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	England and Wales High Court (Administrative Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Administrative Court) Decisions >> Cameron & Ors v Revenue & Customs [2012] EWHC 1174 (Admin) (08 May 2012) URL: http://www.bailii.org/ew/cases/EWHC/Admin/2012/1174.html Cite as: [2012] STI 1602, [2012] BTC 125, [2012] STC 1691, [2012] EWHC 1174 (Admin)

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT

		CO/9346/2010 Royal Courts of Justice Strand, London, WC2A 2LL
		08/05/2012

Mr Justice Wyn Williams:

Introduction

1. I have to adjudicate upon two sets of proceedings. In the first set of proceedings there are two Claimants, Ian Cameron and Nautilus International (formerly Nautilus International). In the second set of proceedings there is one Claimant, Alon Palmer. The Defendants in each claim are the Commissioners for HM Revenue & Customs. Ian Cameron and Alon Palmer seek substantive relief. No substantive relief is claimed by Nautilus International. Accordingly, and also for ease of reference, for the remainder of this judgment Ian Cameron is referred to as the First Claimant and Alon Palmer as the Second Claimant.
2. The First Claimant worked as a seafarer between 1974 and 31 March 2007. Between 1974 and 1979 he worked on bulk carriers for Jebsens UK. Between 1979 and 1981 he worked for the British Shipping Federation aboard various cargo vessels. Between 1981 and 2002 the First Claimant was employed by P&O as the Chief Engineer on a vessel called the Hjaltland. This was a passenger ferry travelling between Aberdeen and Orkney and Shetland. In 2002 North Link Services (Guernsey) Ltd "took over" P&O and between 2002 and 31 March 2007 the First Claimant was employed by that company. He continued to act as Chief Engineer on the Hjaltland.
3. On 30 August 2006 Seatax Ltd submitted the First Claimant's tax return for the tax year ended 5 April 2006. In it the First Claimant claimed seafarer's earnings deduction (hereinafter referred to as "SED") in the sum of £72,936. Following an enquiry, the Defendants disallowed the entirety of the claim.
4. The Second Claimant has been a seafarer since about 1975. For many years he was the Chief Officer and relief Master of the vessel known as European Pioneer (which became known as the Stena Pioneer as from about 2004), a freight and passenger ferry operating between Larne and Fleetwood. For each of the tax years 2001/2002, 2002/03, 2003/04, 2004/05, 2005/06 and 2006/07 the Second Claimant made claims for SED and its predecessor, Foreign Earnings Deduction ("FED"). Following enquiries, the Defendants disallowed the claims for each year.
5. In these proceedings, the Claimants challenge the lawfulness of the Defendants' decisions to disallow their claims for SED/FED. They each argue that at the time they made their claims to the deduction they held a legitimate expectation that the Defendants would uphold them. The overarching issue in each case is whether, as regards each year of assessment, the Claimants held a legitimate expectation that they would be taxed in accordance with what the parties refer to in these proceedings as "the broad concession" (as to which see paragraphs 19 and 22 below).
6. Nautilus International is a trade union and professional organisation representing masters, officers, officer trainees and other maritime professionals. It has some 18,000 members. It is joined to these proceedings since a number of its members may have an interest the outcome. However, as I have said, Nautilus International does not claim any substantive relief in its own right.
7. As will become apparent, I consider it necessary to describe and make findings about various statements made by and on behalf of the Defendants going back many years. Before setting out a historical narrative, however, it is appropriate to explain the relevant statutory context in which that history unfolded.

The statutory context

8. Schedule 7 to the Finance Act 1977 introduced new provisions in relation to the taxation of earnings from work undertaken abroad. Paragraph 1 of Schedule 7 was in the following terms:-

"1 – (1) Where in any year of assessment –

a) the duties of an employment are performed wholly or partly outside the United Kingdom; and

b) any of those duties are performed in the course of a qualifying period which falls wholly or partly in that year and consists of at least 365 days,

then, in charging tax under Case 1 of Schedule E on the amount of the emoluments from that employment attributable to that period, or to so much of it as falls in that year of assessment, there shall be allowed a deduction equal to the whole of that amount.

(2) For the purposes of this paragraph a qualifying period is a period of consecutive days which either –

(a) consists entirely of days of absence from the United Kingdom; or

(b) consists partly of such days and partly of days included by virtue of sub-paragraph (3) below."

Paragraph 6 provided:-

"For the purposes of this Schedule a person shall not be regarded as absent from the United Kingdom on any day unless he is so absent at the end of it."

9. The provisions contained within Schedule 7 became known as the foreign earnings deduction or FED. In the years that followed legislative changes occurred. For example, in March 1988 FED was confined to persons employed as seafarers. As of the tax year 2006/07 the relevant legislative provisions were contained within the Income Tax (Earnings & Pensions) Act 2003. (It was following its enactment that FED became known as SED). The relevant sections of the 2003 Act are as follows:-

"378(1) A deduction is allowed from earning from an employment as a seafarer if –

a) the earnings are taxable earnings under section 15 or 21 (earnings for year when employee resident and ordinarily resident in UK),

b) the duties of the employment are performed wholly or partly outside the United Kingdom, and

c) any of those duties are performed in the course of an eligible period.

(2) In this Chapter "eligible period" means a period consisting of at least 365 days which is either –

a) a period of consecutive days of absence from the United Kingdom, or

b) a combined period.

(3) A combined period is a period –

a) at least half of the days in which are days of absence from the United Kingdom, and

b) which consists of three consecutive periods, A, B, C where –

A is a period of consecutive days of absence from the United Kingdom or a period which is itself a combined period,

B is a period of not more than 183 days, and

C is a period of consecutive days of absence from the United Kingdom.

(4) For this purpose a person is only regarded as being absent from the United Kingdom on any day if absent at the end of the day.

379(1) The deduction under section 378 –

a) is allowed from the amount of the earnings from the employment attributable to the eligible period, and

b) is equal to that amount.

(2) …..

(3) …..

382(1) Duties which a person performs on a ship engaged –

a) on a voyage beginning or ending outside the United Kingdom (but excluding any part of it beginning and ending in the United Kingdom) or

b) on a part beginning or ending outside the United Kingdom of any other voyage,

are treated as performed outside the United Kingdom for the purposes of this Chapter.

(2) Duties which a person performs on a vessel engaged on a voyage not extending to a port outside the United Kingdom are treated for the purposes of this Chapter as performed in the United Kingdom.

(3) For the purposes of sub-section (1) the areas designated under section 1(7) of the Continental Shelf Act 1964 (c29) are treated as part of the United Kingdom.

(4) ….."

