Robin Houldsworth, R (on the application of) v The Commissioners for HMRC

Mr Justice Foxton :

1. This is the oral renewal by the tax payer (“Mr Houldsworth”) of an application for permission to bring judicial review proceedings relating to a closure notice of 8 June 2018 issued by the Defendant (“HMRC”) in respect of Mr Houldsworth’s tax affairs. The closure notice assessed Mr Houldsworth to tax of £323,528.32 on the basis that he was a UK resident for the tax year 2004/2005. That decision was upheld by an internal review at HMRC as set out in the Review Conclusion Letter of 10 October 2019.

2. The application for permission to appeal was received in the Administrative Court office on 6 June 2024. The application was refused on paper by Mr Justice Jay on 31 July 2025 on the following grounds: “(1) DELAY: no properly constituted application for an extension of time has been made and no satisfactory explanation for the delay has in any event been advanced. The Claimant’s case was always grounded on l/e and that had to be advanced by way of JR rather than before the Tribunal. (2) THE MERITS: the Claimant cannot point to a clear and unambiguous representation in these circumstances, particularly when the facts are in dispute. Grounds 2 and 3 add nothing”. The background

3. On his account, in April 2004, Mr Houldsworth left the UK to take up a contract of full-time employment in Switzerland. He says at the time of leaving, he intended to leave the UK for a period of at least three years.

4. On 19 April 2005, Mr Houldsworth returned permanently to the UK. Mr Houldsworth says that he spent fewer than 91 days in the UK in the 2004/2005 tax year.

5. On 8 June 2018, HMRC assessed that Mr Houldsworth was liable for income tax in respect of the 2004/2005 tax year in the sum of £323,528.32.

6. On 6 July 2018 Mr Houldsworth appealed against the closure notice. On 15 August 2019, HMRC offered an independent review. That review upheld HMRC’s position on 10 October 2019.

7. On 22 January 2020, Mr Houldsworth appealed to the First Tier Tribunal (“FTT”) on three grounds: a. No valid notice had been issued under s.8 A Taxes Management Act 1970 (“Ground 1”). This was abandoned on 17 January 2023. b. Mr Houldsworth was not a UK tax resident during the tax year 2004/2005 (“Ground 2”). c. Mr Houldsworth had a legitimate expectation that he would be assessed as non-tax resident by reference to paragraph 2.2 of HMRC’s IR20 published guidance (“Ground 3”).

8. It is helpful to say a little more about Ground 3. IR20 was a 70-page guidance note published by HMRC (and since withdrawn). The Preface states: “The notes in this booklet reflect the law and practice at October 1999. They are not binding in law and do not affect rights of appeal about your own tax. You should bear in mind that the booklet offers general guidance on how the rules apply, but whether the guidance is appropriate in a particular case will depend on all the facts of that case. If you have any difficulty in applying the rules in your own case, you should consult an Inland Revenue Tax Office.”

9. Paragraph 1.1 states: “The terms ‘residence’ and ‘ordinary residence’ are not defined in the Taxes Acts. The guidelines to their meaning in this Chapter and in Chapters 2 (residence status of those leaving the UK) and 3 (those coming to the UK) are largely based on rulings of the Courts. This booklet sets out the main factors that are taken into account, but we can only make a decision on your residence status on the facts in your particular case.”

10. Paragraphs 2.2 and 2.3 provide: “Working abroad 2.2 If you leave the UK to work full-time abroad under a contract of employment, you are treated as not resident and not ordinarily resident if you meet all the following conditions • your absence from the UK and your employment abroad both last for at least a whole tax year • during your absence any visits you make to the UK - total less than 183 days in any tax year, and - average less than 91 days a tax year. (The average is taken over the period of absence up to a maximum of four years - see paragraph 2.10. Any days spent in the UK because of exceptional circumstances beyond your control, for example the illness of yourself or a member of your immediate family, are not normally counted for this purpose.) 2.3 If you meet all the conditions in paragraph 2.2, you are treated as not resident and not ordinarily resident in the UK from the day after you leave the UK to the day before you return to the UK at the end of your employment abroad. You are treated as coming to the UK permanently on the day you return from your employment abroad and as resident and ordinarily resident from that date. If there is a break in full-time employment, or some other change in your circumstances during the period you are overseas, we would have to review the position to decide whether you still meet the conditions in paragraph 2.2. If at the end of one employment you returned temporarily to the UK, planning to go abroad again after a very short stay in this country, we may review your residence status in the light of all the circumstances of your employment abroad and your return to the UK If you do not meet all the conditions in paragraph 2.2, you remain resident and ordinarily resident unless paragraphs 2.8 - 2.9 apply to you. Special rules apply to employees of the European Community (see paragraph 2.14).”

11. In its statement of case served 7 March 2022, HMRC specifically took the point that Ground 3 could not be raised before the FTT, but only by way of proceedings for judicial review.

12. On 6 February 2023, HMRC applied to strike out Ground 3 on that basis. Mr Houldsworth responded on 18 April 2023.

13. The FTT gave directions for the hearing of the strike out application, which took place on 13 September 2023. The FTT struck out the claim on the ground of lack of jurisdiction on 13 March 2024.

