Section 234 Restrictions on Interim Payments in Proceedings Relating to Taxation Matters
Summary
1.Section 234 applies to applications for interim remedies, in particular for repayments of tax, made in High Court and other court of justice proceedings relating to points of law in taxation matters. It brings the courts’ discretion closer to that of statutory tax tribunals by limiting the circumstances in which applications may be granted.
Details of the Section
2.Subsections (1), (2) and (10) set out the scope of the provision. It restricts the power of a court to require HM Revenue & Customs (HMRC) to pay any sum to a claimant (however described) by way of interim remedy (however described) made in any court proceedings relating to a taxation matter on an application founded at least in part on a point of law not yet finally decided. For this purpose taxation matter includes anything within the collection and management responsibility of the Commissioners for Revenue & Customs, other than national insurance contributions.
3.Subsection (3) sets out the new restriction. The court may grant the interim remedy only if (a) payment of the sum is necessary to enable the proceedings to continue, or (b) the claimant’s circumstances are exceptional and such that grant of remedy is necessary in the interests of justice. For the purposes of (a) above, all sources of funding reasonably likely to be available, including borrowing capacity of the claimant, are taken into account.
4.The powers of the court affected by the section are those set out in its procedural rules. Subsection (4) gives examples of these.
5.Subsections (5) to (8) deal with commencement matters. The section applies on or after 26 June 2013 in relation to proceedings whenever they were commenced. If any remedy is granted by a court between 26 June 2013 and Royal Assent, provision is made to oblige the court to revoke or modify any remedy so as to give effect to the restriction and to order recovery of any related payment made by HMRC.
6.Subsection (9) makes clear that proceedings on appeal are treated for the purposes of the section as part of the original proceedings from which the appeal lies.
Background
7.There are currently several examples of long running tax litigation which, because of particular circumstances, are subject to procedural rules of the court rather than the statutory rules which normally apply to tax litigation.
8.The section brings the rules relating to interim repayments in these cases more closely into line with statutory rules which normally apply to tax litigation.