Sections 378, 379 and 382 were derived from various provisions in earlier legislation. It is common ground that any linguistic differences between the provisions in earlier legislation and the provisions set out above are not material to the issues before me.

10. Section 378(1) of the 2003 Act makes it clear that SED is allowed only if three criteria are met. One of those criteria is that the person making the claim performs duties as a seafarer "in the course of an eligible period". Section 378(2) explains what is meant by the phrase "eligible period". As is obvious from the subsection, an eligible period is calculated by reference to "days of absence from the United Kingdom". A person is absent from the United Kingdom only if section 378(4) is satisfied. Under that subsection, a person will be regarded as being absent from the United Kingdom on any day only if he is absent "at the end of the day."
11. Schedule 7 of the 1977 Act contained similar provisions – see Schedule 7 paragraphs 1(2) and 6.

The Defendants' approach to determining whether or not a person was absent from the UK "at the end of the day" during the period 1977 to 2000.

12. As is obvious, it can be very difficult to determine whether a vessel and the seafarers upon it are inside or outside territorial waters at a given moment in time e.g. at the end of a day. Accordingly, as I understand it, even before the 1977 Act came into force measures were being taken to formulate criteria by which it could be determined whether or not a seafarer was absent from the UK or its territorial waters at the end of any given day. On 16 May 1977 a meeting took place between representatives of the Defendants, the Council of British Shipping and various trade unions which represented seafarers. At the meeting the parties sought to agree upon the interpretation of certain terms which were proposed to be used in the Finance Act 1977. As a consequence of the discussion at the meeting a working party was formed to consider some of the issues which had been discussed. One such issue concerned the criteria to be used in order to determine whether a seafarer was to be regarded as absent from the United Kingdom at the end of a day.
13. There is no contemporaneous evidence about how, if at all, this issue was resolved. However, in his first witness statement dated 6 May 2009, Mr Kenneth Eccles, a long standing employee of the Defendants, says that an agreement was reached to the effect that a seafarer would be treated as being absent from the United Kingdom during the day in which the vessel upon which he was serving cast off from a UK berth even if that was before midnight provided that the departure was allied to passage to a foreign port. This was a concession on the part of the Defendants; in these proceedings it has been referred to as "the middle concession".
14. Mr Eccles' understanding is based at least in part if not exclusively upon an exchange of correspondence which took place in July 1980 between a firm of chartered accountants known as Roland, Nevill & Co and the Defendants. On 10 July 1980 the accountants wrote to the Defendants' technical division to raise queries about the application of Schedule 7 to the Finance Act 1977. By letter dated 22 July 1980 the Defendants replied. The last paragraph of the Defendants' letter was in the following terms:-

"Finally, it should be remembered that while paragraph 7 specifies certain duties which are to be treated as performed outside the UK, where the number of qualifying days is relevant for the purposes of paragraph 2 or 4(3)(a), paragraph 6 provides that a person shall not be regarded as absent from the UK on any day unless he is so absent at the end of it, i.e. at midnight. For this purpose, the casting off from a UK berth (allied to passage for overseas port) would be taken as the time of departure from the UK, and equally a ship would be regarded as arriving in the UK at the time of berthing."

15. There is no evidence that this letter was published to a circle which was wider than Roland, Nevill & Co and its clients. Although the accountancy firm had sought information and/or advice from the Defendants with a view to including advice within a tax guide which it published there is no evidence that this is what occurred. In his first witness statement, Mr Eccles frankly acknowledges that his search of relevant files has failed to unearth what if any publicity was given to the letter of 22 July 1980 at or about the time that it was sent to Roland, Nevill & Co.
16. In or about 1979 Seatax Ltd was incorporated. This company was the brain child of Mr Benjamin Byrne who was a seafarer between 1965 and 1979. In 1979, after Mr Byrne's service as a seafarer had come to an end, he founded Seatax Ltd with the specific aim of providing advice to seafarers about their personal taxation. Mr Byrne was wholly unaware of the letter of 22 July 1980 at the time that it was sent by the Defendants to Roland, Nevill & Co.
17. In the years after the incorporation of Seatax Ltd Mr Byrne worked closely with employees of the Defendants. In particular he worked closely with employees of the Defendants who worked in the Cardiff office in a designated marine section. Mr Byrne says that nothing was said to him during the course of the 1980s about the letter of 22 July 1980. There is nothing in the witness statements of Mr Eccles which casts doubt upon this assertion by Mr Byrne.
18. In or about 1987 the Defendant published a document entitled "Notes on the Tax Liability of Seafarers on Foreign Voyages" otherwise known as Form S203(New). The document contained the following relevant passages:-

"A day of absence from the United Kingdom is any day when the seafarer is outside the United Kingdom at the end of the day, i.e. at midnight. The definition of United Kingdom is as explained previously, so that a voyage that does not extend to a foreign port may still count towards days of absence, depending on the vessel's position at midnight in relation to UK territorial waters. A ship would normally be deemed to have left the United Kingdom at the moment at which it leaves its berth or anchorage (whichever is the later) to proceed on its voyage. Arrival times will be similarly defined.

The days of absence from the United Kingdom do not need to be spent on duties of the employment (e.g. foreign holidays) but no deduction will be due for any part of a qualifying period falling in a year of assessment in which no duties of an employment are performed abroad, e.g. if in a qualifying period running from 1 March 1985 to 31 March 1986, the period 1 March 1985 to 10 April 1985 consists of a period of leave spent abroad, or of days of absence on voyages which do not extend to a foreign port, then, no deduction is due for the pay for this period in 1984/1985, as no duties were performed abroad in 1984/1985. For 1985/1986, all pay from 6 April 1985 to 31 March 1986 attracts relief as in that year there were duties performed abroad."

19. Mr Eccles says that Form S203(New) was designed to enable seafarers to submit claims for FED (as it then was). As is obvious, it said in terms that a voyage which did not extend a foreign port might still count towards a day of absence. This document laid the seeds of what the parties refer to as "the broad concession".
20. It is common ground that some time after the publication of S203(New) the Defendants produced and published a specific form to be used by seafarers in the event that they wished to claim SED. This was Form P84. Mr Byrne believes that the form first appeared in around 1991; Mr Eccles says nothing to the contrary. In its original form and thereafter, this document consisted of a number of pages. In the version published in 1994 the first page contained the following:-

"Seafarers Claim to 100% tax relief on earnings or

Claim to be considered non-resident in the UK

To claim the 100% tax relief on foreign earnings or non-resident status in the UK please complete columns 1 to 8 overleaf.

