the decision of the English Court of Appeal in Pritan Kaur v S Russell & Sons [1973] QB 336, where the Court considered an English limitation statute for the purpose of deciding when prescription ended in respect of a period for an act which could only be completed if the Court office was open, holding that the Court could construe the period in a case where it expired on a day when the Court offices were not open, as being extended to the next day on which the Court office was open.  The limitation period under question was the three year period for initiating personal injury actions laid down by statute.  Lord Denning summarised the problem thus at page 348E:

"If you count three years from September 5, 1967, you get the last day as September 5, 1970. The writ here was issued on September 7. 1970. If you looked at the dates, therefore, and nothing else, the action would appear to be two days out of time. But when you look at the days of the week, you see that September 5, 1970, was a Saturday, and September 6, 1970, was a Sunday. On both those days the offices of the court were closed. As soon as they reopened on Monday, September 7. 1970, the plaintiff issued the writ. That is to say, her solicitors took the writ to the offices of the district registry at Leicester. A clerk in the registry stamped it with the official stamp in the proper place (locus sigilli). It was then duly issued. But, was it in time?"

25.     Lord Denning went on to say that as the period of limitation was prescribed by statute, the rules of Court (which said that if the Court offices are closed the time is extended to the next day on which that office is open) had no application.

26.     At page 349, Lord Denning said:

"Those arguments are so evenly balanced that we can come down either way. The important thing is to lay down a rule for the future so that people can know how they stand. In laying down a rule, we can look to parallel fields of law to see the rule there. The nearest parallel is the case where a time is prescribed by the Rules of Court for doing any act. The rule prescribed in both the county court and the High Court is this: If the time expires on a Sunday or any other day on which the court office is closed, the act is done in time if it is done on the next day on which the court office is open. I think we should apply a similar rule when the time is prescribed by statute. By so doing, we make the law consistent in itself: and we avoid confusion to practitioners. So I am prepared to hold that when a time is prescribed by statute for doing any act, and that act can only be done if the court office is open on the day when the time expires, then, if it turns out in any particular case that the day is a Sunday or other dies non, the time is extended until the next day on which the court office is open.

In support of this conclusion, I would refer to Hughes v Griffiths (1862) 13 C.B.N.S. 324. It was on a different statute, but the principle was enunciated by Erle C.J ., at p. 333:

". . .Where the act is to be done by the court, and the court refuses to act on that day, the intendment of the law is that the party shall have until the earliest day on which the court will act."

In so far as Morris v Richards (1881) 45 L.T. 210 and Gelmini v Moriggia [1913] 2 KB 549 proceed on the footing that the time was not extended, they are no longer to be followed. In my opinion, therefore, the plaintiff here had until September 7. 1970, in which to issue her writ. She issued it on that day. She is, therefore, in time. I would allow the appeal, accordingly."

27.     Karminski LJ agreed with the judgment of Lord Denning. 

28.     Megarry carried out an extensive review of the relevant authorities in his judgment.  He noted the general principle stemming from Prideaux v Webber [1661] was that "once time begins to run, it runs continuously, even when the Courts are not open.  That, however, does not trench upon the question of when the period expires".  Megarry J continued (page 355) "The last day is another matter, and without affecting the rule that time runs continuously, it seems to me to be open to the Courts to determine upon what day any period expires, and how that day is to be ascertained". 

29.     Megarry J referred to some Scottish authorities and in particular Henderson v Henderson [1888], referred to at page 354 of the judgment, where a party was required to lodge a particular proceeding within ten days of a judgment in circumstances where the ten day period expired on a Saturday, at which time the offices of the court were closed and had been the day before.  The Lord President said:

"It seems to me that when a limited time is allowed by the legislature for the exercise of a privilege of this kind, that must always be subject to the implied condition that it is possible to perform the act in question within the specified time. Here that was impossible. If we were to hold that in consequence of the impossibility of implementing the statutory obligation to lodge the reclaiming note within the specified period there was an obligation to lodge it within a shorter time, we should be construing the statute in a manner quite unprecedented. In this case it would limit the reclaiming days to eight instead of to ten, which are given by the statute."

30.     That is not an insignificant consideration in this case, where the fourteen day period permitted by the statute is reduced to eleven days if the Respondent's contentions are adopted.

31.     Megarry J concluded:

"Accordingly, in my judgment the result is as follows. There are a number of cases which support the general rule that a statutory period of time, whether general or special, will, in the absence of any contrary provision, normally be construed as ending at the expiration of the last day of the period. That rule remains; but there is a limited but important exception or qualification to it, which may be derived from a line of authorities which include Hughes v. Griffiths, Mumford v. Hitchcocks, the judgment of Sellers L.J. in Hodgson v. Armstrong, and the Scottish cases. If the act to be done by the person concerned is one for which some action by the court is requisite, such as issuing a writ, and it is impossible to do that act on the last day of the period because the offices of the court are closed for the whole of that day, the period will prima facie be construed as ending not on that day but at the expiration of the next day upon which the offices of the court are open and it becomes possible to do the act. In this appeal, there is nothing in the facts of the case which ousts the prima facie application of this exception, which accordingly applies."