14. On 24 April 2024, Mr Houldsworth sent his pre-application protocol letter in the judicial review claim, which culminated in the commencement of judicial review proceedings.

15. HMRC responded on 14 May 2024. That response noted that IR20 reflected practice as at October 1999 and that the document said it was not binding in law. The extension of time application

16. There is no dispute that the claim was not brought within the 3-month time period stipulated by CPR 54.5(1). Mr Houldsworth seeks an extension of time. Has an extension of time application been properly brought?

17. The first point taken against Mr Houldsworth is that the application for an extension of time should have been set out in the Claim Form rather than in the accompanying Grounds of Challenge.

18. As to this: a. Paragraph 6.4.4 of The Administrative Court Guide 2025 provides: “CPR 3.1(2)(a) allows the Court to extend or shorten the time limit even if the time for compliance has already expired. Where the time limit has already expired, the claimant must apply for an extension of time. The application must be set out in section 9 of the Claim Form (Form N461). The application for an extension of time will be considered by the judge at the same time as deciding whether to grant permission to apply for judicial review.” b. In this case, section 9 was not completed, but the Claim Form was accompanied by the Statement of Grounds which did seek an extension of time. c. There is no provision in the CPR which requires an extension of time application to be made in section 9 of the Claim Form, rather than in a document which accompanies the Claim Form. d. By contrast, paragraph 4.3 of Practice Direction 54A provides that an application to extend time “should be included in or contained in a document that accompanies the Claim Form”. e. Finally, paragraph 7.3.1.5 of the Administrative Court Guide provides: “Any application for an extension of time for filing the Claim Form (which can be made in section 9 of the Claim Form or in an attached document).”

19. In these circumstances, I am satisfied that Mr Houldsworth has brought a properly formulated application for an extension of time, it being sufficient for this purpose that the application was made in a document accompanying the Claim Form. Should an extension of time be granted: the principles

20. An extension of the three month time will only be granted where there is good reason or adequate explanation for the delay. Paragraph 6.4.4.2 of The Administrative Court Guide 2025 states: “In considering whether to grant an extension of time, the Court must first determine the date from which the relevant time period started to run so that the period of delay can be calculated correctly. The Court will then consider all the circumstances, including whether an adequate explanation has been given for the delay, the importance of the issues, the prospects of success and whether an extension will cause substantial hardship or prejudice to the defendant or any other party or be detrimental to good administration.”

21. The Guide refers to Maharaj v National Energy Corporation of Trinidad and Tobago [2019] 1 WLR 983 , [38] in which Lord Lloyd-Jones stated: “Here it is important to emphasise that the statutory test is not one of good reason for delay but the broader test of good reason for extending time. This will be likely to bring in many considerations beyond those relevant to an objectively good reason for the delay, including the importance of the issues, the prospect of success, the presence or absence of prejudice or detriment to good administration, and the public interest.”

22. At [47], he continued: “While prejudice or detriment will normally be important considerations in deciding whether to extend time, there will undoubtedly be circumstances in which leave may properly be refused despite their absence. One example might be where a long delay was wholly lacking in excuse and the claim was a very poor and inconsequential one on the merits, such that there was no good reason to grant an extension”.

23. In this case, the explanation offered is that Mr Houldsworth’s legal team wrongly believed that the FTT had jurisdiction to determine Ground 3. In support of the request for an extension of time, Mr Afzal KC relies on the decision in R (Weis) v HMRC [2025] EWHC 2479 (Admin) . In that case, the tax payer had been given specific assurances as to their tax domicile by HMRC, which later changed its view and issued a closure notice assessing Mr Weis for tax. Mr Weis pursued his complaint by various means: an appeal against the closure notices brought on 4 June 2019; and a request for a statutory review in which legitimate expectation arguments were raised. In that review, HMRC said a legitimate expectation argument would not fall within the scope of the statutory review process. Mr Weis also made a complaint under HMRC’s internal complaints process, in response to which HMRC denied that any legitimate expectation had been created. A complaint was also made to the Adjudicator’s Office, although for reasons which were in dispute, that did not progress substantively. The judicial review proceedings were brought within one month of the Adjudicator’s Office stating that the complaint was closed. There was also an ADR process in which both Mr Weis and HMRC participated.

24. The “good reason” offered for the extension of time sought was the pursuit of the internal complaint and the Adjudicator’s Office process, together with the ADR process for the later part of the period.