In support of your claim you must provide a copy of your discharge book, or other documentation which confirms details of voyages undertaken. Flights/ferry tickets confirming the dates of leaving/arriving in the UK for foreign holidays taken within the period of the claim and hotel bills, credit cards/currency exchange receipts must also be provided.

To help us give you the best possible service please ensure all the documentation requested above is provided as failure to do so may result in delay.

Further information about a claim to the 100% foreign earnings deduction is on page 4."

The next page contained a number of columns which were intended to be completed by the person claiming the allowance. Above the columns the following bullet points appeared:-

"Please list below, in date order, all dates of departure from and arrivals in the United Kingdom including overseas holidays.

Do not enter voyages between UK ports unless the vessel is outside the 12 mile UK territorial waters limit at midnight. Evidence of this may be required.

Do not enter calls to the UK if you arrive and leave again before midnight on the same day."

The last page of the document began with the heading "Further Information". It continued:-

"You should remember the following points when considering making a claim to the 100% Foreign Earnings Deduction.

To claim relief for any tax year a seafarer must have undertaken, during the tax year, at least one voyage which involves a call to a port outside the UK.

A day of absence from the UK is any day when you are outside the UK at the end of that day (midnight). We normally treat a vessel as having left the UK at the moment it leaves berth or anchorage, on a voyage which will take it outside UK territorial waters 12 mile limit. Arrival times are treated in a similar way.

Holidays overseas, or even periods of unemployment overseas, count towards a qualifying period.

A claim must be of 365 days or more, and must always begin and end with a period spent abroad. You cannot, for instance, make a claim for a period of 365 days which consists of 183 days overseas followed by 182 days in the UK. You must spend a further period outside the UK. Note, however, once a successful claim of 365 days or more is made, you do not have to begin your next claim with a fresh period of 365 days. Your original claim can be extended by further periods abroad.

If you require further information please ask for our booklet ('Seafarers – Notes on Claims for 100% Foreign Earnings Deductions')".

21. During the course of argument there was a debate about the effect of these passages. I will return to that issue in the section of this judgment headed "Discussion".
22. The reference in the last bullet point above to the booklet "Seafarers – Notes on Claims for 100% Foreign Earnings Deductions" was a reference to a booklet known colloquially as "the Blue Book". It is common ground that the booklet was published, first, in October 1993. It defined a day of absence from the United Kingdom in the following terms:-

"A day of absence from the UK is any day when you are outside the UK at the end of that day (midnight). We normally treat a vessel as having left the UK at the moment it leaves berth or anchorage, on a voyage which will take it outside UK territorial waters. Arrival times are treated in a similar way."

The parties agree that this was a publication of the "broad concession".

23. Notwithstanding that S203(New) had been published in or about 1987, that P84 had been published in 1991 and in successive years thereafter and that the Blue Book was first published in 1993, in 1994 the well-known publication Tolley's Yellow Tax Handbook began to publish, for the first time, the text of the letter written by the Defendants on 22 July 1980 i.e. it published the "middle concession."
24. Mr Eccles says that Form P84 became obsolete with effect from 6 April 1996; apparently this was a consequence of the introduction of the self-assessment regime. The version of the Blue Book published in the tax year 1996/1997 makes that clear, as Mr Eccles points out in his first witness statement. However, that version of the Blue Book continued to describe a day of absence from the UK in identical terms to that set out in paragraph 22 above. Further, Mr Eccles acknowledges that although form P84 was intended to become obsolete, in practice, it was used for many years after 1996, probably until 2005 at least.
25. The version of the Blue Book published in 1996 made reference to a help sheet. This was a document published by the Defendants which was given the reference IR205(S). Mr Eccles says that IR205(S) was designed as a help sheet for those engaged in self-assessment. He acknowledges, however, that the help sheet was not as easy to use as Form P84; he says in terms that it made the calculation of qualifying days difficult. Nonetheless, to repeat, it was a help sheet which was published by the Defendants. It appears that the help sheet was published from 1996 to at least the tax year 2002/2003.
26. This help sheet contained the following information:-

"The employment duties of a seafarer are regarded as being performed outside the United Kingdom if they are carried out on a vessel that is engaged on a voyage or part voyage which begins or ends outside the UK. For this purpose, the UK sector of the North Sea is treated as part of the UK. If you had more than one employment in the qualifying period, you may only claim Foreign Earnings Deduction for those in which you performed duties outside the UK.

A 'qualifying period' is made up mainly of days when you are absent from the UK. You are absent from the UK on a particular day if you are outside the UK at midnight at the end of that day….."

27. As is clear from the extract quoted above, the help sheet notified potential Claimants for SED that they were absent from the UK on a particular day only if they were outside the UK at midnight.
28. In July 1999 Mr Eccles and a colleague, Mr Ellam, met with Captain Robin Lock of the Royal Fleet Auxiliary ("RFA"). The meeting was convened to discuss a number of issues and, according to Mr Eccles' first witness statement, one of the issues was the problems he was experiencing with Seatax Ltd in the way that it was interpreting the law in submitting claims for FED or SED on behalf of RFA employees.
29. Mr Ellam made a note of what was discussed at the meeting. It is clear that there was a detailed discussion about claims for FED although it does not seem to me that the discussion focused upon the issue of how to determine whether a seafarer was within or without the UK at the end of a day. Be that as it may, Captain Lock explained to Messrs Eccles and Ellam that the RFA published its own in-house magazine called "Gunline". He asked Mr Eccles to write an article about FED which could be included in an edition of the magazine.
30. Mr Eccles agreed to write the article. He produced at least two versions. One version contained this paragraph:-

"What is a day of absence (Q day) from the UK?

This is a day at the end of which you are outside the UK at midnight. Location at midnight is simple and decisive. You are either in or out. If you are within the areas as defined above, at midnight, then you are in the UK on that particular day. That day is clearly not then a Q day."

The second version contained the paragraph quoted above but continued:-

"However, a concession exists, and has done so since 1980, when a letter was published identifying what the Inland Revenue regard as a day of absence from the United Kingdom for the purposes of calculating the qualifying period for FED purposes.

……

The concession referred to above is contained in a letter issued by the Inland Revenue on 22 July 1980 and is contained in Butterworth's Yellow Tax Handbook. In the letter there is reference to a Scheduled call to an overseas port……The final paragraph of that letter…..states,

"For this purpose the casting off from a UK berth (allied to passage for an overseas port) would be taken as a time of departure from the UK, and equally a ship would be regarded as arriving in the UK at the time of berthing.""