32.     The Applicant contends that Kaur v Russell is on point, as on an application for judicial review the Court is obliged to take action, i.e. to consider the application itself and make a determination as to whether or not leave should be given.  Whether or not the Applicant was entitled to serve his application electronically (by email), the Applicant says that it had no expectation of action being taken by the Court until it was open on 10 May 2023, as on the previous four days the Court was closed. 

33.     The Applicant also referred to the decision of the English Court of Appeal in Aadan v Brent LBC [2000] 32 HLR 848 which dealt with documents filed in Court pursuant to various housing legislation which required applicants to appeal to the County Court on a point of law within twenty-one days of being notified of a decision.  Under the relevant County Court Rules, documents were filed in Court by delivery to a proper officer or by pre-paid post addressed to that officer.  The officer in question was the Court manager and the Court office was closed on Saturdays.  Reliance was placed on Kaur v Russell, to which I have referred above.  Chadwick LJ said at page 851:

"The "proper officer" in that context is the court manager or any other officer of the court acting on his behalf in accordance with directions given by the Lord Chancellor-see the definition in Order 1, rule 3 of the County Court Rules 1981.

In those circumstances, the short question raised by this appeal is whether a document can be filed in the court office by delivering it to the proper officer on a day when the court office is closed. I put the question in that way because it is common ground that it is not material when the court officer enters the request or other document in the records of the court. A document is filed when it is delivered to the court officer for him to take action upon it. If the document can be filed on a day when the court office is closed, then the fact that the court office is closed on the last day of the prescribed period is immaterial. But if the document can only be filed at a time when the court office is open for business, then, if the last day of the prescribed period would have fallen on a day when the office is closed, the prescribed period must be treated as extended to the first day thereafter on which the office is open. That was decided by this court in Pritam Kaur v. S. Russell & Sons Led [1973] 1 Q.B. 336."

34.     Chadwick LJ went on to say at page 853:

"The critical question, therefore, is that identified by Lord Denning M.R. in the passage to which I have referred (with which Karminski L.J. agreed): is the act one which can only be done if the court office is open. If the answer to that question is "no" that is to say, if it can be held that the act is one which can be done even though the court office is closed-then the exception identified in Pritam Kaur v. S. Russell & Sons Lid does not apply."

35.     It was conceded by the Applicant that if the Royal Court Rules were altered so as to provide that documents could be filed by email at any time of the day or night then this argument would have no merit.

36.     The Respondent rightly contended that the intention of the statute was that these challenges be brought by way of applications for leave for judicial review swiftly and that individuals challenging decisions of the Respondent should bring objections quickly.  The Respondent agreed that the Court had never rejected an application for judicial review because it was filed by email and if an application was required to be made by hard copy (when the Court was open), this was never done by the Applicant.  The Respondent also argued that the Court would not have rejected an application made by the Applicant on Saturday, Sunday or Monday prior to Wednesday 10 May.  The Applicant could have submitted his application two or three days earlier and, in those circumstances, the question as to whether the Applicant served his application in time would not have arisen.  If filing by email was possible, the Applicant was out of time, and if filing by email was not possible, the Applicant was out of time as the Applicant had failed to file a hard copy of his application. 

37.     There is merit in these arguments and for the purpose of this application I am content to rule that the Court is entitled to accept applications such as these by email from applicants.  Further, technically such applications could be made at any time of the day or night - regardless of whether the Court office is open.  But, absent special circumstances, a party is not entitled to expect a response from the Court, let alone action by the Court, unless direct communication is had with the listing officer on an urgent application to seek, for example, ex parte injunctive relief or emergency relief in a children case.

38.     In my judgment, having regard to the authorities referred to above, Regulation 18(3) is to be interpreted so as to require a person to make an application for leave to apply for judicial review within fourteen days, but if on the fourteenth day the Court office is closed then the time is extended until the next day on which the Court office is open, by reason of the fact that such applications invite the early attention of a judge of the Royal Court for the purpose of consideration of leave.

39.     Any other construction of the regulation could lead to a significant truncation of the time available for applications for leave which, for example prior to the Court's closure at Christmas, would substantially limit the period available to make an application for leave.  Amendment to the terms of the regulation or the Royal Court Rules would likely lead to a different conclusion.

40.     Accordingly, in my judgment, this application was made in time.

41.     I now turn to the substantive grounds.

The Applicant's grounds

42.     The test for granting leave was reconfirmed by the Court of Appeal in Imperial Trustees (Jersey) Limited v Jersey Competent Authority [2023] JCA 057 at paragraph 105:

"The Appellant must satisfy the Court that it has an arguable ground of judicial review, with realistic prospects of success which merits investigation at a full hearing.  Whether the ground of review is a good one would, of course, be the issue in the judicial review and a decision to grant leave to apply for judicial review does not pre-judge that issue."

