HMRC loses Christopher Lunn judicial review

HMRC DID NOT follow the correct procedure when withdrawing the tax agent status of a firm that had not been prosecuted for fraudulent accountancy practices, a High Court judge has ruled.

Mr Justice Kenneth Parker, who oversaw a judicial review brought about by the Christopher Lunn firm, found in favour of the accountants, who had a “strong claim” to make representations before the decision was taken. However, he did not dispute the HMRC’s general power to withdraw tax agent status before a successful prosecution.

Commissioners at HMRC took the decision to withdraw the ability of the firm to submit tax returns on behalf of its clients in November 2010. This is the first time HMRC had taken such action against a firm that has not been prosecuted.

The commissioners claimed that evidence that had been uncovered since HMRC began criminal proceedings against the company in June that year had been so strong that it would be a risk to allow Christopher Lunn to continue to process tax claims.

The firm countered that it had been given no chance to make representations to the commissioners before the decision was taken.

The criminal case against the firm is expected later this year.