Case Nos: CO/1486/2014 & CO/1554/2014

Neutral Citation Number: [2016] EWHC 1880 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION
ADMINISTRATIVE COURT

Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL

Date: 25/07/2016

Before:

MR JUSTICE NUGEE

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Between:

                                               THE QUEEN on the application of:                              Claimants 

(1)	VEOLIA ES LANDFILL LIMITED
(2)	VEOLIA ES CLEANAWAY (UK) LIMITED 

-and-

          THE COMMISSIONERS FOR HM REVENUE                 Defendants
AND CUSTOMS           

And Between :
                                              
                                               THE QUEEN on the application of:                              Claimants 

(1)	VIRIDOR WASTE MANAGEMENT LIMITED
(2)	VIRIDOR WASTE SOMERSET LIMITED
(3)	VIRIDOR WASTE (SHEFFIELD) LIMITED 
(4)	VIRIDOR WASTE KENT LIMITED 
(5)	VIRIDOR WASTE EXETER LIMITED 
(6)	VIRIDOR WASTE (THAMES) LIMITED 

-and-

          THE COMMISSIONERS FOR HM REVENUE                 Defendants
AND CUSTOMS           

- - - - - - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - - - - - -

Sam Grodzinski QC (instructed by Simmons & Simmons LLP) for the Veolia Claimants
Francis Fitzpatrick QC (instructed by Ashfords LLP) for the Viridor Claimants
Melanie Hall QC and Brendan McGurk (instructed by HM Revenue and Customs) 
for the Defendants