43.     Before leaving the decision of the Court of Appeal in Imperium, it is noteworthy that various other paragraphs of the Court of Appeal judgment were drawn to my attention, namely that the Notice must be a reasonable one (paragraph 30 of the judgment), that a Notice may be amenable to challenge by reference to the Human Rights (Jersey) Law 2000 as the provisions of Article 8 may in certain respects and in certain context be relied upon by non-natural persons (paragraph 39 of the judgment).  However, in most cases this argument is likely to add little as the Applicant accepted in this case that if the challenge to the lawfulness of the Notice fell away then so would the human rights arguments, such as they were, as the Notice would have been issued in accordance with law.

44.     The key determination that the Court must make on a leave application is whether or not the Respondent has put before the Court sufficient information to the effect that the Notice requires "tax information" as the Respondent has no power to require material which is not "tax information".  In Imperium, the Court of Appeal said the following:

"40.    Since the Respondent has no power, under the current version of the Regulations, to require the provision of information which is not "tax information", as defined, we take the view that this means, in a case where the matter is properly put in issue, the Court requires to determine for itself whether the information which the Notice requires the Appellant to produce is "tax information" - ie whether the statutory test set out in Article 1A of the 2008 Regulations (as adjusted, where appropriate, for the purposes of the application of the 2014 Regulations) is met. If the information is not, in fact, "tax information", the Respondent has no power to require it to be produced, and the Notice would not satisfy the legal requirements of the Jersey statutory regime.

41.      Such an approach should not create undue difficulties for the administration of the statutory regime. An applicant for leave to bring a judicial review on the basis that the information sought is would require to satisfy the Court that there is a realistic prospect of persuading the Court, if leave is granted, that the information sought is not "tax information" as defined. The Court would, in considering any judicial review, apply the threshold test of foreseeable relevance which, as we will explain, is not unduly exacting. The Court would be entitled to rely on any statement or explanation of foreign tax law provided by the requesting authority and put into evidence by the Respondent. By reason of the nature of the statutory test, the Court would not, as a general rule, require to adjudicate on a dispute as to the content or application of foreign tax law, which would, ultimately, fall to be determined, once any investigations have concluded, by the relevant authorities - including the courts - of the requesting jurisdiction. Both at the leave stage and, if leave is granted, the Respondent would require to place before the Court sufficient information about the foreign tax regime and the tax purpose which has motivated the request to enable the Court to adjudicate on the question. In assessing whether to accept any evidence produced by the Respondent explaining why it has concluded that the link between the information sought and the tax purpose satisfies the statutory test, the Court would be entitled to take into account the Respondent's expertise in matters of tax administration and enforcement. Since the Respondent must itself be satisfied that the information is "tax information" and would, in any event, need to explain to the Court the basis of its conclusion in compliance with the duty of candour which was discussed in paragraphs 17 and 18 of Larsen, supra and in Haskell v. Comptroller of Taxes [2017] (1) JLR 230, the requirement to provide sufficient information to satisfy the Court that it should agree with that conclusion should not impose any material additional burden on the Respondent.

Tax information

42.      The definition of "tax information" in Regulation 1A of the 2008 Regulations, which we have quoted at paragraph 24 above, has three elements, all of which must be satisfied.

           (i)         The information must be "foreseeably relevant to the administration and enforcement ... of the domestic laws of the third country whose competent authority is making the request".

           (ii)        The domestic laws in question must concern a tax which is listed in the third column of the Schedule to the 2008 Regulations against the entry for that third country.

           (iii)       The administration and enforcement of those laws must be 'in the case of the person who is the subject of the request"."

45.     Accordingly, I need to be satisfied that there is sufficient information before me regarding the relevant foreign tax regime (in this case the United Kingdom) and tax purposes which has motivated the request to enable me to conclude that there is a link between the information sought and the tax purposes for which it is sought.  The Court is entitled to take into account the Respondent's expertise in matters of tax administration and enforcement when considering this issue. 

46.     As to the tax information being "foreseeably relevant" to the administration and enforcement of the domestic laws of the country making the request, the Court of Appeal in Imperium said at paragraph 44:

"The test of foreseeable relevance does not require the Respondent to address whether the information requested is, in fact, relevant, or will actually be relevant, to the administration or enforcement of the tax laws of the requesting territory in respect of the taxpayer or transaction in question. It suffices that the information is "foreseeably relevant" to one of those activities. Because the Respondent has no power to require the production of information which is not "tax information" as defined, the Respondent must positively conclude that the information which it requires to be produced satisfies the statutory test."

47.     In this regard, the Court of Appeal said at paragraph 51 that the Respondent may rely on the information about the foreign tax regime provided by the requesting competent authority. 

