The Court of Appeal has dismissed Sarlingford Ltd.’s appeal against a refusal to order Revenue to produce documents in its judicial review case over tax relief for income from a patent.
The appeal concerned discovery sought to support Sarlingford’s claim that it had a legitimate expectation of retrospective relief under section 141(5)(d) of the Taxes Consolidation Act 1997. The court upheld the High Court’s decision, finding that whether the relief was legally available was a matter of statutory interpretation, not Revenue policy. It concluded that the company had not shown the requested documents were necessary or reasonable.
Sarlingford, which manufactures and sells windows and doors, holds a patent for an apparatus designed to improve their manufacture. It applied for a determination that the invention involved radical innovation in 1996. Revenue requested further information in February 1997, but the company did not reply then. It later made tax-free distributions to shareholders without a determination. The company revived its claim around 2009 after Revenue queried the basis for those distributions.
After a Revenue nominated officer rejected the claim, Sarlingford appealed. The Appeal Commissioner accepted Revenue’s preliminary argument that the appeal was moot because the relief had ceased to be available from 24 November 2010. Sarlingford then brought judicial review proceedings, including claims about the interpretation of the tax provision and legitimate expectation. The Court of Appeal judgment addressed only the appeal concerning discovery, not the ultimate determination of the tax-relief claim.
Sarlingford sought documents about another taxpayer’s application, any Revenue policy on retrospective relief, and an alleged inspection or audit of the company’s group in 2004 or 2005. The Court of Appeal said the appeal notice covered only the latter two categories. It also found that Sarlingford already had evidence about the other taxpayer’s case, and that a representation to one taxpayer was not a representation to another.
On the alleged 2005 visit, the court said the visit was not said to have examined the patent-relief claim. The company’s account of the visit was available to it, and the fact that inspectors did not address the relief during a visit for other tax purposes did not establish a legitimate expectation.
The court also considered Revenue’s letter of 13 April 2011, which said no approval had been granted and invited Sarlingford to submit information for consideration. It said the company’s claim that the letter created a legitimate expectation or estoppel stood or fell on the letter itself; further background documents were not needed to make that argument.
The court dismissed the appeal and upheld the High Court’s refusal of discovery. It did not decide the underlying judicial review or whether Sarlingford was entitled to the tax relief.