(Judgment 25/2009)  

On a Hastings-Bass application (which we believe to be the first heard before the Royal Court of Guernsey) Her Majesty’s Revenue & Customs (“HMRC”) applied under Rule 37(1)(b)(ii) of the Royal Court Civil Rules, 2007 (the “RCCR”) to be joined as a party.  

In order to be permitted to join the Hastings-Bass application as a party, HMRC would have to satisfy the Court that the requirements of Rule 37 of the RCCR are met, namely:  

  • there must be a question or issue in the proceedings between the Applicant and the Respondent; and
  • that question or issue arises out of, is related to, or is connected with any relief or remedy claimed in the proceedings; and  
  • it would be just and convenient for that question or issue to be determined between HMRC and the parties to the application.  

HMRC’s argument that they had an interest in the issue before the Court (being the Hastings-Bass application) because the outcome of the application might affect HMRC’s legal right to taxation in the UK was rejected by the Court as the issues in the Hastings-Bass application were between the Applicant and the Respondent only; HMRC would be interested in the tax consequences that may follow from the decision made in the Hastings-Bass application.  

The fact that HMRC has declined a number of opportunities to participate in similar proceedings in the UK was of relevance when considering whether it would be just and convenient for HMRC to be joined as a party. In addition the Court considered that what HMRC was really doing was attempting indirectly to enforce a foreign revenue law which was not something that could meet the just and convenient test.  

The judgment makes it clear that HMRC is in no different position to any other non-party to Guernsey proceedings - it can choose to write to the Royal Court who can deal with any such written submissions as it considers appropriate in the circumstances. It remains to be seen whether or not the decision will be considered by the Court of Appeal. Watch this space!