48.     The grounds upon which the Applicant challenged the Notice are as follows:

(i)        The Notice fails to identify the taxpayer(s) to which the request is intended to relate and does not provide "an account number or other identification for the tax information required" as required by Regulation 7(3) of the Taxation (Double Taxation) (Jersey) Regulations 2010;

(ii)       The Notice fails to identify the tax to which it purports to relate and accordingly does not seek information foreseeably relevant to the administration where enforcement of tax in the requesting state and therefore does not seek "tax information" for the purpose of Regulation 1A;

(iii)      The decision to issue the Notice was irrational as the Notice is disproportionately and / or unreasonably wide and / or insufficiently reasoned and / or unreasonably imposes an obligation upon the Applicant to select a sample of employees in respect of whom information is required to be produced and therefore ignores the scope of the UK / Jersey Double Taxation Agreement ("DTA") as it does not relate solely to residents of Jersey and / or the UK, therefore it does not seek "tax information" and amounts to a "fishing expedition";

(iv)     The decision to issue the Notice was irrational and / or unreasonable as it seeks information not obtainable by the Respondent in Jersey and / or HMRC in the United Kingdom and accordingly fails to take account of the provisions of the DTA;

(v)      The decision to issue the Notice was unreasonable and / or irrational on the basis that the Notice is invalid (not complying with the mandatory provisions of the Regulations requiring identification of the taxpayer) and the transfer of any information obtained pursuant to the Notice does not fall within the specific exemption from non-disclosure under Article 45 of the Data Protection (Jersey) Law 2018 ("the DPL").  Accordingly, compliance with the Notice would expose the Applicant to sanction and / or liability under the DPL; and

(vi)     The decision to issue the Notice was unreasonable and / or irrational on the basis that the Notice is invalid (as above) and accordingly the transfer of any information pursuant to the Notice will be unlawful and contrary to the rights of confidentiality, privacy and data protection to be enjoyed by as yet unidentified individuals under Article 8 of the Human Rights Convention.

49.     The DTA between the UK and Jersey came into force on 19 December 2018.  Article 26 provides that the competent authorities "shall exchange such information as is foreseeably relevant for carrying out the provisions of this Agreement".

50.     Article 26(3)(b) entitles the requested party to refuse a request under the terms of a notice to the extent that it is incompatible with any laws or administrative practices of Jersey which ostensibly includes the right to private life under Article 8.  The Protocol to the DTA provides that both territories will apply the Agreement in the light of the Commentaries on the OECD Model Tax Convention as they may read from time to time.

51.     The Applicant is based in Jersey and is an employment service company providing security services and personnel working in a number of countries including in Africa and the Middle East.  The Applicant is the employing entity for these employees and responsible for employee payroll.  It employs individuals of thirty-five nationalities and has a workforce of between three hundred and fifty and four hundred, six of whom are based in Jersey.  All international employees of the Applicant are engaged under a standard service agreement.  Each employee is required to account to the tax authority in their relevant employment location.  Accordingly, employees are paid their salary gross without deduction for income tax or social security.  The Applicant has employees in approximately fourteen jurisdictions, although this can go up or down year on year.  Its six Jersey members of staff have their income tax deducted at source under the ITIS scheme.  Enquiries by HMRC into the business of the Applicant began via the G4S Group in the United Kingdom in 2015.  The affidavit sworn on behalf of the Applicant indicates that HMRC had identified substantial payments being made for Applicant services by four G4S UK based entities and wanted to look into the question of UK Pay As You Earn tax and national insurance contribution liabilities in respect of UK resident individuals employed by the Applicant.  In November 2019, HMRC visited the Applicant's office in Jersey and met its employees in the island.

52.     On 27 March 2023, the Applicant received a letter from the Respondent enclosing a Notice To Produce Tax Information pursuant to a request from HMRC.  It is not necessary to set out the terms of that letter.  The Applicant instructed a Jersey law firm to advise them in respect of that Notice and they wrote to the Respondent setting out various matters of concern in relation to that Notice.  This led to the Notice dated 21 April 2023, the subject of this application, being sent by the Respondent and received by the Applicant on 24 April 2023 under cover of a letter.  Whilst the initial notice appeared to have caught, according to the affidavit sworn on behalf of the Applicant, between two thousand and two thousand five hundred employees of the Applicant past and present, the Notice is confined to seeking information in relation to a sample of ten employees.

53.     The letter of 21 April 2023 from the Respondent enclosing the Notice said that it related to a request received from the Competent Authority of the United Kingdom, that the Respondent was authorised to require tax information under Regulation 7 of the DTA Regulations, that the Notice sought information in relation to a tabular sample of up to ten workers as opposed to the up to two thousand five hundred that fell within the scope of the original scope, and once the information had been received the Respondent would transmit it to the UK Competent Authority and "then engage in a bilateral conversation to come to an agreement on a suitable timeframe to provide all the information for the remaining workers within scope.  This will form the second Notice".  The Notice sought the tax information requested within thirty days.  The Notice itself said:

"1. I am in receipt of a request from the Competent Authority of the United Kingdom.