31. It seems to me to be probable that the version which was published in Gunline did not refer to the concession (which was, of course, the middle concession). I say that for these reasons. First, clients of Mr Byrne drew his attention to the fact that they had seen an article which made no reference to the concession. Second, by letter dated 11 April 2000 Captain Lock apparently distributed the version of the article which contained no reference to a concession.
32. I appreciate that Mr Eccles says in his first witness statement that he intended that the version to be published in Gunline was the version which made reference to a concession. I have no reason to doubt what Mr Eccles says. However, the probability is that Captain Lock caused the wrong version to be published.
33. Shortly after Mr Eccles wrote the article for inclusion in Gunline he began correspondence with Seatax Ltd and other agents in which he sought to "clear up any misunderstanding that may have arisen relating to claims to FED by seafarers". It is to this correspondence that I turn in the next section. It is to be noted at this stage, however, that neither Mr Eccles nor any other witness suggests that by this time any publication had been produced by the Defendants which suggested that the Blue Book was redundant or otherwise not to be relied upon.

Correspondence between April 2000 and 2004

34. On 18 April 2000 Mr Eccles wrote a detailed letter to Seatax Ltd. The letter sought to explain how the Defendants would determine whether or not a seafarer was absent from the United Kingdom at the end of the day. It contained the following passage:-

"We normally treat a vessel as having left the UK at the moment it leaves berth for anchorage on a voyage, which will take it outside UK waters bound for an overseas port. The intention is that the vessel leaves berth and immediately sails for a foreign port. It cannot sail around thinking about so doing for a few days. Consequently the day of departure can be regarded as a day of absence provided that the vessel undertakes a voyage directly to a foreign port."

35. As well as writing the letter Mr Eccles enclosed the article which he had written for inclusion in Gunline. It is probable, at the very least, that he included the version of the article which was consistent with the terms of his letter.
36. Mr Eccles wrote another letter to Seatax Ltd on 18 January 2002. Essentially that letter repeated the stance which had been adopted in the letter of 18 April 2000.
37. In his witness statement Mr Eccles says that both these letters were sent to all known agents who acted on behalf of seafarers. In support of that assertion Mr Eccles has produced a list of known agents as at 31 August 2001. There were 20, in total. There is no evidence before me as to the numbers of seafarers who were represented by those agents and no evidence as to the number of seafarers who acted without recourse to agents.
38. In October 2000 a conversation took place between an agent, Mr John Stacey, and Mr Eccles about how absence at the end of the day was to be determined. A file note of the conversation which took place exists and is dated 13 October 2000. On 16 October 2000 Mr Stacey wrote to Mr Eccles to "confirm we are agreed that the times of arrival/departure from the UK for vessels will continue to be treated as set out in the Form P84(1995)" and the leaflet "notes to seafarers".
39. Mr Eccles says that he has no recollection of the conversation with Mr Stacey on 13 October 2000 and he has no recollection of receiving the letter of 16 October 2000. He suggests that it is very unlikely that he would have reached agreement with Mr Stacey as the file note suggests and the letter of 16 October 2000 certainly suggests given the stance which he had adopted in his letter of 18 April 2000 and the terms of the article which he had written for publication in Gunline. However, the conversation between Mr Stacey and Mr Eccles took place in the context of the tax affairs of a Mr DC Bartlett. The letter of 16 October 2000 suggests, in effect, that Mr Bartlett's claim for FED (as it then was) was allowed. Certainly, there is no evidence which suggests that Mr Bartlett's claim was disallowed. On that basis and as surprising as it might appear it must have been accepted that Mr Bartlett was absent from the United Kingdom on a day or on days when the vessel upon which he worked departed before midnight on a journey which took it outside territorial waters even if not bound for a foreign port.
40. In 2003 Mr Eccles left for the Falkland Islands. Nonetheless discussions and correspondence continued about the issue of absence from the UK at the end of a day. On 4 June 2003 a meeting took place between representatives of the Defendants and Seatax Ltd. On 4 December 2003 Mr TEG Davies (a tax Inspector) wrote to Mr Byrne and included within his letter the following:-

"A day of absence from the UK is any day when the claimant is outside the UK at the end of that day (midnight). A vessel is normally treated as having left the UK the moment it leaves berth or anchorage, on a voyage, which would take it outside UK territorial waters. Arrival times are treated in a similar way. Confusion appears to have arisen over this aspect. I hope S378 ITEPA 2003 will clarify the strict legal position. As a practical working arrangement, the Revenue will accept the date of leaving as the date of departure (rather than where the vessel was at midnight) – where the voyage or part voyage, will take the vessel outside the UK territorial waters; S382 ITEPA 2003. This specifically excludes the coastal waters vessels and voyages, which you appear to be including; if I am mistaken, my apologies."

41. Mr Byrne responded swiftly on behalf of Seatax Ltd. On 20 January 2004 Mr Davies modified what he had to say on the "days of absence" issue. He wrote that the Defendants would not normally seek to establish where the ship was at midnight on the day of departure "on genuine qualifying voyages". In a short undated further letter Mr Davies described a "genuine qualifying voyage" as "one in which the ship leaves a United Kingdom port bound for a foreign port." In the months that followed that issue was debated between Mr Byrne and both Mr Davies and a Mr Gowdy. I need not describe that correspondence in detail. Essentially Messrs Davies and Gowdy maintained the position which Mr Davies had set out in his letter of 20 January 2004 as explained by the further undated letter.

Contact between the First Claimant and the Defendants

42. In about the summer of 2004 the Master of the Hjaltland, David Wheeler, told the First Claimant that he might be eligible for SED. Mr Wheeler showed the First Claimant a document which the First Claimant later learned was Form P84. In the words of the First Claimant:-

"The sheet described a day of absence for SED purposes: when the individual is aboard a ship leaving before midnight on a voyage that would take him outside UK territorial waters he is treated as absent from the UK on the day of departure."

43. The First Claimant says that Mr Wheeler also told him about the Blue Book but the First Claimant cannot say whether or not he saw a copy of it.
44. The First Claimant says that following his conversation with Mr Wheeler he had at least two conversations with employees based at the specialist marine section in the Cardiff office. The First Claimant's account of what transpired is not detailed. He says simply that he asked whether he was eligible for SED and was told that he should submit a claim which would be considered. The First Claimant says that he raised, specifically, Form P84 and was given answers which he regarded as evasive although he says that no one suggested to him that the form was obsolete, cancelled, revoked or superseded.
45. On 2 September 2005 the First Claimant engaged Seatax Ltd to prepare his tax return. On 28 March 2006 Seatax Ltd submitted a tax return on behalf of the First Claimant for the year ended 5 April 2005. On 26 August 2006 the tax return was amended.
46. The amended tax return included a claim for SED. The claim for SED proceeded on the basis that the First Claimant was absent from the UK at the end of a day if he was on board a ship which had left its berth before midnight on a voyage which would take it outside the territorial waters of the UK.
47. By letter dated 31 August 2006 the Defendants, apparently, approved the claim. Meanwhile, on 30 August 2006 the First Claimant submitted his tax return for the tax year ended 5 April 2006. That tax return made a claim for SED on precisely the same basis as had been included in the amended tax return relating to the year ended 5 April 2005.
48. In December 2006 the First Claimant was notified that the Defendants intended to enquire into his tax return for the year ended 5 April 2005. On 12 March 2007 the Defendants completed their enquiry. They did not assert that the First Claimant was not entitled to SED.
49. Shortly thereafter the First Claimant retired from his employment. He did so believing that his claim for SED for the year ended April 2006 would succeed.
50. On 3 January 2008 the Defendants opened an enquiry into the First Claimant's tax return for the year ended 5 April 2006. The enquiry culminated in the decision which is challenged in these proceedings.

