In The Queen on the application of Ralph Hely-Hutchinson v HMRC, a taxpayer was successful in judicial review over HMRC's tax treatment of his Mansworth v Jelly loss claims.

  • Mr Hely-Hutchinson submitted capital losses claims in 2003 in respect of share options for the four tax years from 1999 to 2002.
  • He followed HMRC's 2003 published guidance.
  • In 2003 HMRC opened an enquiry into the loss claims.  
  • In 2009 HMRC changed its guidance, saying that the 2003 guidance had been incorrect and that it would be applying its new view in any open enquiry.
  • HMRC issued closure notices in 2014 denying relief for the losses.

The taxpayer sought a judicial review of the closure notice on the following grounds:

  • He had a legitimate expectation that his claims would be allowed in accordance with the 2003 guidance.
  • HMRC's refusal of his claims was an abuse of power.
  • HMRC was not treating taxpayer's consistently as other Mansworth v Jelley losses had been allowed.

HMRC argued that they had not allowed the claim as he could not show any detrimental reliance on the guidance having been on notice since June 2003 that the losses had not been agreed and were being challenged.

Decision of the high court

  • The taxpayer had a legitimate expectation that his loss claims would be allowed as he had relied upon clear, unambiguous and unqualified guidance issued by HMRC.
  • His expectation was not lessened by HMRC later changing its view.
  • There was an intrinsic unfairness in treating other taxpayers who were in an identical position differently.
  • HMRC should have taken this unfairness into account and not just considered the fact that the taxpayer had suffered no detriment.

The closure notices were quashed and referred back to HMRC to reconsider.


Case reference: The Queen on the Application of Ralph Hely-Hutchinson v HMRC [2015] EWHC 3261


A Court of Appeal hearing is scheduled to begin on 28 March 2017. A summary of the decision can be found here.