2. I have examined the request and, being satisfied that it has been validly constituted in conformity with the terms of the Double Tax Agreement with the United Kingdom, I have decided to respond to the request.

3. I require you to provide, within 30 days, tax information that I require for this purpose in respect of a sample of one to ten workers ("the Workers") that received payments during the period from 6 April 2010 to 28 February 2023 (inclusive) ("the Period") that meet the below criteria;

a. Are UK resident;

b. Hold a UK bank account;

c. Have a UK address;

d. Have a UK contact address or telephone number;

e. Hold a UK National Insurance number;

f. Have a home in the UK (if known);

g. Have a normal place of residence in the UK (if known);

h. Have the UK as their registered country of repatriation;

j. Who were recruited from the UK;

k. Have been provided with air travel to and from the UK for any period of Off Duty service or deployment; or,

l. Have a medical contact such as a general practice doctor, surgery or clinic in the UK (if known).

The tax information required for any Worker meeting any of the above criteria is as follows:

a. Payslip information in tabular format (i.e. on an Excel spreadsheet), to include:

i. Full name and address of Worker;

ii. National Insurance Number;

iii. Date of commencement and/or cessation of employment, if falling within the Period;

iv. Total payments, of any kind, received during the Period (this can be provided as one line item for the total calendar/tax year, e.g. the total gross payments per Individual per year for the Period);

v. Total expenditure/expenses, of any kind, incurred during the Period (again this can be provided on the same basis as iv above); and, vi. The Individuals bank account details of accounts to which payments are made.

4. In accordance with Regulation 7 paragraph (5) (a), copies of the Notice have not been sent to the taxpayers who are the subject of the request, although you are not prohibited from informing them."

54.     One of the complaints made by the Applicant's deponent is that the failure to identify an employee by name puts the responsibility upon identifying the UK taxpayer on the Applicant, rather than requiring HMRC to identify which UK taxpayer they wish to have information in relation to. 

55.     The affidavit sworn on behalf of the Respondent in response says that the relevant officer of the Respondent reviewed the request made by HMRC to ensure that it met the requirements to be a valid request under the DTA.  The Respondent said that it felt bound to adhere to the confidentiality provisions contained in the DTA, which are re-emphasised in the 2008 Regulations and underpinned by the guidance issued by the OECD for exchange of information - see Article 26(2) of the Model Convention issued by the OECD.

56.     The Respondent's affidavit said that the request sought information about a sample of workers which would then allow the issue of a further Notice under Regulation 7 of the Regulations which would apply to all potential workers employed by the Applicant within scope of the HMRC request.  The Respondent says that the information is being sought "because there is a real possibility that the information may prove relevant to establishing under the tax laws of the United Kingdom whether workers fitting certain criteria (which can reasonably be used as part of an investigation of tax residency) are persons who are resident for tax purposes in the United Kingdom (or were so resident in one or more relevant years) and whether such persons (if determined to be resident for tax purposes in the United Kingdom) have or have not declared relevant earnings or other income paid in connection with a contract with [the Applicant] for the purpose of assessment to tax in the United Kingdom".  The HMRC open inquiry "exists because there is a reasonable basis to understand that [the Applicant] has been used for a scheme of tax avoidance using a structure known as Global Employment Company (GEC) arrangement and that security services to overseas end clients have been offered through the deployment of UK resident individuals who have been paid without any deduction for United Kingdom tax and who in their individual self-assessments have not declared such earnings or income.  I understand that the time limits for recovery are extended where HMRC has not been notified by the relevant taxpayer of the failure t to declare such earnings or income in the self-assessment".

57.     In an affidavit sworn in response to this affidavit on behalf of the Applicant, it was said that the Applicant was unaware of any live HMRC inquiry in relation to the Applicant or its employees until receiving the affidavit sworn on behalf of the Respondent.  The Applicant also goes on to say that the Applicant has a report from PWC (which is exhibited to the affidavit) to the effect that the G4S and / or the Applicant should have been made aware of the HMRC inquiry and furthermore that HMRC's own information gathering powers should have been exercised to seek the material that was sought under Notice.

58.     I now turn to consider the merit of each ground upon which judicial review is sought.

Ground 1 - Defective Notice, failure to identify a taxpayer in breach of the Regulations

59.     Regulation 7(1) of the Taxation (Double Taxation) (Jersey) Regulations 2010 ("the DTA Regulations") speaks of the Respondent responding to "a request concerning a taxpayer" and provides at Regulation 7(3) that "where a third party notice does not name the taxpayer to whom it relates, it must provide an account number or other identification for the tax information required".  It is said that the Notice is defective for failing to comply with Regulation 7(3).  It was also said that the Notice is in breach of Regulation 7(1) as the request cannot by definition have been a request concerning a taxpayer as none is identified either in the Request (although the Applicant has not seen it) or the Notice.  Further, Regulation 1 of the DTA Regulations defines a "request" as a "request made....for tax information regarding a person...".