Hearing dates: 9-12 February 2016

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Judgment
Mr Justice Nugee: 
Introduction
1.	There are two applications for judicial review before the Court which have been heard together, one by two companies in the Veolia group, and one by a number of companies in the Viridor group.  Although it is necessary to distinguish between the two groups of claimants, it is not necessary to distinguish between the companies within each group and I will refer to them collectively as “Veolia” and “Viridor” respectively.  The claims are brought against Her Majesty’s Commissioners for Revenue and Customs (“HMRC”).
2.	Both Veolia and Viridor are in the business of waste management.  In particular they operate a number of landfill sites around the country.  As such they are liable for a tax known as landfill tax, which is a tax charged on the disposal of material as waste by way of landfill at a landfill site.  Material is disposed of “as waste” if the person making the disposal does so with the intention of discarding it.
3.	The claims concern material known in the industry as ‘fluff’.  Put very simply, household rubbish (or black-bag waste) that goes to landfill is placed in cells lined with a liner to protect the environment.  The practice of landfill site operators is to sort the waste before it is first placed in a cell so that the layer on the base of the cell does not contain sharp or heavy objects which might puncture the liner.  This layer, typically 2 metres deep, has come to be known as ‘base fluff’.  A similar practice is adopted on the sides of the cell as the cell is filled up, and this material has come to be known as ‘side fluff’.    
4.	In July 2008 the Court of Appeal gave judgment in Waste Recycling Group Ltd v HMRC [2008] EWCA Civ 849 (“WRG”).  This decided that a landfill site operator who had used various inert materials for building roads and for ‘daily cover’ on a landfill site had not had the intention of discarding it, as it had retained and used the material for its own purposes.  Following WRG HMRC issued a public notice called Revenue & Customs Brief 58/08, dated 22 December 2008 (“Brief 58/08”).  This confirmed that HMRC would not be appealing the decision in WRG, summarised the effect of the decision as being that material put to use on a landfill site was not taxable, gave illustrative examples of such use, and invited claims for repayment of landfill tax which fell within such examples.  I will have to consider its detailed terms in due course. 
5.	Landfill site operators, including Veolia and Viridor, submitted various claims for repayment, including claims for repayment of tax paid on base and side fluff.  In mid-2009 HMRC decided that base and side fluff claims were in principle well founded, and proceeded to process such claims.  That took some time due to the need to verify the quantum of claims, and also the resolution of certain issues which arose such as ‘capping’ (how far back a claim could go) and ‘unjust enrichment’ (the principle that where a landfill site operator had passed on the charge to tax to its customer, it could not obtain a repayment without undertaking to reimburse the customer); but HMRC did make substantial repayments in relation to base and side fluff.  In Viridor’s case HMRC in February 2012 paid part of its claim for base and side fluff, but held back the balance pending the sorting out of the unjust enrichment arrangements.  In Veolia’s case HMRC in February 2013 formally agreed the quantum of its claim for base and side fluff subject to capping and unjust enrichment, and later agreed the quantum attributable to those issues too.      
6.	HMRC however also started receiving claims for ‘top fluff’ or ‘reverse fluff’, that is for a similarly sorted layer placed at the top of the cell underneath the overlying layers.  The cells have sloping sides, or in other words a trapezoidal cross-section.  This means that they are wider at the top than the bottom, with the result that the quantum of a top fluff claim is much larger than the quantum of a base fluff claim for the same cell.  HMRC could find no trace of the term ‘top fluff’ being used before Brief 58/08 and suspected that the idea had been invented to generate tax repayments or, as Mrs Hall QC, who appeared before me for HMRC, described it, that it was “an accountant’s construct”.  I am not directly concerned with any top fluff claims, and it is not suggested that I should decide whether HMRC are right about this – this may be a matter for a tribunal in due course – but the fact that HMRC took this view is relevant, or at least arguably so, to the matters that I do have to decide.
7.	The upshot was that HMRC determined to resist paying out on top fluff claims.  This was announced in Revenue & Customs Brief 15/12 dated 18 May 2012 (“Brief 15/12”), stating HMRC’s conclusion that top fluff constituted careful placement of soft waste that was and always had been liable to landfill tax.  Brief 15/12 was supplemented on 1 June 2012 by Revenue & Customs Brief 18/12 which contained some clarification but did not affect the substance.   
8.	In December 2013 however HMRC went further and decided to stop repaying on base and side fluff as well.  That decision was taken at the top level within HMRC, by three of the six individual Commissioners.  It was announced in Revenue & Customs Brief 02/14 dated 23 January 2014 (“Brief 02/14”) which stated that HMRC would make no further payment of base and side fluff claims, although it would not seek to reclaim any payments that had been made.  Letters were sent to Viridor on 7 February 2014 and to Veolia on 11 February 2014 stating that in accordance with Brief 02/14 the claims for repayment were refused.
9.	The practical effect for Viridor was that although it had been paid part of its fluff claim, it has been denied repayment of the balance which was subject to the unjust enrichment provisions; the practical effect for Veolia is that it has received no part of its fluff claim.  Veolia say (and it has not been suggested that they are wrong) that they are one of six major players in the industry (Viridor being another of the six), and that they alone of those six have received nothing.
10.	Veolia and Viridor, as well as many other landfill site operators, have appealed HMRC’s refusal of their fluff claims to the First-tier Tribunal.  The question in those proceedings will be whether the material used as fluff was or was not taxable as a matter of law.  The taxpayers’ contention in the appeals is in summary that because the material has been used as fluff it has not been discarded and hence it has not been disposed of as waste; HMRC’s contention is in effect that all the taxpayers have done is discard it carefully.  Those issues are not before me, and I propose to say no more about the underlying substantive question.  Indeed when in May 2014 Thirlwall J gave permission to Veolia and Viridor to bring these applications for judicial review, she expressly directed that the claims should proceed on the basis that HMRC’s current interpretation of the relevant statutory provisions relating to landfill tax is correct, and I therefore proceed on the basis that as a matter of tax law material used as fluff is disposed of as waste, and is and always has been taxable.
11.	In these claims by contrast the issue is not who is right on the substantive question of tax law, but whether HMRC acted unlawfully in reversing its decision to pay out on base and side fluff claims.  Viridor say that for HMRC to depart from the terms of Brief 58/08 is unfair, a breach of their legitimate expectations and an abuse of power.  Veolia says much the same, but has a separate point that it has been treated differently from other landfill site operators (its commercial competitors), and that for both reasons HMRC has acted so conspicuously unfairly that its conduct constitutes an abuse of power and is unlawful.
12.	HMRC for their part deny that Brief 58/08 said anything to the effect that fluff claims would be paid; assert that the taxpayers do not come with clean hands; and in any event say that the decision to stop paying out on base and side fluff claims was objectively justifiable.  
13.	HMRC also have a contingent application for a stay pending the tribunal proceedings.  It is contingent because Mrs Hall accepts that if I came to certain conclusions, there would be no risk of an overlap between my views and those of the tribunal and no ground for a stay; but if I reached other views, she says that there would be such an overlap and a risk of inconsistent findings such that my judgment should be stayed.  I will come back to the details of this submission in due course. 
Landfill tax
14.	Landfill tax was introduced by the Finance Act 1996 (“FA 1996”), and the relevant provisions are found in Part III (ss. 39-71) and sch 5.  The “basic provisions” are ss. 39-42, of which s. 39 created the tax and entrusted it to the care of (originally) the Commissioners for Customs & Excise.  The charging provision is s. 40 which (as enacted) provided as follows:
“40.  	Charge to tax
(1)  	Tax shall be charged on a taxable disposal.
(2)  	A disposal is a taxable disposal if—
(a)  	it is a disposal of material as waste,
(b)  	it is made by way of landfill,
(c)  	it is made at a landfill site, and
(d)  	it is made on or after 1st October 1996.
(3)  	For this purpose a disposal is made at a landfill site if the land on or under which it is made constitutes or falls within land which is a landfill site at the time of the disposal.”
(This section has subsequently been amended so that it only applies to England and Wales and Northern Ireland, but until April 2015 it also applied to Scotland.)
15.	s. 41 provides that the person liable to pay the tax is the landfill site operator. s. 42 specifies the amount of tax.  This has always distinguished between a standard rate (payable on what is sometimes referred to as ‘active waste’), and a lower rate for “qualifying material”, that is for ‘inactive’ or inert waste.  As originally enacted, the standard rate was £7 per tonne, and the lower rate £2 per tonne; by April 2008, these had increased to £32 and £2.50 per tonne respectively; and they are now £84.40 and £2.65 per tonne.
16.	There are a number of interpretation provisions, including s. 64 which provides as follows:
“64	Disposal of material as waste
(1)  	A disposal of material is a disposal of it as waste if the person making the disposal does so with the intention of discarding the material.
(2) 	The fact that the person making the disposal or any other person could benefit from or make use of the material is irrelevant.
(3) 	Where a person makes a disposal on behalf of another person, for the purposes of subsections (1) and (2) above the person on whose behalf the disposal is made shall be treated as making the disposal.
(4) 	The reference in subsection (3) above to a disposal on behalf of another person includes references to a disposal—
(a) 	at the request of another person;
(b) 	in pursuance of a contract with another person.”
Another interpretation provision, s. 65, contains an explanation of what constitutes a “disposal of material by way of landfill”: this includes a deposit of material on or under the surface of land.
17.	Some other provisions can be briefly noted.  First, under s. 54, an appeal lies to an appeal tribunal from various decisions, including a decision as to whether tax is chargeable in respect of a disposal or as to how much tax is chargeable; s. 54A then provides that HMRC must offer a person a review of a decision that has been notified to him if an appeal lies under s. 54 in respect of the decision, and that the offer of the review must be made by notice given to him at the same time as the decision is notified to him.  
18.	Second, para 14(1) of sch 5 provides that where a person has paid an amount to HMRC by way of tax which was not tax due to them, HMRC shall be liable to repay the amount to him; para 14(2) provides that they shall only be liable to repay such an amount on a claim being made for such purpose; para 14(3) provides that it shall be a defence in relation to such a claim that repayment of an amount would unjustly enrich the claimant; and para 14(4) provides that HMRC should not be liable, on such a claim being made, to repay any amount paid more than a certain time before the making of the claim; since 1 April 2010 this has been 4 years, but in the version which was in force from 1997 to 31 March 2010 it was 3 years.  
19.	Third, para 14 of sch 5 to the Finance Act 1997 provides that where a repayment has been made to anyone under (among other provisions) sch 5 para 14 FA 1996, and the amount of repayment exceeded that which HMRC were liable to repay, they may assess the excess and notify it to him, and para 16(2) makes such amount recoverable from him as if it were tax due from him; para 16(1) however provides that such an assessment shall not be made more than 2 years after the time when evidence of facts sufficient in HMRC’s opinion to justify the assessment come to their knowledge.
20.	Fourth, the defence of unjust enrichment to a repayment claim (as provided for by para 14(3) sch 5 FA 1996) is supplemented by detailed requirements in the Landfill Tax Regulations 1996/1527, regs 14A to 14H.  It is not necessary to refer to the provisions in detail; the general effect is that a claimant for repayment who has passed on the tax, or any part of it, to his customers (referred to as “consumers”), and so would otherwise be liable to be met by a defence of unjust enrichment, has to arrange to reimburse the consumers and give certain undertakings to HMRC.  The undertakings have to be given no later than the time at which he makes the claim for repayment (reg 14G(1)), and must include an undertaking that at that time he can identify the consumers he has reimbursed or intends to reimburse (reg 14G(2)(a)), and that he will repay them by no later than 90 days after receipt of the relevant amount from HMRC (reg 14G(2)(b)).
The WRG decision
21.	I have referred briefly to the decision of the Court of Appeal in WRG above.  Waste Recycling Group (“WRG”) was a landfill site operator that operated a number of landfill sites.  The appeal concerned its liability to tax on inert material, such as builders’ rubble, that WRG received at, or transferred to, its landfill sites, where WRG used it for ‘daily cover’ (that is to lay over the waste which had been deposited during the day, which was a requirement of its licence to operate the sites), or for other purposes, described by Barling J as “site engineering purposes, particularly the construction of roads within the site”.  It was common ground that the disposals with which the appeal was concerned were made (i) on or after 1 October 1996, (ii) by deposit on the surface of the land (and hence “by way of landfill” within the meaning of s. 40(2)(b) and s. 65 FA 1996), and (iii) at landfill sites; and WRG historically accounted for, and paid, tax, at the lower rate, on all such material.  It then however sought to reclaim the tax on the ground that the material had not been disposed of “as waste” within the meaning of s. 40(2)(a) and s. 64 FA 1996.  Its claim was rejected by HMRC, and again by the VAT and Duties Tribunal, but an appeal to the High Court by WRG was allowed by Barling J, and a further appeal by HMRC to the Court of Appeal was dismissed.
22.	The only reasoned judgment was given by Sir Andrew Morritt C.  In essence his reasoning was that all four conditions in s. 40(2) FA 1996 had to be satisfied at the same time [30]; that the conditions in s. 40(2)(b) and (c) (disposal by way of landfill, and at a landfill site) could only be satisfied at the end of the process, so that was when the condition in s. 40(2)(a) (disposal as waste) also had to be satisfied [32]; that on the facts as found by the Tribunal, WRG owned the property in the material at that time [32] and the relevant disposal was a disposal by WRG on its own behalf [33]; that the relevant question therefore was whether WRG then intended to “discard” the materials within s. 64(1) [33]; and that “discard” was used in its ordinary meaning of “cast aside”, “reject” or “abandon”, and did not comprehend the retention and use of the material for the purposes of the owner, as in such a case there was either no disposal at all, or no disposal with the intention of discarding it [33].  On the facts, WRG’s use of the relevant material was clear and such use was conclusive of its intention at the relevant time [35].  
From WRG to Brief 58/08
23.	Prior to WRG it was the prevailing practice amongst landfill site operators to pay landfill tax (and charge their customers) on broadly all of the waste that was brought to their sites for landfill.  The WRG case therefore meant that across the industry tax had been paid that should not have been, and repayments could be claimed.
24.	The judgment of the Court of Appeal in WRG was handed down on 22 July 2008.  Even before it was formally handed down, consideration was given by HMRC as to the implications: a policy document dated 20 July 2008 refers to the judgment as having widespread implications for landfill site operators and said that policy would need to be clarified in the light of it.  It estimated that the impact of the judgment on revenue would be that about half the yield from the lower rate (about £13m a year over a 3 year period) would be lost, as against estimated revenue from the tax as a whole for 2008-09 of £1.1bn (that is a little over 1% of the total).  It also recognised that without a change in policy HMRC would have to look at each transaction relating to daily cover and site engineering individually, which would be unworkable.
25.	By 5 August 2008, when HMRC had a meeting with DEFRA, they had started drawing up a list of uses of waste on landfill sites.  This indicated what type of waste might be used for various types of “site engineering”, (such as daily cover, site haul roads, the ‘cap’, regulating layers etc).  One of the types of site engineering considered was “Cell Engineering”, where the types of waste used were listed as follows:
“Clay for lower/upper slopes and base of cells.  If an HDPE and/or GSL (Geosynthetic) liner is used then sand and soils free of stones and sharp objects could be used above and below it to protect it. 
Waste tyres either whole or shredded may be used to protect the membrane and as a drainage medium above the liner.” 
An e-mail of 6 August 2008 from Ms Katherine Mansfield at HMRC to DEFRA shows that HMRC were planning to use the list as a basis for seeking legislation which would specify that certain uses of waste at landfill sites should be taxable notwithstanding that they did not meet the definition of waste in FA 1996, and were looking to DEFRA to tell them what should or should not be on the list.  Ms Mansfield described the proposed legislation as “quick and dirty”, that is (as explained by her in a subsequent e-mail of 30 October 2008) a rough and ready solution that could be ready for the Finance Bill 2009 to bring material back into tax as appropriate, there not being enough time before the Finance Bill to devise legislation to address the full range of landfill tax issues.
26.	A revised version of the list dated 14 August 2008 identified which of the various types of waste used were taxable at the lower rate and which at the standard rate, so that the entry for Cell Engineering now read as follows:
