Arrbab - Court of Appeal of England and Wales restrictively interprets a power accorded in subordinate legislation to amend the primary legislation

Section 124 of the Finance Act 2008 (UK) provided inter alia that Treasury could by statutory instrument make an order in connection with appeals against HMRC decisions which amended the provisions of any Act, provided that a draft of the order had been laid before and approved by resolution of the House of Commons. Treasury made such an order, amending the Tax Credits Act 2002 (UK), which effectively took away the jurisdiction of the First-tier Tribunal to extend the deadline for a taxpayer to challenge a denial by HMRC of working tax credits. Before concluding that such amendment was ultra vires, Falk LJ stated:

Section 124 … is an example of what has come to be referred to as a "Henry VIII power", meaning a provision of primary legislation which permits subordinate legislation to be used to amend primary legislation.

It is now well established that any genuine doubt about the scope of the power conferred by such a provision should be resolved in favour of a restrictive approach. …

(This case broadly accords with the reluctance in Société des alcools and B.C. Ferry to permit Regulations to be applied so as to depart from the intent of the governing legislation.)

A few days before the taxpayer’s appeal was heard before the Court of Appeal, HMRC realized that its denial of the taxpayer’s credits was mistaken, and reversed such denial, so that the appeal was rendered “academic.” Falk LJ stated that the “conditions that will generally need to be met before this court may exercise its discretion to entertain an academic appeal” are that (quoting an earlier decision):

"(i) the court is satisfied that the appeal would raise a point of some general importance; (ii) the respondent to the appeal agrees to it proceeding, or is at least completely indemnified on costs and is not otherwise inappropriately prejudiced; (iii) the court is satisfied that both sides of the argument will be fully and properly ventilated." …

She found that these conditions were satisfied here.

Neal Armstrong. Summaries of Commissioners for His Majesty's Revenue and Customs v Arrbab [2024] EWCA Civ 16 under Statutory Interpretation – Regulations/ Statutory Delegation, and Federal Courts Act, s. 27(1.1).