60.     In response, the Respondent argues that Regulation 7(3) does not require a taxpayer to be identified by name by the Respondent in order that the recipient of a notice be required to produce tax information.  The Respondent argues that an "account number" would merely be a source of identification for the tax information and the requirement (where the taxpayer is not named) is to provide sufficient information for the recipient of the notice to identify the tax information required to be produced.  The Respondent says there is no difficulty with this; that sufficient clarity has been given as to the criteria to be applied to determine the class of people and the information to be provided.  I have sympathy with this argument, although no authority has been cited by either party to support their contentions.

61.     The Respondent goes on to say that the word "person" in Regulation 1 of the DTA Regulations is in the singular form and does not require that the person be named in the request.  The Respondent says that a request for tax information can relate to an investigation by a competent authority into any persons connected with a particular company or group of companies identified by reference to such criteria as employment, residence, domicile and so on.

62.     I note that the DTA itself defines a "person" as including an individual, a company and any other body of persons.  There is nothing in either the DTA Regulations or the DTA itself which, in my view, requires the Notice to be provided in relation to a particular named taxpayer.  I am emboldened in that view by the wording of Regulation 7(3), which expressly envisages circumstances where a third party notice such as this does not name the taxpayer to whom the notice relates, in which circumstance it must either provide an account number or "other identification".  In my judgment, the Notice in this case provided sufficient "other identification" for the purpose of permitting the Applicant to gather the material required.  That is demonstrated by the Applicant confirming at the hearing that it had successfully gathered the material sought within the period required for compliance with the Notice.  In the course of submissions, the Applicant's counsel conceded this was a "technical point" and in my view it had no merit.  Accordingly, there is no realistic prospect of success in relation to this ground and I refuse leave in respect of it.

Ground 2 - Failure to identify the tax to which the Request relates

63.     The Applicant says the Notice does not identify the tax in question and accordingly it cannot reasonably be concluded that the Request seeks "tax information" that is "foreseeably relevant" for the purposes of the DTA. 

64.     At the hearing, the Applicant's counsel realistically accepted that this was his "thinnest ground".  It was not pursued.  Accordingly, leave was refused in relation to the second ground. 

Ground 3 - The Notice was disproportionate and / or unreasonably wide and / or amounts to a "fishing expedition"

65.     This was the Applicant's principal ground.  The Applicant contends that as the Notice requires disclosure of information in respect of unidentified persons, it is or maybe a fishing expedition as it requires the Applicant to select a sample of unidentified persons from amongst its past and present employees who were employed at some point in the last thirteen year period by reference to thirteen alternative criteria, some of which may be irrelevant to an individual employee's tax status.  The DTA only covers persons who are resident in either or both of Jersey or the UK for tax purposes.  The Notice by its nature may seek information in relation to individuals whose residence for tax purposes in unknown.  Further, it requires disclosure for an excessively long period and may relate to tax matters which do not amount to "tax information" for the purpose of the DTA. 

66.     In Imperium, the Court of Appeal made reference to the case of Luxembourg v L (Case-437/19 reported in the European Court Reports 2021), the Court of Justice of the European Union, the Court in Imperium identifying it as a case "where the very purpose of the request was to ascertain the identity of persons liable to tax.  We have heard no argument on the point and it would require to be determined in a case where the parties join issue on it".

67.     I was referred to the Luxembourg case.  The case concerned a group request for information.  Paragraph 2 of the opinion of the Advocate General said:

"The Court has previously ruled in those proceedings that the "foreseeable relevance' of the information requested for the purposes of taxation in the requesting State is a condition which the request for information must satisfy. Now it has occasion to clarify whether a request fulfils that requirement also where information is requested only on a group of taxpayers whose identity is ascertainable but who are not identified individually or by name. Primarily, it has to clarify how specific and precise the request must be in relation to the taxpayers so that the requested tax authority can assess the "foreseeable relevance' of the requested information to the tax proceedings in the other Member State."

68.     The Advocate General went on to say (at paragraph 5) that Directive 2011/16 provided:

" ...The standard of "foreseeable relevance" is intended to provide for exchange of information in tax matters to the widest possible extent and, at the same time, to clarify that Member States are not at liberty to engage in "fishing expeditions" or to request information that is unlikely to be relevant to the tax affairs of a given taxpayer.  While Article 20 of this Directive contains procedural requirements, those provisions need to be interpreted liberally in order not frustrate the effective exchange of information."