Contact between the Second Claimant and the Defendants

51. Some time in the late 1990s the Second Claimant began contemplating the possibility of making a claim for FED. The Blue Book was available on the vessel upon which he worked. He took a photocopy of the 1993 edition of the book.
52. In 2001 the Second Claimant telephoned the marine section of the Cardiff office. In his witness statement the Second Claimant says that he described the route of his voyage to the person to whom he spoke and asked, specifically, for confirmation that the details in the Blue Book were correct. He says that he was told in terms that the details in the Blue Book were correct and that provided the vessel in question left its berth in the UK by 23.59 hours that day would qualify as a day of absence. It is also to be noted that the Second Claimant says that following the conversation the person with whom he had spoken at the Cardiff office sent him another copy of the Blue Book.
53. Paragraph 5 of the Second Claimant's first witness statement is in the following terms:-

"In 2003, I completed my claim form for the period I had worked on the European Pioneer ending in April 2002 relying on the Blue Book and again I telephoned Cardiff marine to make doubly sure I was entitled to claim a day of absence so long as I left before midnight. I was advised as long as I followed the guidelines in the Blue Book, it would be "OK". I remember informing the person I spoke to that we sailed from a UK port to a UK port but passed through Manx waters. I was advised that this was passing through international waters and that I should apply the position as stated in the blue book: where the ship departed from a berth in the UK before midnight that day counted as a day of absence for FED."

54. The Second Claimant's first witness statement goes on to state that he relied upon the Blue Book when completing forms claiming FED for the tax years 2002/2003, 2003/2004, 2004/2005 and 2005/2006.
55. By letter dated 27 November 2003 Mrs S C Holland (described in the letter as a Revenue Executive) wrote to the Second Claimant informing him that she intended to open an enquiry into the tax return submitted by the Second Claimant for the year 5 April 2002. The letter sought further information including evidence of foreign ports visits.
56. On 8 March 2004 Mrs Holland wrote a further letter to the Second Claimant in which she stated:-

"Working in conjunction with the voyage reports, and your calculation of your Qualifying Period, I note that voyages that left the United Kingdom before midnight have been counted as a day of absence. This is incorrect as the 'concession' only applies to voyages en route to a foreign port."

57. By letter dated 30 March 2004 the Second Claimant provided information to Mrs Holland in relation to her enquiry. He enclosed what he described as "a sheet that was forwarded to me from the Inland Revenue". The sheet was part of the Blue Book.
58. Mrs Holland replied swiftly by letter dated 2 April 2004. She wrote as follows:-

"With regards to the copy of 'further information' that you have taken from the old Seafarers Leaflet, this does confirm that a day of absence is when you are outside the 12 mile limit at midnight, and engaged on a voyage that will take it outside territorial waters (i.e. to a foreign port). These rules have not changed.

The Fleetwood/Larne run is not en route to a foreign port, and only goes temporarily outside the 12 mile limit. The voyage is therefore between UK ports.

The long-standing 'concession' here in Cardiff where a day is counted 'out' from the time it leaves berth is only when en route to a foreign port.

I also enclose an extract from 'Tolley's' that confirms this point. An article also appeared in Gunline in 2000 and that too confirms the point covered above."

59. The correspondence continued. On 17 June 2004 Mrs Holland asserted that there had never been a concession that a day of absence was counted as a day out of the United Kingdom except where a vessel was on a direct route to a foreign port. By letter dated 22 September 2004 the Second Claimant was notified that the enquiry was complete and that his claim to FED had been disallowed.
60. In 2004 the Second Claimant became aware of Seatax Ltd. He contemplated appointing Seatax Ltd to conduct his tax affairs but, at that time, he decided against it.
61. The Second Claimant asserts that the decision of the Defendants left him "in a predicament". Had he known in 2001 or 2002 that he would not qualify for FED he could have transferred to a vessel within his employers' fleet upon which he would have qualified for the deduction. By 2004 that option was not open to him.
62. There was further correspondence between the Second Claimant and the Defendants relating to claims for SED in respect of later tax years. No useful purpose would be served in detailing that correspondence since from 2006 onwards (the period to which this correspondence relates) the Defendants were entrenched in their view that the Second Claimant was not entitled to claim SED and said so repeatedly.
63. As is obvious there was considerable correspondence between the Second Claimant and employees of the Defendants. It is worth noting, however, that the tenor of the letters sent on behalf of the Defendants was that there had never been a broad concession and that the only operative concession was the middle concession.

Legal principles

64. A taxpayer can challenge by way of judicial review a decision taken by the Defendants in exercising their statutory powers and duties if he can show that they have failed to discharge their statutory duty towards him or they have abused their powers or acted ultra vires. Unfairness in the purported exercise of a power can amount to an abuse or excess of power if it can be shown that the Defendants have been guilty of conduct equivalent to a breach of contract or breach of representation – see In re Preston [1985] 1 AC 835 and in particular the speech of Lord Templeman at page 866G to page 867B.
65. In R v Inland Revenue Commissioners ex parte MFK Underwriting Agencies Ltd [1989] STC 873 the Divisional Court (Bingham LJ and Judge J) elucidated and applied that principle. Bingham LJ said:-

"I do not think that we, sitting in this court, have any reason to dissent from this judgment. It follows that I do not think the assurances the Revenue are here said to have given are in themselves inconsistent with the Revenue's statutory duty.