25. Sheldon J found that it was reasonable for Mr Weis to seek a statutory review which took matters from 10 May 2019 to 17 December 2021. As to the delay from 17 December 2021 to 11 June 2024, Sheldon J held that the pursuit of the internal review process which concluded on 11 May 2022 explained that delay, with the referral to the Adjudicator’s Office on 8 August 2022, and the commencement of the ADR process which ended in early April 2023 explaining much of the later delay. He held that there was unjustified delay thereafter of some 14 months, but that there was good reason to extend time nonetheless. In this regard he relied upon the following matters: a. The question for the court is not whether there was a good reason for the delay, but whether there is a good reason to extend time. b. The importance of the issues raised. c. The fact that the issues were arguable. d. The fact that there would be no real prejudice or detriment to good administration, given that it was highly likely that any judicial review proceedings would have been stayed in that case pending the FTT decision. The application of the principles in this case

26. In this case, the explanation for the delay relied upon is the pursuit of the FTT appeal. It might be said that once HMRC had clearly taken the jurisdiction point on 7 March 2022, Mr Houldsworth could have issued a protective judicial review application at that stage. However, I accept that there is a good chance that, had he done so, the judicial review would have been stayed pending the FTT’s decision on Ground 3 and matters would be no further forward: a. On a limited review, I am persuaded that there was at least an arguable basis for the contention that the FTT could determine Ground 3. The FTT addressed the issue in a lengthy and detailed judgment which was reserved for six months. b. The Tribunal Judge noted that “some of the arguments advanced were less straightforward to resolve than others” ([59]). c. It is a well-established principle of public law that, ordinarily at least, judicial review is a remedy of last resort (paragraph 6.3.3 of the Administrative Court Guide). d. As the Court of Appeal noted in R (Archer) v Revenue and Customs Commissioners [2019] EWCA Civ 1021 , [92]: “The authorities show that, although the time limit in CPR 54.5(1) is indeed strict, it is not applied unthinkingly, and in a suitable context the courts are willing to adopt a flexible and pragmatic approach … Where Parliament has provided a potential alternative remedy, such as that in section 222 , the court will if necessary ensure that the taxpayer is not prejudiced by taking advantage of it … As the guidance in Cowl emphasises, both sides are under a duty to act responsibly and to take all reasonable steps to ensure that judicial review proceedings are not prematurely pursued while other forms of dispute resolution are in progress.”

27. In addition to that explanation for the delay, the following factors support the conclusion that there is a good reason for extending time: a. The argument as to the effect of IR20 is potentially of wider application than just Mr Houldsworth’s case. b. As I explain below, I am satisfied that the claim is arguable and that it will have a significant financial impact on Mr Houldsworth. c. I am not persuaded that the further three month delay from the FTT’s decision on 13 March 2024 to 6 June 2024 was inappropriate, involving as it did compliance with the Administrative Court pre-action protocol process. d. I do not believe granting the extension of time will prejudice HMRC or good administration. HMRC has been fully alive to the issues and Mr Houldsworth’s complaint throughout. As I have stated, had judicial review been commenced earlier I think it likely proceedings would have been stayed pending the FTT’s decision as to its jurisdiction on Ground 3.

28. For these reasons, the application for an extension of time is granted. Should the application for permission be refused on the merits?

29. It is sufficient for Mr Houldsworth to show his claim is arguable.

30. I am satisfied that the reasonable expectation argument based on paragraph 2.2 of IR20 is sufficiently arguable to satisfy the requisite merits test. Significant in this regard are the observations of Lord Wilson concerning that paragraph in Gaines-Cooper v Revenue and Customos Commissioners [2011] UKSC 47 . At [21] he explained the background to paragraph 2.2 of IR 20 as follows: “It became clear from decisions like Combe that, if a taxpayer left the UK in order to pursue employment abroad which was full-time, it was likely not only that he would cease to be a UK resident but also that he would escape being deemed still to be a UK resident under the statutory provision. For, from the fact that the employment was full-time, it was likely to follow that he had made a distinct break in the pattern of his life in the UK. By section 11 of the Finance Act 1956 the position of the full-time employee or other worker abroad was strengthened by a provision (now in effect contained in section 830 of the 2007 Act) that, in determining whether he remained resident in the UK, regard should not be had to any place of abode in the UK which he maintained for his use. As I will demonstrate in para 36 below, the revenue also sought to eliminate any remaining element of doubt about the proper treatment of the full-time employee abroad by providing in the booklet that, subject to specified conditions of ostensibly simple application, he would—definitely—be treated as not resident, nor ordinarily resident, in the UK. In his case, therefore, the revenue was dispensing with the need for the multifactorial inquiry.”

31. HMRC’s “Summary Grounds of Resistance” relies on paragraph 1.1 of IR20 stating that “the terms ‘residence’ and ‘ordinary residence’ are not defined” and “we can only make a decision on your residence status on the facts of your particular case”.

32. However, it is at least arguable that paragraph 2.2 was stating that HMRC would treat someone who met its specified requirements as resident abroad without the need for, and irrespective of, any wider enquiry into other “facts in your particular case.” The issue of whether paragraph 2.2 of IR20 only applied if the tax payer had otherwise made “a distinct break” with the UK, or whether HMRC was stating that it would treat compliance with paragraph 2.2 as sufficient to establish any requisite “distinct break”, is also arguable.

33. Mr Houldsworth advances alternative grounds based on Wednesbury unreasonableness and abuse of power. These are essentially alternative means of making the same point as the legitimate expectation ground. While it is not easy to see how they might succeed if the primary ground fails, I am satisfied that the court hearing Mr Houldsworth’s judicial review challenge should not be prevented from considering these alternative formulations of the same basic complaint. Conclusion

34. Mr Houldsworth is granted permission in respect of all three grounds.