69.     The opinion went on to consider the OECD Model Tax Convention and the tax convention between Luxembourg and France.  The nature of the investigation the case was concerned with was detailed at paragraph 21:

"The French authorities indicated in their request for information of 27 April 2017 that they wished to conduct an investigation into F, a company established in France and alleged to be carrying on the activity of leasing a property in a municipality in France. The company L, resident in Luxembourg, was alleged to be not only the indirect parent company of F (via a company incorporated under Dutch law), but also the direct owner of another property situated in the same French municipality. The French authorities explained that individuals directly or indirectly owning immovable property situated in France are required to declare that property for the purposes of a property tax, and that they wished to know who were the shareholders and beneficial owners of the company L."

70.     The Luxembourg tax administration imposed a fine on L for not complying with the information order made against it.  L lodged an action arguing that the information requested by the French tax administration was not of "foreseeable relevance", and the information did not state the tax purpose for which the information was requested.  The administrative court annulled the decision of the Luxembourg tax administration to impose the fine and the Luxembourg Government appealed.  The Advocate General said that the Luxembourg Cour administrative stayed the proceedings and referred the following questions to the Court of Justice for preliminary ruling, including the following:

"(1) Must Article 20(2)(a) of Directive 2011/16 be interpreted as meaning that where a request for exchange of information formulated by an authority of a requesting Member State designates the taxpayers to which it relates simply by reference to their status as shareholders and beneficial owners of a company, without those taxpayers having been identified by the requesting authority in advance, individually and by name, the request satisfies the identification requirements laid down by that provision?

(2) If the answer to the first question is in the affirmative: Must Article 1(1) and Article 5 of that directive be interpreted as meaning that the standard of foreseeable relevance may be met, if the requesting Member State, in order to establish that it is not engaged in a fishing expedition, despite the fact that it has not individually identified the taxpayers concerned, provides a clear and sufficient explanation evidencing that it is conducting a targeted investigation into a limited group of persons, and not simply an investigation by way of general fiscal surveillance, and that its investigation is justified by reasonable suspicions of non-compliance with a specific legal obligation?"

71.     The case is similar in some respects to this.  The Advocate General said at paragraph 31:

"The present case presents two specific characteristics. First, the request by the French tax administration concerns a group of persons, rather than a single individual. Second, that group of persons is not identified by name or other criteria (such as an official photo ID card number, tax registration number or account number) and their identity is ascertainable only by common characteristics (shareholders and beneficial owners of L). It is identification by name that is the precise purpose of the request for information."

72.     The opinion went on to consider a number of matters including the OECD Model Tax Convention and concluded the following:

"74. To conclude, Article 1(1) and Article 5 of Directive 2011/16, read in conjunction with Article 20(2) thereof, must be interpreted as meaning that a request for information may relate to a group of unidentified persons whose identity is, however, ascertainable from their status as shareholders and beneficial owners of a legal person.

75. However, in order to satisfy the criterion of "foreseeable relevance', the requesting State must, in the request for information, (i) provide as specific and detailed a description of the group as possible; (ii) explain the tax obligations to which the group of taxpayers is subject in the requesting State and the facts on which the request is based; (iii) show why there is reason to believe that the group has not acted in compliance with the law."

73.     Various matters were referred back to the referring court in Luxembourg to be addressed, but the key questions (for the purpose of this application) were answered by the Advocate General in accordance with the conclusions referred to above - see paragraph 100.

74.     The Applicant relied on the fact that at paragraph 58 of the decision the Advocate General said "...what is crucial is that the description of the group of taxpayers is specific and detailed enough to enable the requested State to identify them unequivocally".  The tax purpose for which the information is sought also needed to be clear, in other words, "the tax obligations to which the group of taxpayers is subject in the requesting State and the facts on which the request is based must be apparent to the requested state" (paragraph 59).  There needs to be a "reasonable suspicion that those persons have failed to comply with certain statutory obligations" (paragraph 60). 

75.     Counsel for the Applicant summarised the position thus; there must be a targeted investigation into a limited group and compliance with the three stage test from the Luxembourg case set out at paragraph 75, which I have quoted above at paragraph 74 of these reasons.

76.     It was submitted with some force that there is no previous Jersey case on these facts and that the Court of Appeal in Imperium left this category of case open to subsequent judicial consideration and full argument. 

77.     The Respondent argues that the only thing that really matters is whether or not the tax information sought is foreseeably relevant, and in the context of this case both the Respondent and the Court can be satisfied that the material sought is foreseeably relevant.  It is said that the year of creation of the tax information or the period of time in respect of which it is sought has no bearing on the foreseeable relevance of the information sought or its relevancy.  The Respondent says that the suggestions of a "fishing expedition" are misguided and at odds with the prevailing international standards on exchange of information for tax purposes.  There is an open investigation; the information is sought for the purpose of that investigation, and there is a clear nexus between the information sought and the application of the tax laws of the United Kingdom.  The Respondent says that for the information to be foreseeably relevant to tax information, there simply needs to be a reasonable possibility that the information will prove relevant, and the Court can be satisfied that there is. 