I am, however, of opinion that in assessing the meaning, weight and effect reasonably to be given to statements of the Revenue the factual context, including the position of the Revenue itself, is all important. Every ordinarily sophisticated taxpayer knows that the Revenue is a tax-collecting agency, not a tax-imposing authority. The taxpayer's only legitimate expectation is, prima facie, that he will be taxed according to statute, not concession or a wrong view of the law (see R v A-G, ex p Imperial Chemical Industries plc (1986) 60 TC 1 at 64 per Lord Oliver). Such taxpayers would appreciate, if they could not so pithily express, the truth of Walton J's aphorism 'One should be taxed by law, and not be untaxed by concession' (see Vesey [1977] STC 414 at 439 [1979] 1 Ch 177 at 197). No doubt a statement formally published by the Revenue to the world might safely be regarded as binding, subject to its terms, in any case falling clearly within them. But where the approach to the Revenue is of a less formal nature a more detailed inquiry is, in my view, necessary. If it is to be successfully said that as a result of such an approach the Revenue has agreed to forego, or has represented that it will forego, tax which might arguably be payable on a proper construction of the relevant legislation it would, in my judgment, be ordinarily necessary for the taxpayer to show that certain conditions have been fulfilled. I say 'ordinarily' to allow for the exceptional case where different rules might be appropriate, but the necessity in my view exists here. First, it is necessary that the taxpayer should have put all his cards face upwards on the table. This means that he must give full details of the specific transaction on which he seeks the Revenue's ruling, unless it is the same as an earlier transaction on which a ruling has already been given. It means that he must indicate to the Revenue the ruling sought. It is one thing to ask an official of the Revenue whether he shares the taxpayer's view of a legislative provision, quite another to ask whether the Revenue will forego any claim to tax on any other basis. It means that the taxpayer must make plain that a fully considered ruling is sought. It means, I think, that the taxpayer should indicate the use he intends to make of any ruling given. This is not because the Revenue would wish to favour one class of taxpayers at the expense of another but because knowledge that a ruling is to be publicised in a large and important market could affect the person by whom and the level at which a problem is considered and, indeed, whether it is appropriate to give a ruling at all. Secondly, it is necessary that the ruling or statement relied on should be clear, unambiguous and devoid of relevant qualification.

In so stating these requirements I do not, I hope, diminish or emasculate the valuable developing doctrine of legitimate expectation. If a public authority so conducts itself as to create a legitimate expectation that a certain course will be followed it would often be unfair if the authority were permitted to follow a different course to the detriment of one who entertained the expectation, particularly if he acted on it. If in private law a body would be in breach of contract in so acting or estopped from so acting a public authority should generally be in no better position. The doctrine of legitimate expectation is rooted in fairness. But fairness is not a one-way street. It imports the notion of equitableness, of fair and open dealing, to which the authority is as much entitled as the citizen. The Revenue's discretion, while it exists, is limited. Fairness requires that its exercise should be on a basis of full disclosure. Counsel for the Applicants accepted that it would not be reasonable for a representee to rely on an unclear or equivocal representation. Nor, I think, on facts such as the present, would it be fair to hold the Revenue bound by anything less than a clear, unambiguous and unqualified representation."

Judge J agreed with Bingham LJ but contributed a judgment of his own. During the course of that judgment he said:-

"In the present case the Revenue promulgated a number of guidelines and answered questions by or on behalf of taxpayers about the likely approach to a number of given problems. The Revenue is not bound to give any guidance at all. If however the taxpayer approaches the Revenue with clear and precise proposals about the future conduct of his fiscal affairs and receives an unequivocal statement about how they will be treated for tax purposes if implemented, the Revenue should in my judgment be subject to judicial review on grounds of unfair abuse of power if it peremptorily decides that it will not be bound by such statements when the taxpayer has relied on them. The same principle should apply to Revenue statements of policy. In those cases where the taxpayer has approached the Revenue for guidance the court will be unlikely to grant judicial review unless it is satisfied that the taxpayer has treated the Revenue with complete frankness about his proposals. Applying private law tests the situation calls for utmost good faith on the part of the taxpayer. He should make full disclosure of all the material facts known to him."

66. The judgment of Bingham LJ in MFK Underwriting Agencies Ltd must be read in the light of the recent decision of the Supreme Court in R (Davies and Another) v The Commissioners for Her Majesty's Revenue & Customs [2011] UKSC 47 and in particular the judgment of Lord Wilson. At paragraph 29 he said this:-

"In that the representations in the booklet are formally published by the Revenue to the world rather than being its response to approaches of a less formal nature, a literal reading of Bingham LJ's judgment suggests that, although they are binding in relation only to cases falling clearly within them, the requirement that they should be "clear, unambiguous and devoid of relevant qualification" does not apply to them. But in my view a case will fall clearly within them only if they were clear, unambiguous etc; and in R (Bancoult v Secretary of State for Foreign & commonwealth Affairs (No 2) [2008] UKHL 61, [2009] 1A.C. 453, Lord Hofmann, at para 60, applied the quoted words of Bingham LJ to a formal publication, namely a press announcement, on the part of the Foreign Secretary. It is better to forsake any arid analytical exercise and to proceed on the basis that the representations in the booklet for which the Appellants contend must have been clear; but the judgment about their clarity must be made in the light of an appraisal of all relevant statements in the booklet when they are read as a whole; and that, in that the clarity of a representation depends in part upon the identity of the person to whom it is made, the hypothetical representee is the "ordinarily sophisticated taxpayer" irrespective of whether he is in receipt of professional advice."

67. In Corkteck Ltd v Her Majesty's Revenue & Customs [2009] EWHC 785 (Admin) Sales J had to consider whether or not a legitimate expectation had been established as a consequence of a telephone conversation which took place between the taxpayer and an agent of HMRC's telephone national advice service. The learned judge heard oral evidence about the conversation and resolved that the taxpayer's account was not reliable. During the course of his judgment, however, he analysed and applied the judgment of the Divisional Court in MFK Underwriting Agencies Ltd. He drew attention to the requirement that the taxpayer should provide to the tax official the full details of the specific issue or transaction upon which he sought guidance and said:-

"In my view, this aspect of the test in ex p. MFK Underwriting Agencies Ltd will be especially difficult to satisfy where the taxpayer claims that an enforceable legitimate expectation has arisen on the basis of a purely oral exchange with a tax official. In particular, where there is no written request for a tax ruling, then in anything other than very exceptional circumstances a tax official will not have been on proper notice of the desire of the taxpayer to have a fully considered ruling on the point of issue and will not have been put on proper notice of the importance and significance of the ruling which he is being asked to provide."

Sales J also stressed the need to scrutinise whether the alleged reliance upon telephone or other oral discussions was reasonable.

