© 2025 by Michael Firth KC, Gray's Inn Tax Chambers
Contact: michael.firth@taxbar.com
E9. Views of HMRC and others
HMRC VIEWS/PRACTICE
​
- HMRC manuals are merely their interpretation of the law
"[44] Nonetheless, the fact that HMRC’s pensions tax manual contains passages that support Sippchoice’s case carries little weight in this case. Sippchoice has not sought to make any argument that it relied on the passages or had a legitimate expectation that HMRC would not resile from them. Statements in HMRC’s manuals are merely HMRC’s interpretation of the law in their internal guidance and they do not have the force of law. We must interpret the legislation in accordance with the principles of construction described above and if we conclude, as we have, that the legislation bears a different meaning to that found in the HMRC manual, the legislation must be preferred." (HMRC v. Sippchoice Ltd [2020] UKUT 149 (TCC), Roth J and Judge Sinfield)
​
"[24] With regard to HMRC manuals, the Tribunal in Halstead cited, at [92], a passage from the decision of the Upper Tribunal (Roth J and Judge Sinfield) in Sippchoice v HMRC [2020] UKUT 149 (TCC) at [44] that:
"Statements in HMRC's manuals are merely HMRC's interpretation of the law in their internal guidance and they do not have the force of law. We must interpret the legislation in accordance with the principles of construction described above and if we conclude, as we have, that the legislation bears a different meaning to that found in the HMRC manual, the legislation must be preferred."" (Smith v. HMRC [2025] UKFTT 1505 (TC), Judge Brooks)
​
​​​​​- HMRC practice may support taxpayer
“This is not a decisive consideration, but in choosing between competing constructions of a taxing provision it is legitimate, I think, to incline against a construction which the revenue are unwilling to apply in its full rigour, but feel they must mitigate by way of extra-statutory concession, recognising, presumably, that in some cases their construction would operate to produce a result which Parliament can hardly have intended.” (Wicks v. Firth [1983] 2 AC 214 at 231 per Lord Bridge).
- But maybe only where it is consistent with natural meaning
“In our view Lord Bridge’s comments in Wicks may be distinguished. Lord Bridge was already (at pp 229-230) leaning towards an interpretation based on the natural meaning of the provision before him without any straining of language. 35 Mr Prosser on the other hand invited this tribunal to move away from such a natural meaning.” (Spritebeam Limited v. HMRC [2015] UKUT 75 (TCC), §28, Proudman J and Judge Bishopp)
​
- Not when interpreting an international treaty
"The unilateral practice of a taxing authority – no matter how well-advised – is not material that can support or contradict a particular interpretation of a treaty.” (Irish Bank Resolution Corporation Ltd v. HMRC [2019] UKUT 277 (TCC), Marcus Smith J and Judge Herrington - bilateral practice is admissible - §30)
Timing of guidance
​
- Guidance not in existence at time of legislation cannot be used/of little weight
"[54] He sought to draw support for this reading of the substituted provisions from the answers to the frequently asked questions that Lord Walker has quoted in para 34. The Finance Act 2003 received the Royal Assent on 10 July 2003 and they were published on or about that date. The key points were that personal restrictions were to be taken into account and that market value would be determined on a consistent basis throughout Chapters 1 to 5 of Part 7. He submitted that post-enactment official statements of that kind could be taken into account as persuasive authority as to the meaning of these provisions: Bennion, Statutory Interpretation, 4th ed (2002), section 232; R v Montila [2004] UKHL 50, [2004] 1 WLR 3141, para 40; Chief Constable of Cumbria v Wright [2006] EWHC 3574 (Admin), [2007] 1 WLR 1407, para 17.