“Lower rate; Clay for lower/upper slopes and base of cells.  If a High Density Polyethylene (HDPE) and/or Geosynthetic (GSL) liner is used then sand and soils free of stones and sharp objects could be used above and below it to protect it. 
Standard rate: Waste tyres either whole or shredded may be used to protect the membrane and as a drainage medium above the liner.”
	Although a number of possible uses of standard-rated material were identified, none of them referred to household or black-bag waste; as well as tyres, they included such materials as over-sized compost, shredded/chipped wood, fragmentiser waste (known as ‘car frag’ – that is those parts of scrapped cars which cannot be otherwise recycled, ground up into small pieces) and road planings.
27.	An email from Mr Ivor Berry, of the Environmental Taxes Unit of Expertise in Gosforth, dated 26 August 2008 indicates that HMRC had by then decided that they would not further appeal WRG; that HMRC were considering their future policy and procedure for making repayments of tax paid on site engineering materials; and that a policy announcement would be made in due course, but not before October when Parliament was back in session.  In the meantime any claims for repayment should be forwarded to Mr Berry at the Unit of Expertise and would be acknowledged, but no further action would be taken until the announcement were made.  
28.	Ms Mansfield’s e-mail of 30 October 2008, which explained the proposal for “quick and dirty” legislation, circulated within HMRC another list of uses of material on a landfill site, this time specifying whether the uses on the list should be subject to tax or not.  She asked the recipients for comments on the technical descriptions, adding:
“I’m afraid that whether or not a use of waste is taxable isn’t up for grabs. This has been decided by Defra and they get final say on the matter.” 
The attached list distinguished between what should and should not be taxed based on a rule of thumb that the use of waste to create an engineered feature which would have a permanent use should not be taxed, but the use of waste where the waste would be subsumed within the bulk of the waste in landfill void within a relatively short period of time should be taxed.  Under “Cell engineering”, which it was proposed should not be subject to tax, the list of uses of material was as follows: 
“Mineral material used as part of an artificially established [geological] barrier on the bottom, sides or top (cap) of a landfill. 
Materials used to protect from damage any geosynthetic product used for landfill containment on the base, sides or top of the landfill.
Drainage material at the base and up the sides of the site used to collect leachate and allow its transport to a low point for collection/ extraction.
Material used beneath the landfill and up the sides of the site to allow landfill gas to accumulate for extraction. 
Material used as a preferential drainage layer above the cap to encourage surface water drain off.
Mineral material used to protect the cap and provide a restoration layer for planting.”
29.	That was followed on 26 November 2008 by instructions from HMRC to solicitors to draft instructions to Parliamentary Counsel to draft legislation to make certain uses of material on a landfill site subject to tax; these were daily cover and certain other temporary uses such as temporary site haul roads.  The instructions summarised the key effect of WRG as being that “where a landfill site operator uses or intends to use material it is not waste subject to a taxable disposal.”  The instructions also reveal that by that stage the estimate of annual revenue loss (going forward) was a possible £60m per annum; this figure, rather higher than the initial estimate of £13m annual revenue loss (for past years), is no doubt explicable by the realisation that some active waste could escape tax on the basis of WRG, such as car frag, which might be used for daily cover.  The instructions gave the annual revenue from landfill tax as about £0.9bn.
30.	On 22 December 2008 HMRC issued Brief 58/08.  Since this document was relied on by the taxpayers as giving rise to a legitimate expectation, I should set out quite a large part of it.  So far as material it reads as follows:
“Revenue & Customs Brief 58/08
Landfill tax: use of material on landfill sites – Court of Appeal judgment in Waste Recycling Group Limited case
1.	This brief is for landfill site operators and is our response to the judgment of the Court of Appeal in Commissioners for Her Majesty’s Revenue and Customs -v- Waste Recycling Group Limited [2008] EWCA Civ 849.
Background
2. 	On 22 July 2008 the Court ruled in favour of Waste Recycling Group Limited in their action relating to landfill tax liability. The Court found that where material received on a landfill site is put to use on the site (for example, for the daily coverage of sites required under environmental regulation, and construction of on-site haul roads), it is not taxable, as there is not, at the relevant time, a disposal with the intention of discarding the material.
3.	We accepted the Court’s decision and did not seek leave to appeal to the House of Lords. 
Description of use of material
4.	Notwithstanding any possible future changes to landfill tax legislation that the Government might decide to introduce, the judgment means that materials put to use on a landfill site are not taxable. Illustrative non-taxable uses of material include: 
Cell Engineering
•	Mineral material (including clay) used as part of an artificially established (geological) barrier on the bottom, sides or top (cap) of a landfill. Materials used to protect from damage any geosynthetic product used for landfill containment on the base, sides or top of the landfill.
•	Drainage material at the base and up the sides of the site used to collect leachate and allow its transport to a low point for collection/ extraction. 
•	Material used beneath the landfill cap and up the sides of the site to allow landfill gas to accumulate for extraction. Material used as a preferential drainage layer above the cap to encourage surface water run-off. 
•	Mineral material (including clay) used to protect the cap and provide a restoration layer for planting. 
Daily cover
Material used to cover waste during operations and/or at the end of the working day to reduce emissions of odour, dust etc. and to reduce the risk of waste disturbance by birds, vermin or insects. 
Temporary site haul roads
Material used for the construction of roads within the waste disposal area which gives access to the landfill working areas.
Temporary hard-standing 
Material used for the construction of bases/surfaces within the waste disposal area on which activities, for example treatment or recycling operations, take place.
Permanent site haul roads
Material used for constructing roads prior to the commencement of landfilling on the site or off the waste disposal area (characterised by construction in tarmac or concrete and incorporating drains, kerbs, etc).
Permanent hard-standing
Material used for constructing hard-standing areas prior to the commencement of landfilling on the site of the waste disposal area (characterised by construction in tarmac or concrete with sealed drainage).
Cell bunds - part of the engineering structure
Mineral material including clay used to form separate cells on the base of a landfill as part of the engineered containment.
Cell bunds - not part of the engineering structure
Material used for the construction of bunds within the waste disposal area to separate individual cells, except on the base of a landfill as part of the engineered containment.
Temporary screening bunds
Material used as a temporary shield while landfill or recovery activities take place.
Permanent noise/visual screening bunds or mounds 
Material used for the construction of permanent noise or visual screening structures that are intended to remain after the end of landfilling operations.
Gas and leachate pipes and boreholes
Material used to “backfill” the space between the edge of the hole drilled to extract or monitor landfill gas or leachate and a pipe inserted into that hole.
Making a claim for tax
5.	We will not expect or require operators to correct past declaration errors, which were made on the basis of our prevailing interpretation of the law. Operators will, however, be required to apply the new interpretation of the law from the date of this Brief. Where a landfill site operator wishes to correct past errors and make a claim to us for a repayment of tax incorrectly paid, they may do so, subject to the conditions set out in this section of the Brief. 
6.	We may reject all or part of the claim if repayment would unjustly enrich the claimant. Broadly speaking, unjust enrichment means that a claimant would get a windfall profit, because the tax or duty that they are seeking to recover was, in effect, paid by the consumer or consumers (their customer or customers) and the claimant is not planning to pass the refund back to the consumer(s). 
…
11.	We are not liable to repay any amount paid to us more than 3 years before the making of the claim and operators must be able to produce evidence that they overpaid the tax on material used on the landfill site for uses described in paragraph 4 above, and must be able to substantiate the amount claimed. Please note that notification to us that an operator intends making a claim in the future will not be treated as a valid claim for time limit purposes. Subject to the three-year limitation period, any claim should also be for all prescribed accounting periods in which the overpayment(s) occurred. Should a claim not take into account all errors or all affected accounting periods, we will seek to set off amounts owed for these periods against amounts claimed in other periods. 
…
14.	Advice on the guidance for making a claim set out in this Brief should be sought from our Environmental Taxes Unit of Expertise (address and phone number below).” 
	It then gave the address in Gosforth of the Unit of Expertise.
31.	At about the same time HMRC produced a document containing guidance for officers, addressed to all HMRC staff involved in the administration or verification of claims for repayment for landfill tax, and intended to sit alongside Brief 58/08.  It referred to the fact that the judgment in WRG had specifically referred to two uses of material that were not taxable (daily cover and construction of haul roads) but added:
“However, legal advice is that the effect of the judgment is wider than these uses, and uses that are not taxable include all those listed by way of illustration in the HMRC Brief. 
This list may not cover every possible use affected by the WRG judgment. Where an operator suggests that they have put material to some other use officers should contact Ivor Berry in the UoE.”
	Under a heading “What is not now taxable?” the guidance said:
“Where a landfill site operator uses material – or intends to use material - no tax is due. As indicated above, the HMRC brief sets out a list of illustrative non-taxable uses of material. 
Although the majority of usage should be of material which would have been within the scope of the lower rate of tax (e.g. soils used for daily cover), in some cases the uses might be of material which would have been standard rated. Car frag used as daily cover is a good example of non-taxable use of material that would have been standard-rated prior to the WRG judgment.”
Fluff claims
32.	There is no reference in any of the material referred to above to the possible use of household waste at landfill sites, or to “fluff”, and there is indeed nothing in the documentary record to suggest that that those responsible for drafting and publishing the Brief had in mind the practice of landfill site operators in this respect, or were even aware of it.
33.	The evidence does not disclose who first had the idea that a claim could be made for repayment of tax on the basis that household waste that was used for a fluff layer was not taxable.  It appears that landfill site operators were not slow to make repayment claims: on 14 January 2009 Mr Berry reported to an internal HMRC meeting that the largest landfill companies had by then all submitted claims, and that the total claims received to date exceeded £101m (excluding interest), against an estimate from KAI (HMRC’s Knowledge, Analysis and Intelligence unit) of claims reaching £105m all told.  This figure did not include one claim that had been received for £101m which was what became known as a ‘gas claim’, namely that biodegradable waste which gave off gas (methane), the methane then being collected and used to generate electricity, was not taxable as it was being used for that purpose.  
34.	It is not very clear on the evidence when the first fluff claim was made.  In evidence for these proceedings, Mr Morris Graham, an Assistant Director in the Large Business team of HMRC, suggests that the first fluff claim was not made until 3 February 2009, when it was described as a leachate drainage layer claim; but there are other indications that the first claim may have been made as early as September 2008, that is before Brief 58/08 was published: see paragraph 65 below.  I have no other details of the initial fluff claims, or evidence as to how they were dealt with, apart from a passing reference in an e-mail of Mr Berry’s from June 2009 (see paragraph 38 below) indicating that one such claim had been rejected.   
35.	It seems probable however that some consideration had been given to the question of fluff by 19 May 2009 when Ms Mansfield wrote to landfill site operators with details of proposed draft legislation which was intended to bring certain uses of material on a landfill site into the scope of the tax from 1 September 2009.  This consisted of a draft clause and schedule in the Finance Bill 2009 conferring powers on HM Treasury to prescribe certain activities on landfill sites which would be treated as a taxable disposal of waste, and draft secondary legislation including a draft Landfill Tax (Prescribed Landfill Site Activities) Order 2009 to be made under such powers.  The draft order specified in art 3(1) a number of activities to be treated as taxable disposals, such as the use of material to create a temporary haul road, of which one, at art 3(1)(g) was as follows:
“[the use of material placed against the drainage layer or liner of the disposal area to prevent damage to that layer or liner]” 
It seems very likely that this refers to fluff; it was the only sub-paragraph in the draft order in square brackets and no doubt reflects some uncertainty whether it needed to be included.
36.	That was followed on 4 June 2009 by a visit by Mr John Durkan, a policy officer member of HMRC’s Environment and Transport Taxes team, and Mr Berry to a landfill site in Scotland to better understand whether the use of waste as fluff qualified for repayment of tax under the WRG criteria.  Mr Durkan reported to Ms Mansfield (in the same team) by e-mail on 8 June, copying in Mr Berry and two other individuals in the Environment and Transport team, and since Mr Grodzinski QC, who appeared for Veolia, described it as a very important e-mail, I should set out the substance of it, as follows:
“At the landfill site visit last Thursday I took some photos, including some of the ‘fluff’ layer being laid down…
The material for this layer is black bag waste deposited by the council’s bin lorries on the active cell. This is then sorted by a digger driver into a pile that is suitable for the fluff layer (nothing too heavy [or] with anything that might damage the drainage layer or the liner) and the pile that isn’t. This sorting is a fairly rough process, with the digger driver using the digger bucket to lift the waste and then putting it down again - it’s totally down to his experience as to whether the material is suitable or not. My impression was that most of the waste passes the test. The customer gets charged the same regardless of whether the waste is used in the fluff layer [or] is just disposed of straight into the active cell. The material for the fluff layer is then loaded into a dumper truck and taken to the cell that is being filled with its fluff layer. Waste that isn’t suitable for the fluff layer is spread and compacted on the active cell. Waste that is tipped for the fluff layer isn’t compacted. The whole of the base of the cell is covered with a fluff layer before anything else happens in the cell. Once the fluff layer is complete, an independent engineer inspects it and produces a report. This goes to SEPA and if they’re happy, they allow the landfill site operator to use the cell for accepting more general waste. 
Much as it goes against the grain, I think that the use of the waste for the fluff layer is, in post-WRG terms, just as much a use of waste as is that for daily cover. Indeed in some ways, because of the report from the independent engineer followed by SEPA’s OK, it is a clearer use of waste. I think we wouldn’t be able to put up a good case for refusing to pay back any tax paid on the use of waste in the fluff/soft/blinding layer above the drainage layer/liner and that we should give in gracefully now. We should therefore ensure that this use of waste is brought back into tax on 1 September.” 
(SEPA is the Scottish Environment Protection Agency).   
37.	Ms Mansfield replied to Mr Durkan the same day, saying:
“Thank you for this - I will be instructing Laura shortly. 
We are all agreed that this is a clear case of waste use.  Can you let Annette and Ivor know to tell Officers to accept claims for this material (I would not propose issuing an addendum to 58/08 – this makes clear that the list of material on which we will make repayments is not exhaustive). 
Jon/Steve- sorry to mess up your modelling.  This is another category of waste on which we will be making repayments - the fluffy/ soft/ binding layer is a layer of sorted waste immediately above the liner intended to prevent puncturing of the liner….”
	The reference to “Jon/Steve” was to two individuals at KAI, and the reference to “instructing Laura” was to Ms Laura Stockwell who was dealing with the draft statutory instrument.  Ms Mansfield e-mailed her later that day asking for the square brackets to be deleted so that fluff could be brought back into tax, saying:
“Following John Durkan’s site visit to look at such a layer we believe this is a use of waste in the terms of WRG and no tax is due.  We want to bring this use into tax…
Briefly, while the fluffy layer looks like (and indeed is) rubbish…it is a requirement of the regulator that such a layer is included in a disposal area and the layer will be subject to inspection by an engineer.  In many ways, the case for the fluffy layer being a use of waste is more convincing than that for daily cover being a use of waste.”
38.	On 11 June Mr Durkan, as requested, e-mailed Ms Annette Hughes and Mr Berry, saying:
“The claim was for the layer of waste placed at the bottom of the cell above the drainage layer and liner.  The purpose of the layer is to protect the drainage layer from damage and clogging and to ensure the liner doesn’t get pierced by sharp objects.  The site we visited called it the ‘fluff’ layer but it may be called other things, for example the ‘soft’ layer or the ‘blinding’ layer, but the function is the same.  This use of waste was added in square brackets as a prescribed landfill site activity in Article 3(1)(g) to the draft Landfill tax Prescribed Landfill Site Activities Order 2009.
