In Aozora GMAC Investment Limited v HMRC [2017] EWHC 2881 (Admin) the High Court considered whether the taxpayer had a legitimate expectation that it could rely on HMRC’s published guidance.

The legal principle was set out recently in Hely-Hutchinson v HMRC [2017] STC 2048: [2017] EWCA Civ 1075:

“I now turn to the situation where HMRC issues a policy or guidance but later comes to the view that its policy or guidance was wrong in law. Legitimate expectations are not unqualified: see, for example, United Policyholders, above. If HMRC finds that they need to resile from guidance, a taxpayer can only rely on the legitimate expectation that the guidance created, where, having regard to the legitimate expectation, it would be so unfair as to amount to an abuse of power" (my emphasis).”

Aozora requested a judicial review of HMRC’s decision to reject their claim for double tax relief on tax withheld by its US subsidiary from interest it paid to the parent. The taxpayer argued that its claim was in line with HMRC’s International Manual (INTM151060) so HMRC should have allowed it.

The Court held that the manual constituted a “relevant representation”, so it was reasonable for a taxpayer to assume that this was correct.

However, the Court rejected Aozora’s claim, because on reviewing the evidence provided to them, they were not convinced that Aozora (or its advisers) had actually relied on the guidance in question.


The technical issue here is somewhat specialist in nature and not likely to be of interest to the general practitioner, but the principle is relevant to every taxpayer.

It is clear that advice given to one’s client should be in writing should make explicit reference to HMRC’s manuals where these have been considered, particularly if there is any doubt in the application of the law followed.

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Appeals: legitimate expectation


Aozora GMAC Investment Limited v HMRC [2017] EWHC 2881 (Admin)

R (Hely-Hutchinson) v HMRC [2017] EWCA Civ 1075