78.     Although there is force in the Respondent's argument, in view of the authorities to which I have been referred I have no doubt that I should grant leave in respect of this ground on the footing that the Applicant has a realistic prospect of success.  I grant leave, not pre-judging the outcome of the substantive application in this case.

79.     In the circumstances, I think it unnecessary to refer to the various provisions in respect of the OECD Convention on Mutual Administrative Assistance in Tax Matters in respect of foreseeable relevance and fishing expeditions to which I was referred.  However, I note in particular paragraph 50 of chapter 3, section 1 which says:

"The standard of 'foreseeable relevance' is intended to provide for exchange of information in tax matters to the widest possible extent and, at the same time, to clarify that Parties are not at liberty to engage in 'fishing expeditions' or to request information that is unlikely to be relevant to the tax affairs of a given person or ascertainable group or category of persons...."

Ground 4 - Notice was irrational and / or unreasonable as seeks information not obtainable by the Respondent in Jersey and / or HMRC in the UK contrary to the DTA

80.     The Applicant argues that the Respondent unreasonably failed to investigate, or did not reasonably conclude on the basis of such investigation, or failed to give adequate reasons for its conclusion that the DTA applied to the intended subjects of the Notice.

81.     The Respondent says that this argument is unsustainable because the Notice was not required to explain the inquiries conducted by the Respondent with HMRC.  The Respondent was entitled to conclude that there was a real possibility that the Notice may seek material relevant to the HMRC investigation within the scope of the DTA.  Article 26(1) requires the Respondent to exchange "such information as is foreseeably relevant for carrying out the provisions of this Agreement" and this material was within such a category, save insofar as this argument overlaps with Ground 3 above where I have already given leave. 

82.     The second argument under this Ground is that the Respondent unreasonably failed to investigate whether, or has not reasonably concluded on the basis of any such investigation that, or has failed to give adequate reasons for his conclusion that HMRC would have been able to obtain the information "under the laws or normal course of administration" as required under Article 26 of the DTA. 

83.     Reliance is placed on Article 26(3) of the DTA for this purpose.  However, though Article 26(3) says that the provisions of paragraphs 1 and 2 of Article 26 in no case should be construed to impose on a territory an obligation to carry out administrative measures at variance with the laws and administrative practice of that or the other territory, or supply information that is not obtainable under the laws within the normal course of administration of that or the other territory, that does not mean, in my view, that if there were procedures available under Jersey law to obtain information that are not available under UK law, then they could not be exercised.  Jersey would be under no obligation (Article 26(3)) to exercise such powers.  That in my view is the consequence of the wording in Article 26(3).  In any event, from the material placed before me, it appears that HMRC has a wide ranging power under Schedule 36 of the Finance Act 2008 to issue information requests to persons in respect of third party taxpayers and I was told that that power could be used when the identity of the taxpayer or class of taxpayers is unknown at the time that the notice is issued.  These are called "Identity Unknown Notices". 

84.     In view of the material placed before me, I am of the view that the argument in Ground 4 (save where it duplicates with Ground 3, where I have already given leave) has no realistic prospect of success and I refuse leave on that ground.

Ground 5 - The terms of the Notice and consequential transfer of data by the Applicant in compliance will expose the Applicant to potential liability for breach of the Data Protection Law

85.     Both this and the following ground only arise if the Notice is held to be unlawful.  Counsel for the Applicant acknowledged that the data protection and human rights issues fall away if the Notice is lawful and valid.  Accordingly, they are make-weight grounds for seeking leave that are parasitic upon Ground 3.  The Applicant says that to comply with an unlawful notice could amount to a data breach which may result in regulatory sanction and a fine imposed by the Information Commissioner.  The risks identified by the Applicant in its Skeleton Argument in various scenarios which are postulated appear to be largely theoretical and unlikely to arise in practice, but as I have given leave in respect of the third ground then the Applicant should be permitted to pursue these arguments.  I give leave in respect of Ground 5.

Ground 6 - The transfer of information by the Applicant in compliance with the Notice will expose the Applicant to potential liability for breach of duty of confidence, in particular under Article 8

86.     The same principles under Ground 5 apply in relation to the consideration of granting leave under Ground 6.  The Ground fails if Ground 3 fails, and if Ground 3 succeeds then the Notice will not stand.  Accordingly, I grant leave with the same reservations expressed as in respect of Ground 5.

Authorities

Taxation (Double Taxation) (Jersey) Regulations 2010.

Minister for Planning and Environment v Herold [2014] JRC 020.

Planning and Building (Jersey) Law 2002.

Larsen v Comptroller of Taxes and States of Jersey [2016] (2) JLR 198.

Royal Court Rules. 

Pritan Kaur v S Russell & Sons [1973] QB 336. 

Aadan v Brent LBC [2000] 32 HLR 848.

Imperial Trustees (Jersey) Limited v Jersey Competent Authority [2023] JCA 057.

Data Protection (Jersey) Law 2018.

Luxembourg v L (Case-437/19 reported in the European Court Reports 2021).