As a result of our visit, we are all agreed that this is a clear case of waste use.  Please can you tell officers to accept claims made for this material   
The Order will have the square brackets removed and such use of waste will be brought back into tax from 1 September.”   
	Mr Berry’s response the same day was to the effect that he had only had a handful of claims that included “this engineering use” as yet, but felt certain they would soon be getting a lot more.  He also had one (from Lafarge, one of the six large operators) which they would have to revisit as they originally said no to their request. 
39.	On 21 July 2009 the Finance Act 2009 was passed.  It included s. 119 and sch 60 which amended the FA 1996 by inserting a new s. 65A.  This provided that a landfill site activity that was prescribed by order was to be treated as a disposal at the landfill site of the material involved as waste and by way of landfill, thereby making it taxable.  On the same day the Landfill Tax (Prescribed Landfill Site Activities) Order 2009 SI 2009/1929 (“the 2009 Order”) was made, to come into force on 1 September 2009.  The 2009 Order very largely followed the form of the draft, and included in the list of prescribed activities art 3(1)(g) in the same form as it had been in the draft (set out at paragraph 35 above).  On 7 August Mr Durkan circulated a copy of the 2009 Order to landfill site operators, drawing attention to the fact that the text in art 3(1)(g) which was formerly in square brackets now formed part of the Order. 
40.	The number and value of claims for repayment continued to rise.  In a summary of the position dated 12 October 2009, Mr Berry said that a total of 93 claims had then been received, totalling £561.5m (of which £392.5m was attributable to 11 gas claims, so £169.1m was attributable to non-gas claims).  That included 11 claims relating to a fluff layer totalling £11.7m.  He added:
“We are aware that KPMG are aggressively marketing gas generation and fluff layer claims amongst landfill operators, including those who have already submitted claims for the same periods.  We anticipate that the largest businesses will all have submitted ‘normal’, ‘fluff layer’ and ‘gas generation’ claims within the next few weeks….
Unjust enrichment has increasingly become an issue due to the introduction of the new types of claim which involve more ‘mainstream’ waste where reduced prices and absorption of the tax is less likely to have occurred.”  
41.	On 4 November 2009 there was an HMRC meeting at Peterborough to consider landfill tax post WRG.  The note of the meeting, taken by Mr Richard Hart, a Higher Officer in HMRC’s Environmental Taxes Team who was also the point of contact for Veolia, included this reference to fluff:
“Fluffy Layer
The new claims – possibly brought on by the inclusion of protection as a taxable activity from 1/9/2009 leading to the view that it wasn’t before…
General agreement was reached that we will have to pay these claims as evidence of intention and use can be demonstrated, but to challenge volumes, density and obtain proof of use.
Plastic liner protection – mostly for base, sides and infrastructure protection based on a standard lift - 2 meters in most cases, density varying considerably from 0.5 tonnes per m3…
Appears to be no special sourcing of this material – just use of suitable wastes with no reduced price to reflect use, all standard rated - more likely unjust enrichment on these claims.” 
42.	The points made about unjust enrichment in Mr Berry’s summary and the meeting note are expanded on in considerably more detail in a further paper from Mr Berry dated 23 November 2009.  This explained that in the early meetings to discuss WRG claims, it was decided simply to ask the claimant whether he would be unjustly enriched and HMRC would normally accept his answer, but this was based on the expectation that the claims would largely involve inert waste with a tax rate of £2 or £2.50 per tonne and that operators had not usually passed on the full costs, with lower prices being negotiated due to the operators’ need for the material for daily cover.  But since then the claims received had increasingly become more complicated, the waste concerned in the claims was increasingly at the standard rate and not likely to be subject to reduced prices, and it was difficult to see how the operator could have absorbed the landfill tax; it was increasingly obvious that most operators were not in a position of being either unjustly enriched or not, but rather would be unjustly enriched in some situations but not in others.  In many cases it was likely to be a case of negotiating with the operators the extent to which tax was passed on.  
43.	That was the context in which numerous landfill site operators made fluff claims, including Veolia and Viridor whose claims were made on 26 February 2010 and 4 June 2010 respectively.  The claims were processed by individual HMRC officers, (Mr Hart in the case of Veolia, and Mr Philip Hayes in the case of Viridor), and as can be seen from the way in which they handled them, they did not reconsider whether fluff claims were payable in principle – that had been decided as a matter of policy, and their role was not to query that, but to implement it.  They were concerned with verifying the quantum of the claim that was properly allowable.  That involved three things in particular.  One was agreeing the relevant amount of tax that had been paid.  That was in itself quite a complex process: since landfill tax was paid per tonne, it meant agreeing the figures not only for the volume of the fluff layer in each landfill cell concerned, but also for its weight in tonnes per m3, or compaction rate.  None of this could be directly measured, as these were historic claims where the landfill cells had been subsequently filled in and there was no question of opening them up to measure what the fluff layer in fact consisted of, so it all had to be done by estimation.   The second issue was capping, namely whether the claim was all in time having regard to the time limit for repayment claims in sch 5 para 14(4) FA 1996 limit (initially 3 years and then 4 years from 1 April 2010).  The third issue was unjust enrichment.  
44.	I will have to come back to look at the details of Veolia’s and Viridor’s claims and what happened to them, but it is convenient to continue the overall story first.
Reverse fluff claims – to Brief 15/12 and Brief 18/12
45.	In January 2011 Mr Hayes raised some queries in an e-mail about a fluff claim he had received.  Some of them related to base and side fluff – was a 2m depth normal, was a compaction rate of 0.9 higher than expected; but the operator had also claimed for a fluff layer over the top of cells under the regulation layer and cap.  He had not seen such a claim before and wanted to ask the Environment Agency (“EA”) their comments, but his contact there had retired so he asked for it to be forwarded.  His e-mail was forwarded to Ms Charlotte Danvers at the EA, who asked what fluff was, to which Mr Durkan (who had been copied in) replied on 20 January:
“My understanding is that it is the layer of waste placed at the bottom of the cell above the drainage layer and liner (and now we find the same term is used for the waste at the top of the cell).  The purpose of the layer at the bottom of the cell is to protect the drainage layer from damage and clogging to ensure that the liner doesn’t get pierced by sharp or heavy objects.  At the site that Ivor and I visited in Scotland last year (I think) the layer was called the ‘fluff’ layer but it may be called other things, for example the ‘soft’ layer or the ‘blinding’ layer but the function is the same. 
Attached is a photo of the laying down of the fluff layer, which is domestic black bin waste.”
46.	Ms Danvers replied:
“Thank you for clarifying – we would call this material waste for our legislation, rather than a material serving an engineering purpose.  It is waste that is selected and deposited with care, in order to protect the engineering materials from clogging or damage.  However you may view that differently for your legislative purposes. 
(a) 	the depth of 2 metres is not uncommon  
(b)	compaction rate is probably variable – expect it to be the same as for most black bin waste if that is what they are using.  I think that they should have on-site information to back up their claim.  We have seen and heard 0.9 being used. 
(c) 	use of this waste under the cap is likely to be included in the design to protect the cap materials.” 
47.	On 21 January Mr Berry joined in the conversation with an e-mail saying:
“I thought I would add my perspective to this, having seen a lot of fluff layer claims now and having just received a first claim from [     ] for a ‘reverse’ i.e. top fluff layer…
I think we need to look carefully at the construction of top fluff layer.  In both [     ]’s claim and that I have received for [     ] I am confused about the relationship between a regulatory layer placed below the cap and a further fluff layer also said to protect the cap.  Plans of the construction of the cell and/or seeing a cell at that stage may help and I’m intending to visit [     ] with that in mind.
As we receive more of these claims I will keep you in touch with any new developments.”
48.	Mr Hart replied the same day:
“I probably had the first cap claim – from [     ] back in the summer of 2009
Quantum agreed, but stuck with unjust enrichment issues
[     ] provided evidence to prove almost word for word what [     ] put in the first para of page two 
Not just sharp protection, but also to ensure uniform shrinkage to avoid the liner splitting in future…”
He then discussed the appropriate depth for a reverse fluff layer, adding:
“What ever the case these look like the next round of claims – won’t be long before the gas claims are redundant!” 
49.	In June 2011 Ms Hughes emailed Mr Durkan as follows.
“SI 2009/1929 prescribed activities taxable after 01/09/2009: 
3(g) the use of material placed against the drainage layer or liner of the disposal area to prevent damage to that layer or liner
The legislation does not differentiate between bottom, sides or top nor does it specify the amount of material. As a result we are receiving reverse cap (fluff). I understand that you are currently liaising with the EA to gain an understanding of their requirements in relation to protection of the top layer. Given the engineered cap I would not have thought there would be a need for domestic waste ‘protection’ at the top?”
50.	A meeting on landfill tax took place on 21 September 2011.  A number of concerns had been identified by operational staff, including the fact that there had been complaints from some of the large waste operators that they were being undercut by others who were charging prices for standard rated waste that did not reflect the standard rate of tax; a concern that the 2009 legislation was not clear particularly in relation to reverse fluff; and that the EA had not been helpful on what comprises the cap, and that there was an opportunity to ‘over engineer’.  Mr Berry reported to the meeting that the total of claims to date was £1.67bn.  He said that KPMG “who have ring mastered most of the claims from business” were pushing for claims to be paid.  There had also been two recent claims for fluff for periods after 1 September 2009 (ie despite the terms of art 3(1)(g) of the 2009 Order) described as “testing the water”.  Policy had sought guidance from the EA to assist HMRC in assessing whether the fluff layer under the cap really had to be 2m thick; the EA line however would not support the refusal of reverse fluff claims pre September 2009.  It was agreed that HMRC officers should seek to agree the quantum of (base and side) fluff claims for the period up to 1 September 2009 by the end of 2011 so legacy risks might be closed; and that they should seek to verify the quantum for reverse fluff claims pending further advice from policy.  
51.	On 29 September 2011 one of those attending, Mr Ray Hughes, raised a query whether fluff claims were really payable, referring back to the e-mail from Ms Danvers at the EA of 20 January 2011 where she had said that they would call it waste, not material serving an engineering purpose, albeit waste “deposited with care”.  Ms Annette Hughes replied that she did not think there was any appetite for saying the fluff layer did not serve an engineering purpose – she had already tried this approach with policy.  After WRG Mr Durkan and Mr Berry had agreed to allow repayments of landfill tax for waste used in the basal fluff layers of landfill sites, and it was difficult to go back on that for the top fluff layer when the nature and the purpose of the top layer was effectively the same.  She thought the only hope pre Sept 2009 was to limit the thickness of the top fluff layer eligible for any repayment of tax to perhaps a maximum of 1 metre, although input from the EA would be needed on this.  She added: 
“Policy asked if the EA could provide us with the technical/ regulatory information which could perhaps allow us to reduce or even reject these claims, on the basis that some or all of the top fluff layer is not being used. In July 2011 Charlotte Danvers said the EA have no guidance or position statements on the use of fluff layers in capping.” 
She forwarded her email to Mr Berry saying:
“I accept some basal fluff layers have been repaid but no point perpetuating a wrong view if there is a possibility of rejecting claims? 
Any mileage in taking this up with policy”
The evidence does not disclose any reply from Mr Berry.
52.	On 5 October 2011 Mr Durkan replied, to a query from Ms Paula Taylor, that they did not have advice that specifically covered fluff post WRG, but he referred to the text of Brief 58/08, namely “Materials used to protect from damage any geo-synthetic product used the landfill containment on the base, sides or top of the landfill”, and said:
“That is ‘fluff’.” 
53.	HMRC attended a meeting arranged by HM Treasury on 28 November 2011 with them and the EA and DEFRA.  One of the questions provided as a basis for discussion was “What is the EA view on acceptable depth for top fluff layers?”  EA and DEFRA appeared surprised that fluff layers had become such an issue for landfill tax and appeared unaware that waste used in fluff layers had been untaxed.  When asked whether they would support a position where a depth of 0.5-1.0m would be considered as the appropriate level, EA challenged the requirement for a reverse fluff layer at all – the requirement was for visual inspections to ensure that there was no sharp waste that could damage the cap or drainage layer, but not a specific layer of waste.  The conclusion of the meeting was that:
“EA/Defra saw top fluff layers as serving no real use in the engineering of landfill sites cells - their requirements were centred on standards of engineering that did not involve having specified layers but focused on protecting the integrity of the engineering. Defra felt there was no reason why waste used as fluff layers should not be subject to the tax – they saw this as a disposal not a use of waste.” 
On the basis of this HMRC indicated that they were minded to reject the top fluff claims in their entirety on the basis that such layers were serving no useful purpose and that therefore the waste was not being used.
54.	A follow-up meeting between HMRC and the EA took place on 31 January 2012.  The EA saw so-called “reverse fluff” as the final lift of waste in the cell and in no way part of the engineering process or a use of waste; there was a strong argument for basal fluff being considered as serving a use in the engineering of a landfill cell, but that in no way meant that the final lift of waste (or “reverse fluff”) should be considered in the same way.
55.	HMRC summarised the then position with landfill tax in a paper (undated but probably to be dated January 2012) headed “Landfill tax: current issues and challenges”.  It appears to have been written for the purpose of informing HM Treasury of the position. It refers among other things to secondary legislation having been introduced as a quick fix after WRG: 
“but the current aggressive approach of the industry and their representatives has resulted, in turn, in this legislation being challenged. 
Since the WRG case HMRC has observed a more aggressive approach from tax advisors resulting in a significant increase in the number of challenges to the landfill tax regime.”
It gave figures for the total amount of tax at stake, which could be up to £3.6bn, of which £2.5bn related to the gas claims.  A table summarising the current status of various types of claim showed the status for base fluff claims as “Accept claims” – these claims amounted to £205m, of which £35m plus statutory interest had been repaid;  whereas the status for reverse fluff claims was “Considering principle and disputing quantum” – these amounted to £159m so far but could rise to £250m.  An annex on base fluff said:
“Landfill site operators claim that in engineering landfill cells, they use a layer of sorted waste at the base of the cell. This layer, known as basal or bottom fluff, tends to comprise softer waste without sharp objects. The softer, fluff layer is alleged to be used to provide protection to the cell liner at the base of the cell to prevent the liner being breached, which would result in wider pollution of the site.
After deliberation within ECSM and other stakeholders, HMRC concluded that there was no option but to accept that these claims fell within the scope of the WRG ruling (as being the use of waste in a landfill site). Waste used for this fluff layer is mainly sorted “black-bin bag” municipal waste, and therefore standard rated.”
56.	On 18 May 2012 HMRC issued Brief 15/12, headed “Landfill Tax: material used in a landfill site; and classification of waste”.  After explaining the background, under the heading “3.  Material used in a landfill site”, it referred to Brief 58/08 which had invited claims for repayments of tax incorrectly paid, and said that many such claims had been repaid.  It continued:
“However, HMRC has received a number of claims from landfill site operators and their advisers that relate to materials which are said to be used to protect or provide a suitable stable substrate for the overlying layers at the top of the landfill cell. This material is often referred to as a ‘landfill reverse fluff layer’ or ‘top fluff layer’ as opposed to a ‘landfill fluff layer’, which describes material used for basal landfill engineering to protect the integrity of the lining system. 
HMRC has discussed these claims widely, including with site operators and the environment agency (‘EA’) and have undertaken site visits to inform its decision. It has concluded that the so-called reverse or top fluff layer constitutes careful placement of soft waste that should not cause damage to the cap or regulating layer placed above and should be (and always should have been) liable to landfill tax as the waste material is disposed with the intention of discarding it and the disposal does not constitute a use of that material.”
