In December 2010 I wrote about the blockade imposed by HMRC on Christopher Lunn & Co (CLAC), a Sussex accounting firm.
"The firm claims that HMRC is refusing to deal with it, and will not allow it to file certain tax returns while it is being investigated.
According to the FT CLAC were raided by HMRC in June 2010 and the firm's files taken.
Despite the investigation going on for the last 6 months, HMRC have not told them why they are being investigated. CLAC suspect it is part of HMRC's much vaunted (unless of course you are Vodafone or a friend of Hartnett) anti avoidance campaign.....
Guilty until proven innocent appears to be the maxim of HMRC.
Should this department be given such powers, and be allowed to treat firms and individuals in such a high handed manner without due process?
Power of this nature, especially when in the hands of unelected bureaucrats, corrupts."
CLAC have now won their legal challenge against HMRC.
In a Judicial Review filed against HMRC, Mr Justice Kenneth Parker found in favour of Christopher Lunn and Company ruling that:
"The challenged decision should be quashed on account of the unlawful procedural failure."
The judgment reverses HMRC's decision, ruling it unlawful.
Here is the full text of the press release issued yesterday:
CHRISTOPER LUNN WINS LEGAL CHALLENGE AGAINST HMRC
· HMRC actions branded unlawful and unfair
· Effect of HMRC conduct undermined business confidence
LONDON, 16 February 2011: Christopher Lunn and Company, a Sussex-based firm of accountants, today won a significant victory in the High Court overturning a decision by HMRC to revoke its tax agent status. The judgment follows the instigation of an HMRC enquiry into Christopher Lunn and Company that began in 2009 and culminated in the HMRC deciding to withdraw Christopher Lunn and Company’s tax agent status in November 2010.
In a Judicial Review filed against HMRC, Mr Justice Kenneth Parker found in favour of Christopher Lunn and Company ruling that: “the challenged decision should be quashed on account of the unlawful procedural failure." The judgment reverses HMRC’s decision, ruling it unlawful.
Christopher Lunn and Company’s submissions centred on establishing whether HMRC had acted lawfully in withdrawing agent status without giving an opportunity to Christopher Lunn and Company to make representations first as to why its agent status should not be withdrawn. Despite giving Christopher Lunn and Company 28 days in which to make representations, HMRC withdrew agent status with immediate effect and on the same day that it notified Christopher Lunn and Company of its decision, wrote to clients of Christopher Lunn and Company advising them of its actions. Christopher Lunn and Company contended that HMRC's actions prejudged the issue and materially prejudiced Christopher Lunn and Company's position.
Following today’s ruling, Christopher Lunn and Company will be able to obtain its costs and will also be claiming damages from HMRC.
James Bullock, Tax Partner at McGrigors LLP, Solicitors to Christopher Lunn & Company said:
“Today’s judgment confirms that HMRC acted unlawfully in a procedurally unfair manner by deciding to cease dealing with Christopher Lunn and Company without giving them an opportunity to make representations first. In the light of an ongoing investigation, in respect of which Christopher Lunn and Company has sought to co-operate, it was most surprising that HMRC should act in this way. Only once before has HMRC unilaterally withdrawn agent status- and that was in a situation where the agent had actually been convicted of tax fraud. The High Court has quite rightly ruled HMRC's actions unlawful."
Christopher Lunn, the founder and owner of Christopher Lunn and Company, said: “Today’s decision is hopefully a major step towards clearing our names. It seemed to us that HMRC was seeking to close our business, threatening the livelihoods of 50 full and part-time staff. This is despite the fact that it was only in the run up to the High Court hearing itself that HMRC became obliged to disclose details of the case against us. We have been astonished at the allegations which HMRC have made which we believe are fundamentally flawed and inaccurate. This victory now gives us the opportunity to rebut the allegations that have been thrown at us."
“We have carefully built and nurtured our reputation over 40 years of successful and unblemished trading, and would like to thank those many clients who have continued to support us over the last nine months. We have been in a period of incredible uncertainty and immense pressure, despite not having been charged with any offence.”
Management and staff at Christopher Lunn and Company, which is based in Crowborough, East Sussex, are committed to continue to offer their full support to HMRC in order to dispense with its investigation at the earliest time. The company continues to trade and support its customers in the professional way that it has done in more than three decades.
For more information
On behalf of CLAC
David WilsonBell Pottinger Public Relations
+44 (0) 20 7861 2445
Bell Pottinger Public Relations
+44 (0) 20 7861 2502
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