68. During the course of the oral arguments there was a debate about whether it was necessary for the Claimants to establish that they had acted to their detriment as a consequence of their reliance upon statements made by the Defendants. I agree with Mr Maugham on behalf of the Claimants that the law in relation to this issue is as stated in the speech of Lord Hofmann in R (Bancoult) v Secretary of State for Foreign & Commonwealth Affairs (No 2) [2009] 1 AC 453. At page 488 Lord Hofmann said:-

"60. The relevant principles of administrative law were not in dispute between the parties and I do not think this is an occasion on which to re-examine the jurisprudence. It is clear that in a case such as the present, a claim to a legitimate expectation can be based only upon a promise which is "clear, unambiguous and devoid of relevant qualification": see Bingham LJ in R v Inland Revenue Comrs ex p MFK Underwriting Agents Ltd [1990] 1 WLR 1545, 1569. It is not essential that the Applicant should have relied upon the promise to his detriment, although this is a relevant consideration in deciding whether the adoption of a policy in conflict with the promise would be an abuse of power and such a change of policy may be justified in the public interest, particularly in the area of what Laws LJ called "the macro-political field": see R v Secretary of State for Education & Employment, ex p Begbie [2000] 1 WLR 1115, 1131."

Ultimately, I did not understand Mr Margolin to take issue with this statement of the law and as will become apparent from my conclusions later in this judgement it is unnecessary to set out passages from the decision in Begbie and other decisions which preceded Bancoult.

69. There was one legal issue canvassed before me which is not the subject of a definitive statement of principle within the relevant authorities. In the list of issues which Counsel provided to me the issue is expressed thus:-

"If the taxpayer did acquire a legitimate expectation that he would be taxed in accordance with the broad concession, did there come a time when the legitimate expectation ceased? Viewed another way, did there come a time when the taxpayer's reliance on HMRC's representations ceased to be reasonable?"

70. In my judgment the answer to these questions must be sought by reference to the manner and extent of the publication of the broad concession. The Claimants allege that the broad concession was published in a formal document produced by the Defendants (the Blue Book) which had as its aim the provision of assistance to seafarers who were contemplating making a claim for FED. The Blue Book was aimed at all those seafarers who were eligible, potentially, to claim FED. Assuming for the moment that the terms of the broad concession within the Blue Book were clear and capable of founding a legitimate expectation, my judgment is that the Defendants would remain bound by the broad concession until they had given notice to all seafarers potentially eligible to claim FED/SED that the concession was to be withdrawn or altered. It is not for me to lay down prescriptive rules about how such notice could be given. However, effective notice of a change could be given only if there was publication in some form to the whole class of potentially eligible taxpayers.
71. In his skeleton argument Mr. Margolin acknowledges that if a taxpayer has acquired a legitimate expectation that he is entitled to the benefit of a particular concession he also has a legitimate expectation that such concession will not be withdrawn retrospectively and that any withdrawal will be managed fairly. He accepts, in effect, that the Defendants should give reasonable notice of any withdrawal or alteration of a concession so as to allow the taxpayers time to make any necessary adjustments to their affairs. I agree with that approach.
72. In this case the suggestion is also advanced that the Claimants acquired a legitimate expectation that they would be taxed in accordance with the broad concession on the basis of oral statements made by employees of the Defendants during telephone conversations. Assuming that a legitimate expectation was properly founded upon such conversations the Defendants would remain bound by what had been said until they had given notice to the Claimants of a change. In these circumstances, of course, notice to the Claimants as individuals (or Seatax Ltd on behalf of the First Claimant) would be sufficient provided the approach set out in paragraph 71 above was also followed.
73. In this case the Defendants argue that even if the broad concession was published in the Blue Book and it properly founded a legitimate expectation upon which the Claimants relied they should not be bound by the concession once they had written to the Claimants denying the existence or application of the broad concession. This point is relied upon particularly in the case of the Second Claimant. Instinctively I do not consider that can be right. If a taxpayer legitimately relies upon a statement made by the Defendants which is contained within a document published by the Defendants and aimed at a class of taxpayers of which the taxpayer is one it does not seem to me that his reliance upon the document ought to regarded as unreasonable simply because an employee of the Defendant expresses a view which is contrary to that contained in the document. In my judgment a taxpayer is entitled to rely upon a statement made in a formal publication unless and until the statement is revoked, withdrawn or altered in the manner described in paragraphs 71 and 72 above.