57.	On 1 June 2012, HMRC issued Brief 18/12.  This provided some further clarification on Brief 15/12, but did not affect the substance of it.
From Brief 18/12 to Brief 02/14
58.	In an e-mail exchange on 31 October 2012 Mr Berry expressed the view that a major driver to the challenges to landfill tax was a: 
“major accountant mass marketing the services of constructing a claim on behalf of landfill operators for their own profit.  In the days before the WRG case the major accountants showed little or no interest in our taxes.  They saw the opportunity that the WRG case gave them and they’ve been making money from it ever since.”
	Mr Graham replied:
“I’ve been told on a couple of occasions recently (and not by HMRC staff) that “top fluff” and “reverse fluff” are terms coined by a certain accountancy firm, and which wouldn’t be recognised by operatives at a landfill site.”  
59.	Mr Graham, as the Senior Responsible Officer for Landfill Taxes, was also responsible for a submission to the Business Taxes Contentious Issues Panel (“the BT CIP”) recommending a pan-industry meeting.  The submission is undated but from internal evidence is to be dated to the latter half of 2012.  In the submission Mr Graham referred to a willingness of the part of certain elements in the waste management industry to exploit WRG, which had a knock-on effect on competitors who had felt they could not compete if they played by the book; to the operators having been “led by major accountancy firms marketing the services of constructing a claim on behalf of landfill site operators for their own profit”; and to WRG having “opened up a loophole in LFT legislation” which the industry and their representatives had sought to use to widen the scope of their claims and challenge to the tax regime.  
60.	The BT CIP agreed to the pan-industry meeting, and it took place in February 2013.  It was attended by representatives from all of the major players in the industry and the “Big 4” accountancy firms.  Mr Graham spoke at it and reiterated many of the same points: landfill tax was subject to exceptionally high levels of challenge (some £3.5bn, or approximately 30% of the entire revenue from the tax since it was introduced, was subject to challenge of one form or another); more and more challenges to the tax building on case law amounted to what HMRC and the Treasury called “boundary pushing”, or within HMRC “extreme boundary pushing”; since WRG, which concerned inert material used for daily cover and haul roads, the concept of material “used” in landfill had been pushed and extended to include base and side fluff, later top/reverse fluff, and onto material “used” to generate gas to produce electricity, all of which were a long way from inert material used in daily cover and haul roads.   Increasingly they heard Heads of Tax (of operators) tell them that they would walk away from a number of current challenges, including gas generation and top/reverse fluff, but for the fact that their competitors would gain commercial advantage in the event that the litigation succeeded.  He urged the industry to take a collective step back from litigation in order to get the tax onto a sensible and workable footing.  He added:
“There is a case to say that HMRC has not helped itself by not litigating on the concept of fluff prior to September 2009, but nevertheless we are where are, and that particular battle is lost.  
However, because of extensive challenges that still exist the time has come to draw a line in the sand, and to seek to work together with the industry and their representatives in order to get the tax back onto the simple, even keel that clearly Parliament intended.”
61.	On 24 May 2013 HMRC had a joint telephone call with a number of accountants, and told them they had taken top fluff to a QC who had expressed surprise that HMRC did not litigate on base fluff.  HMRC were therefore having a period of reflection over the next 8 weeks or so to consider how to progress.  In practical terms that meant that HMRC suspended repayments on base and side fluff claims. 
62.	On 19 July 2013 Mr Graham had a further telephone call with the “Big 4” accountants.  The message he conveyed was that HMRC, who had been back to counsel, needed further time to evaluate the advice they had received.   
63.	By November 2013 the Environmental Taxes team had completed their review of the position.  They proposed a change in policy, but this required approval from more senior levels within HMRC, and ultimately the Commissioners themselves.  So far as the evidence before me reveals, the process started with a paper written on 7 November 2013 by Mr Michael Lyttle, a Policy Manager at the Environmental Taxes team, to Mr Ian Stewart and Ms Melissa Tatton, two directors of Indirect Tax, seeking their agreement for a proposed approach to the BT CIP which was meeting on 29 November.  The main issue was a proposal for a policy change, namely to reverse the previous view that WRG meant that all material “used” within a landfill site was not chargeable to tax, the new view being that such material was and always had been taxable as waste discarded to landfill, HMRC having interpreted WRG too widely.  There was a consequential issue however which was whether to stop making repayments on base and side fluff.  The paper recognised that the new policy need not be limited to reverse fluff but was equally applicable to base and side fluff, but:
“There are, however, issues around legitimate expectation with base and side fluff given that HMRC invited claims for repayment soon after the loss of the WRG case.”  
By this stage HMRC had repaid [£85m] on base and side fluff, with another [£103m] left to repay (it appears from other material that these figures were the wrong way round, but nothing turns on this), three of the unpaid claims having already been approved for repayment by TDRB (the Tax Dispute Resolution Board) and the Commissioners.  The decision whether to make the remaining repayments was “finely balanced”, with Central Policy believing that resisting repayment would not succeed, and that the point might as well be conceded now, whereas Large Business was concerned that given the large amount of revenue the point should not be conceded.  Environmental Taxes Policy were concerned that opposing repayment might antagonise the sector but conceded that it would send a strong message that HMRC did not accept:
“these or other claims which are deliberately seeking to push at the boundaries of the tax.”  
64.	After a meeting with Mr Stewart and Ms Tatton, a further paper was drafted setting out the pros and cons of continuing with repayments, the new policy having come at a stage when HMRC were halfway through a repayment programme.  While it was believed that there was a strong case to say that base and side fluff were taxable under the new policy, there was a question whether a legitimate expectation had been created as a result of Brief 58/08 and HMRC’s conduct in paying out some base and side fluff claims.  The arguments for ceasing to repay included that too much tax was at stake, that in policy and presentational terms it was difficult to simply concede this aspect while litigating reverse fluff, and that arguments based on legitimate expectations were difficult for taxpayers to establish.  Arguments for continuing to repay included that a legitimate expectation challenge was almost inevitable, and that by ceasing to repay:
“we will immediately create unfairness within the industry.  Part of the industry will benefit from a financial advantage brought about by HMRC’s actions.”  
65.	The BT CIP agreed at its meeting that HMRC should contest fluff claims and make no further repayments on base and side fluff, but that the issue be put to TDRB and the Commissioners.  The TDRB met on 6 December 2013 and agreed that HMRC should stop repaying fluff claims.  The issue was then put to the Commissioners.  In preparation for this, Mr Graham prepared a Note for the Commissioners described as “Landfill Tax – Main Briefing Paper” dated 10 December 2013.  This gave the background, including reference to the initial legal advice on WRG being unequivocal: the judgment needed to be interpreted widely in terms of what might constitute a use of material.  Under the heading “Boundary pushing following WRG”, Mr Graham referred to the waste industry, orchestrated by their advisers, having started submitting claims for fluff in September 2008 (explained as often simply black bin waste with sharp objects removed), the initial claims relating to base and side fluff.  On this Mr Graham said:
“In the light of the prevailing legal advice and following discussions between HMRC and the [EA], HMRC accepted that base and side fluff material was “used” and therefore within the scope of the WRG judgment.”  
He then referred to accountancy firms and their clients having subsequently started to “push the boundaries of WRG even further”, by making the gas claims (from September 2009) and reverse fluff claims (from December 2010).  
66.	Under the heading “2013 review of policy” he referred to HMRC, in preparation for the reverse fluff tribunal, having carried out a comprehensive review of its policy in respect of all WRG related claims, informed by further detailed advice from counsel, the main conclusions of the review being that:
“Contrary to our previous legal advice and policy, the WRG judgment did not provide a precedent that waste “used” within a landfill site was not taxable, and that HMRC had interpreted the application of WRG too widely.”  
	All types of fluff were and always had been taxable; there was no power to recover the £103m already repaid on base and side fluff claims “on the basis of our previous interpretation of the WRG judgment”; but further repayments should be withheld: 
“given the amount of revenue at stake; that we believe it is wrong to repay tax which we now consider is not legally due; that continuing with repayment could undermine our substantive litigation defence; and that there are precedents for successfully refusing repayments in analogous situations in relation to other taxes.”  
67.	The Commissioners met on 16 December 2013.  There were three Commissioners present: Mr Edward Troup, Mr Jim Harra and Mr Nick Lodge.  They had a number of papers before them including in particular the Main Overview Paper, which I take to be that drafted by Mr Graham on 10 December 2013.  The upshot of the meeting was that they requested more information, and the decision was remitted to a further meeting.  The minutes record the Commissioners being concerned about a number of matters: Mr Lodge asked if there were issues about commercial equitability; Mr Troup wanted to know if Brief 58/08 created a legitimate expectation; he also wanted to establish if the companies were innocently trying to get the right amount or being aggressive and getting advisors involved.  The minutes continue:
“Jim Harra (JH) said that KPMG were now being aggressive but HMRC had issued a brief inviting the claims for base and side fluff.  We need to be careful of criticising the boundary pushing in these circumstances.  
ET [Mr Troup] pushed as to whether the companies were surprised to get the repayments in the first place or was it case of pleased to receive but nonetheless expected.  He wanted an honest opinion.  MG [Mr Graham] thought that the companies and KPMG were surprised that we did not appeal against the WRG decision but they do not feel they had got away with anything as they were just following the 2008 HMRC brief
ET asked the Commissioners if they agreed we should stop the repayments.  NL [Mr Lodge] still had concerns that the brief had invited the claims…
ET accepted that the companies will consider they have a legitimate expectation as a result of the brief and they will litigate against us if we refuse the repayments.” 
	Mr Troup also accepted that there was some unfairness as some companies had had their claims processed while others would now have their claims refused.  The Commissioners asked for further information on, among other things, the time-line of claims and the differences between traders. 
68.	On 17 December 2013, Mr Andrew Discombe of Environmental Taxes sent an e-mail to the Economic Secretary to the Treasury with interim advice.  This referred to the intention, subject to final agreement of the Commissioners, to reject claims that waste disposed of to landfill was being ‘used’ beyond the specific circumstances covered by WRG; this change of approach would prevent the repayment of nearly £4bn by the end of the Parliament and “we hope, deter further WRG-inspired boundary pushing in the future.”  Mr Harra, one of those copied in, replied:
“I am concerned that the first para under “HMRC review and outcome” does not give the EST an objective outline of the facts.  While landfill companies and their advisers may well be pushing the boundaries of the tax, surely we have to acknowledge that this is not the case for base and side fluff – our RCB actually invited them to make such claims, and we repaid some of them on the basis that we agreed the position adopted by the companies.”  
69.	On 18 December 2013 Mr Graham produced a follow-up note for the Commissioners.  Under “Status of claims” the note said that all bar one of the major players had had a proportion of their base and side fluff claims paid; the element that had been paid related to internally generated waste ie waste provided to the landfill operating company by an associated company. Because in this instance the site customer was a connected party there was no need to delay the repayments in order to consider unjust enrichment.  He gave revised figures for base and side fluff claims, namely that a total of £236m had been received of which £133m had been already repaid and £103m was unpaid.  Under “Signal to the Industry”, the note said that a year after WRG they put in place what was intended to be a temporary legislative fix while they undertook consultation on the future of tax but the consultation did not result in changes to the tax because consultees could not agree on the need for changes.  The note continued
“While we invited claims to implement the effect of the WRG decision prior to this new legislation we did not and could not have foreseen that challenges to the tax would snowball in the manner they have. We did not envisage (and neither we nor the Environment Agency (EA) accept) that claims for material used in site engineering could amount to almost a third of the tax paid in the lifetime of the charge. It is clear to us now that the early claims for base and side fluff were part of a concerted campaign of boundary pushing which started with the original WRG case itself.  
Had it been possible to foresee the extent of this boundary pushing, our approach to the WRG decision and the consultation would almost certainly have been different.” 
The note also referred to advisers filing claims for alleged uses of material outwith the scope of the new legislation almost as soon as it took effect; they had seen three new types of claim that year which the EA advised were artificial tax constructs. Most of the major players had indicated that they would prefer not to be party to the claims but could not now resile because of the competitive disadvantage they would suffer if they withdrew unilaterally and the litigation was found in the claimants’ favour. The major operators were also now subject to claims from their own customers that they had been overcharged tax, claims which were also being orchestrated by the major accountancy firms.
70.	The Commissioners met again on 19 December 2013. Mr Troup wanted to understand if the companies’ legitimate expectation was for less than the full amount given that, under unjust enrichment, part of the repayment would have to be reimbursed to the operator’s customers. Mr Graham said that if a successful legitimate expectation claim was made the court would award the full amount to the operator not just the part they would ultimately retain; effectively the operators would also be making a legitimate expectation claim on behalf of its customers but the customers wouldn’t actually know.  The decision of the Commissioners was that no further repayments of tax for base and side fluff should be paid. The reasons recorded in the minutes are as follows:
“In the circumstances – the behaviours of the companies (boundary pushing) and the amount of money at stake - meant it was right to not make the repayments. ET found it increasingly difficult to continue to make the repayments but reflected that there were questions to be asked about our own behaviour. ET expressed that we need to weigh up the public interest vs the interest of a few particular customers.  
NL agreed based on the behaviour of the industry and their advisers… NL took on the wider point that although it may appear unfair it nonetheless was the right decision on balance.  JH added that, given the legal advice, he would rather take the decision not to repay even though there is a risk we will subsequently be told by a judge that the repayments have to be made.” 
71.	On 23 January 2014 HMRC issued Brief 02/14.  This announced a change in HMRC’s approach to claims for repayment of landfill tax; HMRC’s review of its approach led it to conclude all types of fluff were and always had been taxable as it is waste permanently discarded to landfill; HMRC had found no evidence to suggest fluff layers fulfil any engineering purpose or are a regulatory requirement; and HMRC would make no further payments of such claims, although it would not seek to reclaim any payments it had previously made. Thereafter HMRC wrote to those with outstanding claims, including Veolia and Viridor, refusing the claim for repayment of landfill tax on the basis of base and side fluff.
72.	Against this background I should now deal with Veolia’s and Viridor’s claims.  There was some sensitivity at the hearing as to the amounts involved, and I have therefore not set out the exact figures below.  I do not believe the precise figures are required.  
Veolia’s fluff claim
73.	Veolia first made a repayment claim on 27 October 2008.  That claim related to material (inert material and car frag) used for daily cover and site roads.  In accordance with Mr Durkan’s e-mail of 26 August 2008 (paragraph 27 above), this was acknowledged but no further action taken pending the issue of Brief 58/08.  In January 2009, HMRC started an extended verification process.  This took up most of the year but by 25 November 2009 Mr Richard Hart had verified the claim and it was authorised for repayment in a slightly lower sum than that claimed, and was paid in December 2009.  
74.	That claim did not involve fluff, but at some stage Veolia became aware of the possibility of making a claim for fluff.  Mr Donald Macphail, a Regional Director for Veolia, who made a witness statement, says that “in around 2009” he became aware of discussions within the landfill industry as to the taxability of fluff, and spoke to Mr James Pickford, then Veolia’s tax manager who had conduct of Veolia’s claims for repayment of landfill tax, as follows:
“I remember suggesting to Mr Pickford that because some site operators were not charging their customers landfill tax on materials used in the soft waste layer, Veolia may have interpreted HMRC’s guidance incorrectly.  I had numerous discussions with both Ms Wagler and Mr Pickford, because I wanted to establish whether Veolia might have made a mistake in charging and accounting for landfill tax on material used in the soft waste layer.”  