[55] But, as Lloyd Jones J said in Chief Constable of Cumbria v Wright, para 17, it is for the courts to interpret legislation, not the executive. Mr Johnston QC for the respondents said that the answers on which Mr Sherry sought to rely, which he accepted could not be reconciled with his argument, were not accurate. The point which mattered in this case was that, while the definition of market value was to be applied consistently, the property to be valued under each Chapter varied. The answers had been withdrawn towards the end of 2005 and replaced by a manual dealing with the taxation of employment-related securities from which the points made in the answers were absent. He invited the court not to attach a great deal of weight to them. I agree. I do not think that the points that they make are sufficiently precisely framed to amount to an official statement on the particular issue that arises in this case to carry the persuasive authority that the statement in Bennion contemplates." (Grays Timber Products Limited v. HMRC [2010] UKSC 4, Lord Hope)
​
"[21] Since the words of section 92B and section 116 (1) (b) are closely aligned, [the taxpayer] argues that section 116 (1)(b) should be given the same meaning as section 92B. In support of that submission, [the taxpayer] sought to rely on a statement in Parliament by the Financial Secretary to the Treasury (Dawn Primarolo MP) as the bill which became the Finance Act 2002 was passing through its committee stage in the House of Commons. In response to a proposed amendment to the bill, she said that HMRC would produce a statement of practice to deal with what kind of building would count as residential property. I assume that that is the origin of SP 1/03. The statement itself was not in existence at that time; but it came into existence at or shortly before section 92B was brought into effect by regulations. It follows that that guidance was not available (even in draft) during the passage of the bill through Parliament. It therefore falls outside the principle as stated in Bennion.
[22] Before the UT, [the taxpayer] also relied on guidance given by HMRC after the Finance Act 2003 had passed into law. That guidance was in similar terms to that I have quoted, and related specifically to section 116; although it was altered in 2019 (after the relevant transactions in these appeals). But [the taxpayer] no longer relies on that guidance. His submission is confined to the guidance that he says Parliament must be taken to have had in mind when considering the Bill that became the Finance Act 2003." (Hyman v. HMRC [2022] EWCA Civ 185, Lewison, Simler, Snowden LJJJ)
​
- Existing guidance that Parliament may have had in mind may be relevant depending on the quality of the reasoning
"[15] [The taxpayer] does not suggest that the proposed limitation is in the express words of section 116 (1) (b) itself. But, he says, HMRC (then the Commissioners for Inland Revenue) had published guidance on analogous legislation which was extant at the time that what became the Finance Act 2003 was making its way through Parliament. In enacting section 116 in the way that it did, Parliament should be taken to have had that guidance in mind and to have intended it to be equally applicable to section 116.
[16] In support of this argument, he relies on passages in Bennion, Bailey and Norbury on Statutory Interpretation (8th ed) ("Bennion"). At paragraph 24.10 the editors say:
"While views expressed by officials are not generally admissible they may be relevant if expressed in public before an Act is passed. For example, the drafter of a consolidation Bill will give public evidence to Parliament and there seems to be no reason why this kind of material should not be referred to on the basis that it forms part of the material that was in the contemplation of Parliament at the time at which the Act was passed"
[17] In R v Wandsworth London Borough Council, ex p Beckwith [1996] 1 WLR 60 the House of Lords rejected an argument that counsel sought to support by relying on guidance issued by the Department of Health. Lord Hoffmann said:
"'The opinion of the department is entitled to respect, particularly since I assume that the Act was drafted upon its instructions. But in my view this statement is simply wrong."
[18] Commenting on that decision in paragraph 24.17 the editors of Bennion say:
"There may, of course, be cases where guidance was available in draft during the passage of a Bill through the legislature. In that case it forms part of the relevant contextual material to be borne in mind when construing the resulting Act."
...
[31] As Bennion says at the start of paragraph 24.17, guidance by a public authority may be persuasive authority "depending on the quality of the reasoning". Where, as here, there is neither reasoning nor explanation, SP1/03 cannot be given any significant weight. In my judgment, HMRC's interpretation of section 92B (if that is what it was) was simply wrong." (Hyman v. HMRC [2022] EWCA Civ 185, Lewison, Simler, Snowden LJJJ)
​
- Guidance on stamp duty not relevant to SDLT even if similar wording
"[27] Although the guidance on which Mr Cannon relies was in existence as the bill which became the Finance Act 2003 passed through Parliament, it was given in the context of stamp duty; not SDLT. As the Upper Tribunal pointed out in Pollen Estate Trustees v HMRC [2012] UKUT 277 (TCC), [2012] STC 2443 at [19]:
"SDLT is an entirely new tax invented to replace stamp duty because of the unsatisfactory nature of that tax [i.e. stamp duty]. It is clearly not the case that the new tax carried with it any of the intellectual or other baggage of the old tax."