Discussion

74. A taxpayer's legitimate expectation is, ordinarily, that he will be taxed in accordance with the statutory provisions which are relevant to his tax affairs. That is not the case, however, in relation to claims by seafarers to entitlement to FED and SED. The Defendants accept and, indeed, assert that since the coming into force of the 1977 Act the Defendants have not insisted upon a seafarer proving that he was absent from the United Kingdom at the end of any given day as a necessary step in establishing an entitlement to FED or SED. The case for the Defendants is that a seafarer's entitlement to FED or SED has been or, at least, should have been determined in accordance with the middle concession. The Defendants submit that in each of the tax years in issue in this case the Claimants' legitimate expectation was that their claims to FED/SED would be determined in accordance with the middle concession. It is submitted that in each tax year the Claimants' entitlement was so determined.
75. The middle concession has its genesis in the agreement which Mr Eccles says took place in the late 1970s. Certainly, it is set out, in terms, in the letter dated 22 July 1980 sent by the Defendants to Roland, Nevill & Co (see paragraph 14 above).
76. It is now impossible to determine the extent to which this letter was publicised either in 1980 or in the decade which followed. All that can be said is that in 1994, for the first time, the letter was published in Tolley and that publication in that handbook continued thereafter. I am far from persuaded that the Defendants ever formally published the middle concession to all seafarers who were eligible or potentially eligible to claim FED at any time prior to 1987.
77. As from 1987 three documents had come into existence which the Defendants published and which were aimed, specifically, at seafarers who were eligible or potentially eligible for FED. The first was the document known as Form S203(New). That document was followed by Form P84 and then the Blue Book.
78. On any fair reading of the contents of Form S203 (New) it included a statement of the broad concession (see paragraph 18 above). Form P 84 was published in 1991. The Defendants do not accept that, properly read, this document contains an unequivocal statement of the broad concession. I disagree. In my judgment the last page of the document contains an unequivocal statement of the broad concession which is not qualified by anything contained in the preceding pages. Even if I am wrong about this, however, from 1993 until 1996 P84 was intended to be read in conjunction with the Blue Book. On any view, in my judgment, the Blue Book set out the terms of the broad concession unequivocally (see paragraph 22 above).
79. The evidence shows that P84 was intended to become obsolete with effect from 6 April 1996. There is no evidence to suggest that the terms of the Blue Book were affected, in any way, by Form P84 becoming obsolete. I have not been told the date when a version of the Blue Book was last published but there is no evidence before me which suggests that the Defendants published any document which was aimed at eligible seafarers which suggested that the Blue Book was obsolete or redundant in any of the tax years with which this case is concerned. The last version of the Blue Book which is in evidence before me is the version which was published first in 1996. To repeat, there is no evidence which suggests that the Defendants did or said anything subsequently which would have suggested to the world that the Blue Book was obsolete or redundant or that any part of the information provided in it had been superseded or altered.
80. The Blue Book published in 1996 referred to IR205S. That document did not refer either to the middle concession or the broad concession. It simply specified that a seafarer would be absent from the UK on a particular day if he was outside the UK at midnight at the end of that day i.e. it stated the relevant statutory provision. It is not suggested on behalf of the Defendants that this document should be read as revoking both the middle concession and, if it existed, the broad concession.
81. In my judgment, as from the date of the first publication of the Blue Book at the very latest there was in being a clear statement of the broad concession published in a document which was specifically intended to assist seafarers who wished to claim FED. There is nothing in the evidence which suggests that sometime thereafter and prior to the tax year 2006/2007 the Defendants published a document aimed at eligible seafarers which sought to revoke or alter the effect of the broad concession or suggest that the Blue Book was obsolete or superseded. Further, there is no evidence that the Defendants published or caused to be published a statement of the middle concession at any time after 1993 in any document which was intended to be available to all seafarers who were eligible or potentially eligible for FED/SED.
82. I appreciate, of course, that the Defendants suggest that the article in Gunline made it clear that the Defendants would determine claims for FED on the basis of the middle concession. Two points arise in relation to this article. First, as I have found, the probability is that the article actually published made no reference to the middle concession. Second, even if I am wrong about which version of Mr Eccles' article appeared in Gunline it cannot be said that the article in Gunline was a publication to the whole of the relevant class of taxpayers. While I accept that many potential claimants for FED might read Gunline the Defendants had no basis upon which they could properly conclude that an article in Gunline would amount to publication to all potential claimants for FED. There is no evidence before me which would allow me to reach such a conclusion.
83. I have also borne in mind that the evidence of Mr Eccles is that his letters of 18 April 2000 and 18 January 2002 were sent to all known agents for seafarers. He also says that he sent out to those agents the correct version of the Gunline article when he sent them his letter of 18 April 2000.
84. Obviously this was an attempt to give widespread publicity to the middle concession. However, the same difficulty arises as with the publication in Gunline. This was not publication to all the relevant taxpayers. It was not suggested that all relevant taxpayers were represented by agents.
85. As I have set out in some detail above, extensive correspondence took place between the Second Claimant and officers of the Defendants about the Second Claimant's claims for FED/SED. In the correspondence sent to the Second Claimant the Defendants' officers maintained the position that his entitlement to the deduction should be determined in accordance with the middle concession. While the stance adopted by the Defendants' officers was unequivocal, those letters were personal to the Second Claimant. As I have found it was not unreasonable of the Second Claimant to rely upon the broad concession as published in the Blue Book when the Defendants had published nothing which was generally available to seafarers eligible or potentially eligible to claim FED/SED to the effect that the broad concession was no longer operative or to be relied upon.
86. In my judgment the Claimants have established that the Defendants published the broad concession, at the latest, in 1993 in the Blue Book; that the Blue Book remained readily available for many years thereafter and certainly for many of the years with which these proceedings are concerned. I am also satisfied that the Defendants took no effective step after 1993 to inform seafarers potentially eligible for FED/SED that the broad concession contained within the Blue Book was no longer operative and that seafarers should no longer rely upon it.
87. I turn to the individual circumstances of the Claimants.
88. The First Claimant was aware of part of Form P84 prior to making his claim for SED. He was also aware of the existence of the Blue Book but he has not proved that he saw or knew of its contents. In my judgment that state of affairs does not defeat his claim based upon legitimate expectation. The First Claimant appointed a tax advisor to submit his tax return and he relied upon that agent to make such claims for a reduction in tax to which he was properly entitled. Seatax Ltd was fully aware of the terms of the broad concession. It also knew that some of the officers of the Defendant did not accept that the broad concession was still operational or that it ever had been. Nonetheless, it seems to me to be clear that the First Claimant's claim for SED was made in reliance upon the broad concession as set out in the Blue Book. There can be no other explanation for the making of the claim. It is clear that the First Claimant did not rely upon anything said by officers of the Defendants in his brief telephone calls to the Cardiff office.
89. The Defendants concede that the First Claimant acted to his detriment by giving up his employment after he had submitted his claim for SED for the year ended 5 April 2006. There can be no doubt that he acted in that way because he believed that his claim for SED in respect of that tax year would succeed.
90. I have reached the conclusion that the First Claimant succeeds in his claim for judicial review. The broad concession published in the Blue Book was capable of giving rise to a legitimate expectation; it was clear in its terms and it satisfies the test expounded in MFK Underwriting Agencies Ltd; the First Claimant relied upon the concession; his reliance was reasonable and he acted to his detriment believing that his claim for SED for the tax year ended 2006 would succeed.
91. I reach the same conclusion in the case of the Second Claimant. I accept his evidence that when he made each claim he did so in reliance upon the Blue Book. I also accept that an officer of the Defendants actually sent the Blue Book to the Second Claimant following a telephone discussion which occurred in 2001 which must have reinforced the Second Claimant's view that he was entitled to rely upon its contents. The fact that from 2004 he was on notice that his entitlement to FED/SED was disputed by the Defendants does not lead me to the view that his reliance upon the Blue Book ceased to be reasonable. The correspondence sent to the Second Claimant did no more than articulate the view of officers of the Defendants that there had never been an operative broad concession. I have found that to be incorrect. In any event, it was not unreasonable of the Second Claimant to continue to rely upon the Blue Book in the face of the correspondence when the Defendants had never published any indication to eligible or potentially eligible seafarers as a class that the broad concession had been withdrawn or altered.
92. The Defendants do not concede that the Second Claimant ever acted to his detriment. In fact, I consider that he did. Once convinced, as he was, of his eligibility for FED, he continued to work on the European Pioneer without investigating the possibility of work on other vessels where there could be no doubt about entitlement to FED. In any event set against the background that the relevant concession was published not to the Second Claimant as an individual but to a significant class of taxpayers, it is extremely doubtful, at the very least, whether the Second Defendant's claim could be defeated on the basis that he had not acted to his detriment in reliance upon the concession.
93. I propose to determine the precise form of relief after hearing short submissions from Counsel. If, of course, Counsel are in agreement about the form of relief and all other consequential matters, a draft order can be submitted to me and there need be no appearance by Counsel at the handing down of the judgment.