	(Ms Wendy Wagler has been Head of Tax at Veolia since January 2010).  Mr Macphail goes on to explain that following WRG a number of Veolia’s customers had made claims against Veolia for alleged overpayments of landfill tax in relation to fragmentiser waste; and he wanted to be sure that if Veolia had made a mistake in charging and accounting for landfill tax on fluff, it was fully protected in the event that customers started seeking repayments of sums paid to Veolia in respect of landfill tax on that material.  He and Mr Pickford therefore decided to pursue fluff claims, one of the key considerations being the need to protect Veolia’s position in the event of claims from its customers.  In late 2009 or early 2010 Veolia therefore embarked on a process of seeking to quantify the amount of material that had been placed in the fluff layers, and that led to a formal claim being made on 26 February 2010.
75.	In the meantime on 13 November 2009 Mr Hart made a visit to a Veolia landfill site at New Albion where he met Mr Pickford.  This was in connection with an unrelated issue to do with whether a particular type of compost waste should be subject to the standard or lower rate, but at the time of the visit a fluff layer was being placed in one of the landfill cells.  This was noted by Mr Hart in his notebook, and in his audit report as follows:
“Cell 2b  Just started tipping on the basal liner – first layer over drainage, soft material then more bulky items in second and subsequent lifts…  
Noted currently tipping cell 2B…
Observed placing / selecting of waste suitable for the basal liner protection layer. Loads inspected and deemed suitable as they appear, good waste separation, experienced operators” 
	Mr Macphail says that Mr Pickford (who left Veolia in January 2012 and has not given evidence, but to whom Mr Macphail had spoken for the purposes of his statement) believes that he would have discussed with Mr Hart on 13 November 2009 Veolia’s intention to make fluff claims; but whether or not this is so, Mr Hart was well aware in general of the issues surrounding the fluff claims as he was a member of the team responsible for determining HMRC’s response to WRG and as such attended – may indeed have hosted – the meeting in Peterborough on 4 November 2009, and took the notes of the meeting.
76.	On 26 February 2010 Mr Pickford sent a formal claim on behalf of Veolia to Mr Hart.  This referred to the claim made in October 2008 which had been paid and continued:
“As you are aware this issue has developed considerably since my original letter of 27 October 2008 both in terms of litigation by the customers from whom the materials are required and a review of materials used for landfill operations. Additionally, the legislation has changed with the introduction of the prescribed activity regulations effective from 1 September 2009.  
Accordingly, I am writing regarding the landfill tax repayment for materials that have been used as a protective layer known as the ‘fluff’ layer in cell construction. This layer is a key part of the cell engineering to prevent the cell liner being damaged in order that there is no unnecessary environmental impact of the landfill operations i.e. leaking leachate.… 
Veolia acquires some materials from customers that are useful for the ‘fluff’ layer in its landfill operations. These materials acquired are typically municipal waste that is lightly compacted to a depth of two metres in accordance with the site licences. Therefore Veolia does not and did not intend to discard these materials and as such there is not a taxable disposal as all of the conditions of section 40 (2) FA 1996 are not satisfied.” 
Mrs Hall drew my attention to the fact that the letter nowhere referred to Brief 58/08.
77.	The claim was not at that stage fully quantified, but a further letter dated 29 June 2010 added some further tax periods and quantified the claim.  Mr Hart acknowledged the claim on 15 July 2010, and said that he would be in touch in due course “to commence verification”.  On 22 September 2010 he wrote to Mr Pickford again to set out the areas he would like to cover at a meeting that had been arranged for October.  These included the methodology used for the claims, and:
“Discuss and examine evidence for the need for a regulation layer, i.e. site permits, working plans, internal Veolia site guidance, Environment Agency requirements, CQA requirements etc…  
Establish type of waste materials used.” 
78.	The meeting took place on 22 October 2010 at Candles landfill site in Telford.  Mr Hart’s notes from the visit contain a reference to “Side wall claims?”, and in a letter dated 16 March 2011 Mr Pickford referred to the fact that as discussed on 22 October Veolia had not taken account of the fluff layer used for the sideslopes and enclosed a revised claim to include side fluff which increased the total amount claimed.  Mr Hart’s notes of the October meeting also show that he asked for an “evidence pack”.  Mr MacPhail’s evidence is that Mr Pickford also sent this with his 16 March letter, consisting of a number of items as follows:
(1)	 	An extract from an EA publication called “LFE5 – using geomembranes in landfill engineering”.  This referred to the need, immediately after installing any section of liner, to cover it with a layer of suitable material to protect against damage, the most commonly used protection materials being granular materials such as sand, silt or geosynthetic material, and referred to “the protection system” as including the materials immediately adjacent to the geomembrane, the leachate drainage blanket and “the first layer of waste”.
(2)	 	An extract from a publication by the International Solid Waste Association Working Group on Landfill called “Landfill Operational Guidelines”.  This referred to the first layer of waste placed in a cell as being crucial for the landfill operation; this layer needed to be placed as a loose cushion layer, sometimes referred to as a “fluff” layer.  This loose first layer was essential to avoid damage to the liner and leachate collection system, which could very easily occur; bulky or hard wastes capable of puncturing the line must be removed; the vertical thickness should be at least 50cm (often up to 1m or more if bagged street collection waste were used) and “this layer must not be compacted, so it then constitutes a protection layer to the liner and leachate drainage system.”
(3)	 	An extract from a Department of the Environment paper which referred to the risk that damage would occur to the liner where bulky difficult waste was tipped onto it, and suggested as a precautionary measure following CQA procedures for the initial waste infilling to minimise the risk of damage caused by waste.
(4)	 	Site Management System reports prepared as part of Veolia’s applications for a number of landfill site operating permits (dating from 2003 to 2004), each of which provided:
“Only selected waste, which excludes large, bulky or sharp items will be used for the initial lift of waste in each cell immediately above the liner system…
The selected waste will be subject to a minimal amount of compaction and will be used to form a ‘buffer layer’ approximately 2 m in depth.”
(5)	 	An extract from a report from consultants which formed part of Veolia’s permit application for another site and which provided:
“Within each cell, the initial layer of waste will comprise selected materials free of items which are likely to breach the liner. 
The selection and placement of the initial layer shall be supervised on a full-time basis.”
79.	On 24 June 2011 Mr Hart wrote to Mr Pickford requesting clarification on a number of points and additional evidence.  His letter said:
“I can confirm that from the evidence provided, I am willing to accept that it is Veolia’s intention to use selected soft waste for protection of the base and sidewall liners and as such this material is not subject to landfill tax prior to 1st September 2009, the date from which this activity was included within the Landfill Tax (prescribed Landfill site activities) order 2009.  
However before I can agree the quantum of this claim I have a number of observations in which I would appreciate your comments and a number areas where I would like to examine additional evidence.” 
He then went on to detail a large number of specific queries that went to quantum at the various sites; and suggested that the unjust enrichment issue be left until the quantum of the claim had been agreed, a suggestion which Mr Pickford agreed to in his reply of 11 August 2011.
80.	On 19 April 2012 Mr Hart wrote again (this time to Ms Wagler) asking for certain calculations to be revisited, and raising a point on capping of the claim, namely that the amendment on 16 March 2011 to introduce the sidewall into the claim was a new claim and was therefore limited to the previous four-year period, which had the effect of reducing the potential quantum of the claim.
81.	After further correspondence, by letter dated 1 February 2013 Mr Hart wrote to Ms Wagler, referring to the claims for base fluff dated 26 February and 29 of June 2010, and for side fluff dated 16 March 2011, and said:
“I can confirm that I am now in agreement with your figures and agree the quantum of this claim as £[     ].”
However he did not agree with Veolia’s arguments on capping and that reduced the claim slightly.  He then referred to internal transactions, that is where Veolia for practical purposes had borne the tax. In such a case HMRC “accept there is no unjust enrichment and would repay the landfill tax that relates to these transactions.”  Where however the tax had been borne by a customer, HMRC could consider repayment of such claims if Veolia were willing to enter into a reimbursement arrangement and an appropriate undertaking.  The letter also rejected Veolia’s claim for compound interest.  At the end of the letter was information about the right to have the decision reviewed by an HMRC officer not previously involved in the matter, or alternatively appealed to an independent tribunal.  Mr Grodzinski relied on this as an indication that Mr Hart regarded his letter as a formal decision that attracted the consequences of s. 54 and s. 54A FA 1996.
82.	There was then considerable correspondence between Veolia (assisted by KPMG) and HMRC on the quantum of unjust enrichment, and revisiting the issue of capping.  The unjust enrichment quantum depended on an elaborate calculation of the economic loss suffered by Veolia, based on the assumption that if Veolia had not had to pay so much tax, the prices it charged its customers for disposing of waste would have been lower, and it would have done more business, and generated more electricity, and hence made more profits.  As KPMG understood, even if the calculations were agreed by the relevant HMRC officer (Mr Hughes, who had replaced Mr Hart), they would need to be put to the TDRB for approval.  At a meeting on 26 March 2013 Mr Hughes agreed that the unjust enrichment model previously used by KPMG could be used for Veolia’s claim.  KPMG submitted their calculation on 12 April 2013 claiming that its lost profits (ie that part of the externals claim which would not be subject to an unjust enrichment defence) amounted to a little over 50% of the total fluff claim.  No claim was made for any internals, KPMG’s e-mail saying:
“Veolia ES Landfill Limited has not identified any waste that could have been suitable for the fluff layer which has come from a Veolia ES Landfill Limited transfer station.  It has not therefore been necessary to review internals as part of the economic loss calculation.” 
By 16 April 2013 KPMG had proposed a slightly revised claim which Mr Hughes agreed to put up to the TDRB.  That left the issue of capping.  At the meeting of 26 March 2013 Ms Annette Hughes agreed to look at whether Mr Hart had been correct to apply the “Reed principle” (a reference to a previous case on capping); and by letter dated 29 April 2013 she agreed that the capping suggested by Mr Hart did not in fact apply.  By that stage therefore agreement had been reached on all the elements of Veolia’s claim, subject to the approval of the TDRB.  The case was due to go to the TDRB on 6 June 2013, but on 29 May 2013 Mr Graham contacted KPMG to say that HMRC had received legal advice that was making them reconsider their position on base fluff, and Veolia’s case would not go to the next TDRB.  Ms Wagler’s understanding of the position as set out in an internal e-mail of that day was as follows:
“HMRC seem to have obtained a Counsel opinion saying that bottom fluff should never have been paid out.  Depending on how the instructions to Counsel are phrased it is possible to get a positive opinion on this.   In terms of payments received by other operators, these include the internals + the economic loss for Viridor and the internals for all other operators.”  
83.	In fact as set out above HMRC then reviewed the position with fluff generally, as a result of which the decision was made first to put on hold, and then to reject, any claims for repayment of tax on base and side fluff.   After the publication of Brief 02/14, Mr Hart wrote to Ms Wagler on 11 February 2014 referring to the claims that Veolia had made and stating quite tersely that in accordance with Brief 02/14, the claim for repayment of landfill tax was refused. 
Viridor’s fluff claim
84.	Following WRG Viridor made a number of claims in October 2008 and January 2009 for repayment of landfill tax.  These claims did not include any claim for fluff: they were based on the use of inert materials (and some other materials such as car frag and contaminated soils) for daily cover.  The claims were reviewed by HMRC and repayment was made in November 2010.
85.	The evidence of Mr David Adams, Group Taxation Manager for Pennon Group plc, the ultimate holding company of the Viridor companies, is that Viridor was advised in July 2009 that in view of Brief 58/08 HMRC was receptive to claims for the repayment of landfill tax on fluff.  (Mr Adams does not say who advised Viridor of this but Mr Fitzpatrick QC, who appeared for Viridor, told me that it was KPMG).  In March 2010 when Viridor had not made a claim, Mr Hayes asked them about the possibility of such a claim and its possible value, but Viridor was not then in a position to confirm that they intended definitely to submit a claim.  Viridor in fact lodged a formal claim by letter dated 4 June 2010.  The description of the claim was as follows:
“Viridor uses some of the material which enters its site as engineering material for the construction of cells…Engineering requirements are carefully planned in order to comply with environmental and planning law, so Viridor is always aware of whether or not it will re-use material entering its site for engineering purposes….  
When constructing a cell Viridor is required to protect the liner of cell by putting in place a fluff (protective) layer.  The fluff layer is usual selected soft domestic waste that has been sorted to remove any sharp objects, and comprises of the first 2 metres of any new cell (in Whitehead a 3 metre layer is in place in order to comply with engineering requirements at that site)…. 
In summary, Viridor has overpaid landfill tax on material re-used for site engineering purposes at its landfill sites.” 
86.	By letter dated 9 December 2010 Viridor lodged an amended claim which included reverse fluff.  The quantum of the claim was very substantially increased, to over four times the original fluff claim.  The letter included a new paragraph saying that Viridor was required to place a final layer of sorted soft waste between the waste and the capping materials; it also included details of the calculation methodology.  On 1 April 2011, Viridor sent a further letter with calculations of the proportion of the claims that related to ‘internals’.  There was then various correspondence in which HMRC took issue with aspects of the calculation such as the compaction rate and whether the claim was a new claim or an amendment to the original claim, but Viridor asked for an interim repayment, confined to base and side fluff and on the assumption that HMRC was right on capping and compaction.  On 15 December 2011, Mr Hughes, who had discussed the case with Mr Hayes, sent an e-mail saying they were happy to agree that the internal element of the claim did relate to internal sales, and hence unjust enrichment did not need to be considered, and that: 
“Accordingly we are essentially comfortable in making an interim repayment taking into account the exclusion of the Reed element, top layer and compaction issues.”  
	The quantum on this basis was subsequently agreed, and repayment in this amount was made in February 2012.    
87.	After publication of Briefs 15/12 and 18/12, HMRC wrote to Viridor rejecting the reverse fluff element of their claim.  On 1 March 2013 Mr Hughes e-mailed Viridor confirming that they had received authorisation to proceed with “repayment of the non Reed basal and side fluff claim subject to an unjust enrichment restriction”, or in other words an amount that was (i) limited to base and side fluff; (ii) capped by reference to HMRC’s argument that the claims were new claims; and (iii) did not include any part of the external element of the claim which exceeded Viridor’s own economic loss.  On 14 March 2013 Mr Hughes sent a further e-mail to KPMG agreeing figures for the total quantum, the internals (slightly higher than already paid, the additional amount being “repayable”), the externals, and the “repayment on the externals” (representing the amount of Viridor’s total economic loss and thus the extent to which they were not unjustly enriched).  On 28 March 2013 HMRC made a substantial repayment to Viridor representing the extra amount of the internals, the share of the externals which it was agreed represented Viridor’s economic loss and was therefore not subject to unjust enrichment, and interest.  The remaining part of Viridor’s claim was the balance of the externals, which was subject to unjust enrichment, and would not be repaid until Viridor had given suitable undertakings.  They could not do that until they had identified the relevant customers and the amounts repayable to each: Mr Adams’ evidence is that that was a significant exercise, involving specialist advice from KPMG and counsel.   
88.	Before it could be completed Viridor learned from KPMG that HMRC had new legal advice to reconsider paying fluff claims; that was followed first by confirmation that there would be a delay in processing such claims, then by Brief 02/14 and then by a letter dated 7 February 2014 from Mr Hayes which, as with Veolia’s letter, tersely indicated that in accordance with Brief 02/14 the outstanding elements of the claim were refused.  
Issues
89.	I propose to address the issues which arise on these facts in the following order: (i) was there a clear and unambiguous statement, either in Brief 58/08, or in the correspondence from the relevant HMRC officers to Veolia and Viridor respectively, that base and side fluff were not taxable, giving rise to an expectation that the repayment claims would be met; (ii) did Veolia and Viridor fail to put their cards face up on the table; and (iii) was HMRC’s decision to refuse repayment objectively justifiable or conspicuously unfair?  This follows the order adopted by Mr Grodzinski.