That observation was approved in this court: [2013] EWCA Civ 753, [2013] 1 WLR 3785. There is no reason, therefore, why Parliament should have intended that the guidance given in relation to stamp duty should apply to SDLT. Second, the guidance given by HMRC did not, even in its own terms, purport to be an interpretation of section 92B. At best it amounted to guidance on how HMRC would, in practice, apply a test. Third, HMRC did not explain why they decided to apply a test derived from the express wording of section 222(3) of the Taxation of Chargeable Gains Act 1992 to section 92B. Section 222 was in very different terms..." (Hyman v. HMRC [2022] EWCA Civ 185, Lewison, Simler, Snowden LJJJ)
​
Guidance on previous legislation
​
HMRC internal management systems do not affect interpretation​
"[59] There was some uncertainty at the end of the hearing about the precise status of Mr Dean’s evidence, or the extent to which it was relied on in support of the Revenue’s submissions. Although we invited further submissions on certain questions apparently arising from it, I do not think the evidence itself is critical to our consideration of this issue. It is of some interest in explaining, not only the background to the present appeal, but more generally aspects of the Revenue’s approach to the self-assessment process, and the workings of its internal systems. However, as Ms McCarthy rightly submits, neither the Revenue’s internal management systems, nor Mr Dean’s subjective understanding of them, can ultimately be determinative of the issue before us. That must turn on the correct interpretation of the law, and an objective reading of the tax return within its statutory framework." ​(R (oao Derry) v. HMRC [2019] UKSC 19)
​
EU VAT COMMITTEE REPORTS
​
- Persuasive but not binding
"[41] Lastly, it is important to note that the VAT Committee, established in Article 398 of Directive 2006/112, carried out an identical analysis regarding the VAT group referred to in Article 11 of that directive in the guidelines resulting from the 119th meeting of that committee of 22 November 2021, which state that the treatment of a VAT group as a single taxable person precludes the members of that group from continuing to operate, within and outside their group, as individual taxable persons for VAT purposes. While such a document does not have binding effect, nevertheless constitutes an aid to the interpretation of the Sixth Directive (see, by analogy, order of 8 October 2020, Weindel Logistik Service, C‑621/19, EU:C:2020:814, paragraph 48).
[42] Similarly, point 3.4.3 of the communication from the Commission to the Council and the European Parliament on the VAT group option provided for in Article 11 of Council Directive 2006/112/EC on the common system of value added tax (COM(2009) 325 final), relating to ‘Intra-group supplies’, states that transactions between members of the same VAT group do not exist for VAT purposes." (Finanzamt T v. S C-184/23)
​
"[36] We now consider some EU VAT Committee documents which refer to dental prostheses and were relied on by HMRC and whether any views expressed in them cause us to alter our conclusion in the previous paragraph. The EU VAT Committee is a consultative body established under Article 398 of the PVD, which consists of representatives from each of the EU member states and also the European Commission. The primary role of the EU VAT Committee is to assist in the uniform application of VAT across the EU through guidelines and consultations in respect of the PVD.
...
[44] [HMRC] accepted that the views of the EU VAT Committee are authoritative but not binding, and that is clear from the footer in the guidelines." (Align Technology Switzerland GmbH v. HMRC [2025] UKFTT 462 (TC), Judge Sinfield)
​
- Not followed where contrary to FTT's own view and not unanimous
"[44]...We have come to the conclusion that we should not follow the view expressed in the guidelines that 'dental devices' are not 'dental prostheses'. We reach this view because that view was clearly not held by all of the member states and the guidelines do not contain any analysis of competing views or reasons for the 'almost unanimous' conclusion. " (Align Technology Switzerland GmbH v. HMRC [2025] UKFTT 462 (TC), Judge Sinfield)
​
OTHER​​
​
Tax Journal articles not an aid to interpretation
"[76] We have not considered the tax journals; they are not an aid to construction. Even if Parliament had wished to achieve a particular result (we do not consider that it did), if the statutory language adopted is for a narrower purpose it is no part of an exercise in purposive construction to give effect to a wider outcome than can properly be borne by the statutory language. That would amount to rectification of legislation." (M Group Holdings Limited v. HMRC [2023] UKUT 213 (TCC), Green J and Judge Ramshaw)
​