Neil Martin – way to go

Having reserved judgment for the past 5 months, the Court of Appeal has today released its decision in Neil Martin v Commissioners for HMRC [2007] EWCA Civ 1041.

The facts of the case are fully rehearsed in the appellate court's judgment, with one particular aspect being of the utmost importance to the decision and the limitations of its possible wider application by others (see para 73) . In brief, the taxpayer sought to comply with its obligations under the Construction Industry Scheme, was met with the not unusual catalogue of errors and delays by the Revenue. The taxpayer's business suffered as a result and the taxpayer sought damages from the Revenue on the grounds that there had been a breach by the Revenue, either of a statutory duty under the CIS legislation or under a common law duty of care owed to the taxpayer.

Not unexpectedly, the Court of Appeal has dispensed with the statutory duty argument. However, and far more importantly, it has been held that, in certain circumstances, the Revenue can owe a duty of care under common law principles. The case may be appealed to the House of Lords on public interest grounds but, with the Court of Appeal finding unanimously for the taxpayer and applying the third strand of Caparo in holding that it was fair, just and reasonable that a duty of care be imposed on the Revenue, it is difficult to envisage how the Law Lords will feel able to reverse the decision.

The judgment will receive much attention by public law academics and the wider ramifications will remain to be seen. At this early stage, there is no reason to suppose that the floodgates will be opened and, even where there are other taxpayers with broadly equivalent cases, there will probably be a reluctance displayed by professional advisers in wanting to pursue claims where this necessitates targeting the actions of identifiable coalface level Revenue employees, to whom an ever increasing measure of sympathy exists.

With the potential for others now to bring cases and, in doing so, seek to use Neil Martin to widen the scope of the Revenue's common law duty, it might be more realistic to expect a reversal of the policy of the Revenue achieving cost savings by the snide expediency of off-loading its inefficiencies to taxpayers and their advisers. If this leads to better training and job support for hard put upon Revenue employees, then that can certainly be no bad thing except, of course, for the Revenue bean counters and their political masters.

Further, with there being no automatic duty of care imposed being upon the Revenue but, rather, a need for that duty to be assumed by the actions of the Revenue or its officers, we might also now expect to see an end to the irksome claims by the Revenue to have an educational role in the provision of assistance to the taxpaying public.