90.	The case for HMRC cannot be so neatly divided up into separate issues.  As advanced by Mrs Hall it is an elaborate and complex case but can I think be adequately summarised as follows:
(i)	As a matter of construction of Brief 58/08, fluff is not within its scope unless it is correctly characterised as “Cell engineering”.  
(ii)	HMRC initially thought that base and side fluff was to be characterised as cell engineering and hence within the Brief.  
(iii)	The HMRC officers who dealt with Veolia and Viridor merely implemented that policy, assuming that base and side fluff was within the Brief.  
(iv)	That belief was compounded by Veolia and Viridor who consistently referred to fluff as part of cell engineering or site engineering and the like.
(v)	At the time that the Commissioners decided to stop repaying base and side fluff claims in December 2013, it was still thought that such claims were within Brief 58/08.
(vi)	However in an appeal by Veolia in relation to side fluff post September 2009, it was asserted among other things that the fluff was not caught by art 3(1)(g) of the 2009 Order as there was a layer of sand or clay between the drainage layer or liner and the fluff so the fluff was not “material placed against the drainage layer or liner.”  That appeal was lodged on 3 February 2015 and prompted HMRC to obtain expert advice, which it had done in time for consultation with counsel in May 2015.  I have not seen the expert advice HMRC received, and indeed at an interlocutory stage Kenneth Parker J refused permission to HMRC to adduce expert evidence.  But I am told that on the basis of it HMRC now realises that they made a mistake in thinking that fluff was part of cell engineering.  In truth it is just carefully managed waste, which is discarded as much as the rest of the waste placed in the cells.
91.	Mrs Hall deployed aspects of this composite case as HMRC’s answer to each part of the elements of the taxpayers’ claim.  Thus she submitted (i) there was no relevant representation in Brief 58/08 as on its true construction it only covered fluff if fluff was cell engineering, which it was not; (ii) that the taxpayers, by referring to fluff as cell engineering when it was not, failed to place their cards face up on the table and therefore did not have any legitimate expectation; and (iii) that the Commissioners’ decision to stop paying out on base and side fluff claims could now be seen to be justifiable as the decision to pay out in the first place was based on a mistake of fact.  
92.	In these circumstances I think it is helpful before coming to the specific issues to consider HMRC’s case as I have summarised it above.  At the heart of it lies the suggestion that HMRC initially paid out on base and side fluff claims because they wrongly thought that fluff was “cell engineering”, and now realise they made a mistake of fact.  I do not however think that this is a fair reading of the contemporaneous documents.
93.	Mrs Hall agrees – indeed relies on the fact – that the individual officers (mainly Mr Hart (Veolia) and Mr Hayes (Viridor)) – did not decide for themselves whether fluff was taxable, or whether the base and side fluff claims were in principle well founded.  The way she put it was that the process of validation which Mr Hart and Mr Hayes went through focused on substantiating the amount of the claim.  The officers’ task was to implement policy, not to engage in a forensic enquiry as to whether there was a relevant use and on what basis.  They had been told that “There is this thing called fluff, we have accepted that repayment claims should be met…go and validate, go and verify.”  I accept this which is amply borne out by the evidence – indeed Mr Hayes in his witness statement says he personally thought fluff was just well managed waste and the claims should not be paid, but he followed the decision of “Policy” that they should be.  
94.	The relevant question therefore is not what Mr Hart and Mr Hayes thought but what “Policy” decided and why.  The evidence clearly establishes – and Mrs Hall did not seek to argue to the contrary – that the question whether fluff was taxable or not was considered internally by HMRC in the middle of 2009, and the conclusion was reached that it was not.  It seems probable that the question had already arisen by 19 May 2009 (paragraph 35 above), but it was certainly squarely raised after the visit of Mr Durkan and Mr Berry to a landfill site in Scotland on 4 June 2009.  Mr Durkan, with some reluctance (“much as it goes against the grain”) had concluded by 8 June 2009 that fluff was not taxable (paragraph 36 above); and on the same day Ms Mansfield replied that “We are all agreed that this is a clear case of waste use” and asked him to let Ms Hughes and Mr Berry know to tell officers to accept claims for fluff, which he did on 11 June 2009 (paragraphs 37 and 38 above).  I was not I think specifically told who “we” here referred to, although it no doubt included Mr Durkan, Mr Berry and Ms Mansfield; but there is no real doubt that this was a policy decision taken as a matter of principle: see for example, Ms Annette Hughes’ response in September 2011 when Mr Ray Hughes queried whether fluff claims were really payable, to the effect that after WRG Mr Durkan and Mr Berry had agreed to allow repayments of base fluff claims and it was difficult to go back on that (paragraph 51 above); and the HMRC paper, probably from January 2012, which said that after deliberation, HMRC concluded that there was no option but to accept that fluff claims fell within WRG (paragraph 55 above).
95.	The pertinent point for present purposes is that there is nothing in the contemporaneous e-mails to suggest that the decision made in June 2009 was a decision based on the wording of Brief 58/08, or based on a belief that fluff was “cell engineering” within the meaning of the heading in the Brief.  What Mr Durkan says in his e-mail of 8 June 2009 is that “the use of waste for the fluff layer is, in post-WRG terms, just as much a use of waste as is that for daily cover.”  What Ms Mansfield says in her reply to him is that “we are all agreed that this is a clear case of waste use”, and to Ms Stockwell was “we believe this is a use of waste in the terms of WRG and no tax is due … the case for the fluffy layer being a use of waste is more convincing than that for daily cover being a use of waste.”  None of these e-mails refers to the question whether the fluff should be characterised as “cell engineering” within the meaning of Brief 58/08: indeed the only reference to the Brief is by Ms Mansfield in her reply to Mr Durkan who thought that it was not covered by the specific examples given in the Brief as it stood, as she said “I would not propose issuing an addendum to 58/08 – this makes clear that the list of material on which we will make repayments is not exhaustive.”  
96.	In these circumstances I do not accept that the policy decision taken to the effect that fluff was not taxable and that fluff claims should be accepted was taken because of an erroneous belief that it fell within the scope of Brief 58/08 because it was to be characterised as cell engineering.  It was taken, so far as the evidence shows, because the fluff was regarded as a use of material within the meaning of WRG.  That is incidentally how Mr Graham recounted the history in his Main Briefing Paper for the Commissioners on 10 December 2013 where he referred to the fact that “HMRC accepted that base and side fluff was “used” and therefore within the scope of the WRG judgment” (paragraph 65 above).  Mrs Hall herself indeed submitted at one stage of her argument that the context of the discussion was not “is this cell engineering or is it not cell engineering?” but “is this used?”; and at another stage of her argument, said that the first time that HMRC thought that base and side fluff fell within the specific wording of the Brief was the e-mail from Mr Durkan of 5 October 2011 (paragraph 52 above).  As she said, that is the first HMRC e-mail in the evidence which in terms addresses the question whether fluff falls within the Brief.  
97.	Hence, as I have already said, I do not accept that the policy decision taken in June 2009 was taken because of an erroneous belief by HMRC that fluff was part of cell engineering.  Nor do I think that HMRC misunderstood the basic facts when that decision was made.  It is clear from Mr Durkan’s e-mail that he understood (i) that fluff was household or black bag waste (deposited by the council’s bin lorries (ii) that it was then sorted (by a fairly rough process) and (iii) that the purpose of the sorting was to screen out waste that was too heavy or with anything that might damage the drainage layer or liner.  There is nothing to suggest that he thought that the fluff was “engineered” to a particular standard, or part of the process of constructing a cell, or anything more sophisticated than a layer of household waste which had been sorted to remove anything potentially damaging and was laid down first on the bottom of the cell before anything else happened.  (There is a suggestion that he thought it was inspected, which may not have been right, but this is not what is now relied on as the relevant mistake).  I put to Mrs Hall that Mr Durkan was not in any doubt as to what fluff physically was or how it was physically used, namely that it was sorted household waste from which heavy and large and sharp objects had been removed, and it was laid as a first lift in order to minimise the risk of puncture of the layer, and she agreed.  
98.	In other words, her case, as I understand it, is not that HMRC were under any misapprehension as to what the fluff layer actually was.  The way she put it was that HMRC were labouring under a factual misapprehension as to how to characterise the material that was seen, the mistake being to characterise fluff as part of cell engineering.  I have already said that I do not accept that this is what the decision in June 2009 was based on, but even if it had been, it seems to me a matter of some potential significance that HMRC do not suggest they misunderstood what fluff was; what is suggested is that they characterised it wrongly.  
99.	A similar point can be made in relation to the cards face up on the table issue.  When Mrs Hall referred to the taxpayers as having “exaggerated” the use of fluff, I asked her whether she meant that the facts had been misrepresented, or that, on facts which were true, a claim had been made that was an ambitious one in the context of the legislation.  She replied that in the case of base fluff it was the latter (although she said it was the former in the case of top fluff which was an artifice or device to create a false impression).  As I understood it, that was an acceptance that in relation to base fluff, the taxpayers did not misrepresent the facts.  I will have to look at the detailed allegations made by HMRC of failure by the taxpayers to put their cards face up on the table, but even before coming to the detail it can be seen that it is difficult to say that the taxpayers have failed to put their cards on the table when what is suggested is not that they have misrepresented the facts but advanced a claim, albeit an ambitious one, on the basis of those facts.  
100.	With that introduction, I can now look at the particular issues.
Legitimate expectation – the principles
101.	The principle that guidance given by HMRC to taxpayers can give rise to a legitimate expectation is by now very well established.  The origins of the principle can be found in the decision of the Divisional Court in R v IRC ex p M.F.K. Underwriting Agents Ltd [1990] 1 WLR 1545 (“MFK”).  In that case financial institutions proposing to issue certain bonds made approaches to the Revenue seeking assurances that indexation gains on the bonds would be taxable as capital not income.  When the Revenue later sought to tax the gains as income, the taxpayers complained that this was unfair and unlawful.  The particular claims failed on the facts, but Bingham LJ accepted that if a taxpayer approached the Revenue with an inquiry as to how a proposed transaction would be taxed and received a clear ruling or statement, it would often be unfair for the Revenue to go back on it.  For this principle to be applicable however the taxpayer had to put all his cards face upwards on the table, and the ruling or statement had to be “clear, unambiguous and devoid of relevant qualification” (1569G).  Judge J agreed, also referring to the requirement for “complete frankness” on the part of the taxpayer about his proposals, and an “unequivocal statement” from the Revenue (1575A-B).
102.	Although MFK concerned a case where the taxpayers individually approached the Revenue for assurances on particular facts, a similar principle applies where the Revenue chooses to publish guidance to the public generally.  Both Bingham LJ and Judge J said as much, Bingham LJ saying (at 1569C): 
“No doubt a statement formally published by the Inland Revenue to the world might safely be regarded as binding, subject to its terms, in any case falling clearly within them”
and Judge J saying (at 1575A):
“the same principle should apply to revenue statements of policy.”
In R (Davies) v HMRC, R (Gaines-Cooper) v HMRC [2011] UKSC 47 (“Davies”), which concerned a booklet (IR20) published by the Revenue on the liability to tax of residents and non-residents, this was endorsed by the Supreme Court.  Lord Wilson referred to Bingham LJ’s statement in MFK and said (at [29]) that although a literal reading of his judgment would suggest that the requirement that revenue statements be clear, unambiguous and devoid of relevant representation did not apply to such guidance:
“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 be clear; that 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.”
Mr Grodzinski also drew my attention to the statement of Moses LJ in the same case in the Court of Appeal ([2010] EWCA Civ 83 at [12]), cited with approval by Lord Wilson in the Supreme Court (at [25]) that:
“The importance of the extent to which thousands of taxpayers may rely upon guidance, of great significance as to how they will manage their lives, cannot be doubted. It goes to the heart of the relationship between the Revenue and taxpayer.”
103.	Based on these cases Mr Grodzinski in his submissions formulated a series of legal propositions.  The first four of them were as follows:
(1)	 	HMRC may create a legitimate expectation that a person’s tax affairs will be treated in a particular way either by the promulgation of general guidance to a body of taxpayers or by a specific statement or ruling given to a taxpayer.
(2)	 	A legitimate expectation will only arise if the guidance or the specific statement is clear, unambiguous and devoid of any relevant qualification.
(3)	 	If a taxpayer approaches HMRC for a ruling, he has an obligation to place all his cards face up on the table, in the sense of giving full details of the transaction on which he seeks the revenue’s decision.
(4)	 	Provided there was a clear and unambiguous statement, and provided the taxpayer has placed all his cards face up on the table, he will generally be entitled to rely on an assurance given to him as binding on HMRC.  A similar entitlement arises in relation to guidance issued by HMRC. 
I accept these propositions which are justified by MFK and Davies.
104.	Before coming to the question whether the taxpayers in the present case have established the necessary clear, unambiguous and unqualified representations, it is worth noting that in two linked respects the present case differs from that in MFK and Davies.  First, in those cases the assurances were sought, or the guidance issued, first, and the taxpayers arranged their affairs in the light of them.  In MFK the whole purpose of approaching the Revenue was to seek comfort as to how the bonds would be treated for tax purposes before they were issued; in Davies the taxpayers and their advisers, at any rate in the first of the two cases, specifically relied on IR20 in planning their move abroad.  In fact the taxpayers failed in either case to establish a sufficiently clear and unambiguous representation, but had they done so, it is not difficult to see why it should have been regarded as unfair for HMRC to seek to go back on the representations and claim tax on a different basis.  
105.	By contrast in the present cases, the taxpayers initially paid tax on base and side fluff on the assumption that it was taxable as waste.  What they rely on are subsequent representations by HMRC to the effect that fluff was not taxable after all in order to found repayment claims.  I will have to consider whether clear representations to that effect have been established, but even if they have, it is not so obvious, at any rate to me, that it is equally unfair for HMRC to resile from them.  The taxpayers’ complaint in such a case is not “You (HMRC) told me that if I did X it would not be taxable; I therefore did X thinking it would not be taxable; now you have changed your mind and say it is in fact taxable”; it is rather “I did X thinking it was taxable (and paid the tax on that basis); you later told me it was not, so I thought I would get the tax back; now you have changed your mind and say I will not get the tax back after all.”  The unfairness in the first case is as I say not difficult to see; but the unfairness in the second case seems to me to be less strong.  No doubt in the second case, as in the first, the taxpayer can say that his expectations have been disappointed, but the expectations are not quite the same.  In the first case the taxpayer’s expectation is that if he does X, he will be taxed in a particular way.  In the second case however the taxpayer’s expectation is simply that if he pursues a repayment claim he will be repaid.  
106.	It was not however suggested by Mrs Hall that this meant that the principle of legitimate expectation was inapplicable, and although Mr Grodzinski accepted that a case of the second type was “comparatively rare”, there is at least one other reported case of a similar type where a claim based on legitimate expectation succeeded, namely the recent decision of Whipple J in R (Hely-Hutchinson) v HMRC [2015] EWHC 3261 (Admin) (“Hely-Hutchinson”).  In that case the taxpayer was a member of his employer’s share option scheme and exercised certain options in 1999 and 2000, disposing of the shares.  At the time the common understanding was that no gain or loss arose on disposals in such circumstances and he did not claim any capital losses.  There was then a decision of the Court of Appeal in 2002, which was followed by guidance formally issued by HMRC in 2003 indicating that as a result of the judgment a capital loss might be claimable after all.  The taxpayer sought to make a claim accordingly, but before it was allowed HMRC in 2009 issued a Revenue and Customs Brief withdrawing the 2003 guidance.  Whipple J held that the 2003 guidance gave rise to a legitimate expectation, and remitted the decision to the Commissioners to re-evaluate the fairness of withdrawing the benefit of it from the taxpayer.  (For the sake of completeness I was told that HMRC are appealing this decision). 
107.	Mr Grodzinski therefore submitted that the fact that in this case the taxpayers initially thought that fluff was taxable did not prevent them from relying on the doctrine of legitimate expectation when HMRC later told them it was not.  As I say the contrary was not argued by Mrs Hall, and on this I am therefore content to follow Whipple J.  But Mr Grodzinski accepted that these matters were potentially relevant to the question whether, assuming the claimant does establish the legitimate expectation, there is an objective justification for resiling from it, or, put another way, whether resiling from it is conspicuously unfair.  Thus although detrimental reliance by the taxpayer is not a necessary pre-condition to obtaining relief, the extent of any detrimental reliance is one factor in considering the question of objective justification or conspicuous unfairness.
108.	The other respect in which the present case differs from the paradigm case exemplified by MFK and Davies is that in those cases the judicial review was a response by the taxpayer to an attempt by HMRC to collect tax from him contrary to previous assurances that they would not do so.  Indeed in MFK Bingham LJ referred to a case where: 
“the revenue has agreed to forgo, or has represented that it will forgo, tax which might arguably be payable on a proper construction of the relevant legislation.”
	By contrast in the present case the taxpayers are seeking payment from HMRC.  Mindful of the principle that the payment of public money in general requires statutory authority, I asked Mr Grodzinski if this made any difference: he said that it did not, and there was no significant legal distinction between the two situations.  In each case HMRC was being held to what they had said, whether they had said that they would forgo tax which was arguably due, or that they would repay tax which was arguably not repayable.  Their authority to do so could be found in their powers of care and management, which authorised them to give effect to the representations they had made.  
109.	Mrs Hall accepted that the distinction between a taxpayer relying on a legitimate expectation to resist HMRC’s attempt to collect tax from him and relying on a legitimate expectation to enforce a repayment claim did not give rise to an ultra vires point, but said that it was relevant to the balance of fairness; there was a difference between a taxpayer being told he does not have to pay tax and living his life on that basis and then being hit with a massive tax bill, and a taxpayer paying tax and then later asking for it back.  It was a factor to put in the scales.  There is I think some truth in this in that in general it is likely to be more unfair for a taxpayer to be asked to pay tax he was not expecting to have to pay than to deny him a repayment he was expecting to receive; but it must all depend on the facts of the particular case.    
Clear and unambiguous representation – Brief 58/08
110.	Mr Grodzinski’s first submission was that Brief 58/08 itself contained a clear and unambiguous representation that material used as fluff was not taxable, and invited claims for repayment on that basis.  As appears from the judgment of Lord Wilson in Davies, this does not depend on how the individual taxpayer in fact understood the Brief, but is an objective inquiry as to how it would have been understood by an ordinarily sophisticated taxpayer.  Mr Grodzinski accepted that in a case such as the present where the taxpayers are all landfill site operators (and the Brief is in terms addressed to them – see paragraph 1) the exercise of construing it objectively requires asking how it would have been understood by a reasonable reader of it in the industry to which it was directed (that is by a reasonable landfill site operator), and for this purpose one can take into account the background context reasonably available to those in the industry.  
111.	The objective nature of the inquiry also I think entails two other consequences: first, the question of construction cannot logically be determined, or even affected, by what HMRC subjectively intended the Brief to mean, or by the process of drafting it; second, what HMRC later subjectively thought the Brief meant is also logically irrelevant to what it did mean.  These are very familiar principles applicable in the construction of other documents such as contracts, where evidence as to the subjective intentions or understanding of one party (or even both) is inadmissible on a question of construction.  In the present case, there was a tendency on both sides to try to make some forensic use of such material, Mrs Hall pointing to the fact that the Brief was not drafted with fluff in mind (as Mr Grodzinski accepted), and Mr Grodzinski referring to the fact that HMRC later undoubtedly thought it did include fluff, and that this remained HMRC’s pleaded case in its Summary Grounds of Response (which referred to “HMRC’s … statement in [the Brief] that base and side fluff material was not subject to landfill tax”).  These are understandable forensic points but strictly I suspect that they should be regarded as irrelevant to what the Brief on its true construction meant.  Questions of construction of a document are as a matter of general law regarded as questions of law for the Court, not questions of fact to be determined on evidence as to what the document was intended by the draftsman, or understood, to mean; and I am rather doubtful whether it can make any difference to the principles that the question arises in the context of a judicial review.  Certainly I was not referred to any authority to that effect.     
112.	Mr Grodzinski’s submissions were very simple.  One has to read the Brief as a whole.  Reading paragraph 2 (“The Court found that where material received on a landfill site is put to a use on the site…it is not taxable”) together with paragraph 4 (“the judgment means that materials put to use on a landfill site are not taxable”), the overall statement is clear, unambiguous and devoid of any qualification.  What is determinative is whether material is put to use on a landfill site.  This is reinforced by the fact that the statement in paragraph 4 is followed by a list of “illustrative non-taxable uses of material”, every single one of which, as Mr Grodzinski pointed out, refers to “material(s) … used”.   Since fluff is used or put to use on a landfill site, it is squarely within the words “material put to use on a landfill site” and the clear representation is that it is therefore not taxable.  And since the list which is contained in paragraph 4 is expressly said to be “illustrative” not comprehensive, it does not matter whether fluff can be brought within the specific examples listed.  
113.	That made it unnecessary to decide whether the words in the first bullet point under the heading “Cell engineering” (“Materials used to protect from damage any geosynthetic product used for landfill containment on the base, sides or top of the landfill”) apply to fluff or not.  Taken by themselves those words do in fact appear perfectly apt to include fluff; but even if, as HMRC argue, in order to come within this bullet point the material has to meet some substantive requirement of being “cell engineering” (whatever that may mean), and fluff does not meet that requirement, this is beside the point.  Fluff is put to use on a landfill site and that is enough.
114.	Mr Fitzpatrick for Viridor adopted Mr Grodzinski’s submissions and did not add any separate ones of his own.
115.	Mrs Hall made in effect four submissions as follows:
(1)	 	There is no promise to be found in paragraph 2 or the opening words of paragraph 4.  These are introductory words which describe HMRC’s understanding of the judgment in WRG, but do not themselves make any promise.  The only relevant promise is that found in paragraph 11 where HMRC say that “operators must be able to produce evidence that they overpaid the tax on material used on the landfill site for uses described in paragraph 4 above.”  That confines the promise made by HMRC to claims made based on the specific list of non-taxable uses in paragraph 4.  
(2)	 	In order to take advantage of the first bullet point under “Cell engineering”, it was necessary to show that fluff was part of cell engineering, which it was not.  
(3)	 	Allied to the second point was that fluff is not being “used” in any relevant sense.  There is a critical distinction between the infrastructure on a landfill site used to receive the waste, and the waste itself.  In the case of fluff, it is not part of the receptacle into which waste is put, it is the waste itself.  All that happens when a fluff layer is laid down is that one type of waste is sorted from another in circumstances where each type of waste ends up in the cell. 
(4)	 	Quite apart from this, there is nothing in the Brief which the taxpayers can point to as containing a promise that HMRC would not change its policy.  The verification process was bound to take a long time – months if not years – and the landfill site operators can have had no reasonable expectation that government would not change its policy during the verification exercise.
116.	I propose to consider first whether the express example given in the first bullet point under “Cell engineering” (“Materials used to protect from damage any geosynthetic product used for landfill containment”) includes the use of waste as fluff.  It is worth reiterating that although this is a question of how the Brief would be reasonably understood by the ordinarily sophisticated taxpayer, the question is not one of statutory construction and is a rather different exercise.  If a statute provided that “materials used to protect from damage any geosynthetic product used for landfill containment are not subject to landfill tax”, the Court would have to decide if fluff satisfied this description or not, and the answer would either be Yes or No.  It would not matter whether the Court regarded the answer as clear and obvious, or difficult and finely balanced: many questions of construction are arguable both ways and can be quite difficult to resolve, but the process of construction would ultimately produce an answer.  But the present exercise is not like that.  The question is not just what the Brief means, but whether it contains a clear and unambiguous representation.  If therefore the meaning is obscure, or doubtful, the requirement of a clear and unambiguous representation will not have been satisfied. 
117.	In my judgment Mrs Hall is right that the Brief in this respect falls short of the necessary clarity.  Despite the beguiling simplicity of Mr Grodzinski’s submission that fluff is used to protect the liner, I do not think it is as straightforward as he suggested.  In the first place, as Mrs Hall pointed out, there is no reference in the Brief to household waste at all, let alone to fluff.  That is not surprising in the light of the accepted fact that HMRC did not have fluff in mind when drafting the Brief, but it does make this case rather different from the others to which I have been referred.  In MFK the Revenue knew that they were being asked about the tax treatment of certain bonds; in Davies they knew they were publishing guidance on residence and non-residence; in Hely-Hutchinson they knew they were publishing guidance on the acquisition cost under certain share option schemes.  And the hypothetical reasonable taxpayer who read the guidance would in each case understand that it was addressing the particular issue concerned.  In the present case, the Brief was not published as a response to queries about the taxability of fluff, or in order to give guidance about the taxability of fluff; and as a result it says nothing specifically about fluff as such.  This to my mind is significant; it means that the taxpayer’s case does not rest on a clear statement in terms that fluff is not taxable, but rests on more general words.  It is undoubtedly possible to read those words, as Mr Durkan did on 5 October 2011 (paragraph 52 above), as referring to fluff – although I have already pointed out that Ms Mansfield on 8 June 2009 does not seem to have read them as doing so – but the question is not whether they can be read that way, but whether they clearly and unambiguously refer to fluff.  
118.	As the preparatory documents show (paragraphs 25-26 above), what HMRC actually had in mind was other materials such as sand, soils free of stones and whole or shredded tyres, and there is no reason to think that they were wrong in believing that such materials are used to protect the liners, so it is not as if the words would lack content if they did not refer to fluff.  The other examples listed as illustrative non-taxable uses in paragraph 4 of the Brief, apart from daily cover, are almost all cases of material being used to construct or form some temporary or permanent structural feature of the site (roads, hard-standing, bunds, screening structures).  The list therefore does tend to suggest that what the Brief is referring to is the use of materials to create the infrastructure of the site.  In the context of cell engineering, the suggested distinction drawn by Mrs Hall between the creation of the cell (as a receptacle for the waste) and the filling of the cell (with waste) seems to me a perfectly sensible and understandable distinction to draw, which reflects a real distinction in what actually happens on the ground: first you have to prepare the cell to receive the waste, and then you can fill it.  In these circumstances when one envisages the hypothetical reasonable landfill site operator reading the heading “Cell engineering” and the relevant bullet (“Materials used to protect from damage any geosynthetic product used for landfill containment”), he might I think be left in some doubt whether this was to meant to go any further than the creation and preparation of the cell so that it was ready to receive waste; and also be left in some doubt whether fluff was thereby included or not.  There is, to put it no higher, a question whether fluff is aptly described as part of the process of engineering a cell, or whether it is more aptly described as careful filling of the cell once engineered.  I do not propose to answer the question whether the fluff layer is to be characterised as part of the preparation of the cell for receiving waste, or as merely a carefully selected and placed part of the waste – this (or something like it) may well be a matter for the tribunal in due course – the relevant point for present purposes being that this is something that is arguable.  In these circumstances the hypothetical landfill site operator would in my judgment consider that it was distinctly possible that the relevant words extended to fluff but that there was a real doubt about whether that was what HMRC were intending to say.    
119.	If that is how the hypothetical reader would read the bullet point in the list, would he have regarded the words in paragraph 2 (“material … put to use on the site”) and repeated in paragraph 4 (“materials put to use on a landfill site”) as clarifying the matter sufficiently?  It is true that the list is said to be illustrative.  But I agree with Mrs Hall that the whole point of the list was to specify certain particular uses which HMRC accepted were covered by the WRG judgment, and hence which HMRC would regard as entitling a taxpayer to repayment.  That is the effect of paragraph 11.  In my judgment the reasonable hypothetical landfill site operator reading the brief would  understand from it that HMRC accepted that the WRG judgment established that materials that were put to use on a landfill site were not taxable, and that HMRC would not dispute that the particular examples listed were examples of material being so put to use, and hence as qualifying for repayments; but he would not understand from the brief that HMRC were accepting that any other way in which an operator dealt with material was a qualifying use.  The list was not said to be exhaustive, so if the operator had dealt with waste in some other way, he could seek to persuade HMRC that it was a further example of material being put to use on a landfill site; but HMRC had not bound itself to accept that any other suggested use was a qualifying use.  In short the hypothetical landfill site operator would in my judgment have read the Brief as giving him an argument – quite possibly a reasonably strong argument – that fluff was a case of material being put to use on a landfill site and hence qualifying for repayment of tax; he would not however have read the Brief as clearly and unambiguously indicating that HMRC had accepted that this was the case.  
120.	As I have said above, the question of how the Brief would have been understood by a reasonable hypothetical taxpayer is logically a question of construction for the Court and not I think determined, or even in principle affected by, evidence as to how it was in fact understood.  I do not in fact have any very detailed evidence as to who first conceived of the idea that the Brief could be read as including fluff.  But if it is the case that the first fluff claims were submitted in September 2008, they were evidently not prompted by the Brief which was not published until 22 December 2008; and I have evidence that an early fluff claim was submitted in February 2009 when it was described as a leachate drainage layer claim, that is within the second bullet point under “Cell engineering” rather than the first (paragraphs 33-4 above).    The evidence of Mr Macphail on behalf of Veolia was that he became aware of discussions within the industry in “around 2009” concerning the taxability of fluff and that he spoke to Mr Pickford because Veolia “may have interpreted HMRC’s guidance incorrectly” (paragraph 74 above); the evidence of Mr Adams on behalf of Viridor was that he was told (that is by KPMG) in July 2009 that HMRC were receptive to claims for fluff (paragraph 85 above).  None of this suggests that Brief 58/08 so clearly and unambiguously represented that fluff was not taxable that the landfill site operators in fact read it that way when it was first published, or that at any rate the two taxpayers before me thought that a claim could be made for fluff until it was suggested to them by others.  That as I say cannot answer the question, but it does perhaps suggest that the conclusion that the hypothetical reasonable landfill site operator would not have read Brief 58/08 as saying anything clear and unambiguous about fluff is not an unrealistic one.
121.	In these circumstances I find that Brief 58/08 did not contain a clear and unambiguous representation by HMRC that they regarded fluff as not taxable or would meet repayment claims for fluff.  That makes it unnecessary to consider Ms Hall’s fourth submission that since the Brief contained no promise that HMRC would not change its mind, the reader could have had no legitimate expectation that the policy would not change.  That I regard as an ambitious submission, which if correct in this case would seem to have far-reaching consequences for the doctrine of legitimate expectation generally.   Since it does not in my view arise, I prefer to say nothing about it.
Legitimate expectation – HMRC’s letters 
122.	Mr Grodzinski’s alternative submission was that even if Brief 58/08 was not clear and unambiguous, the way in which HMRC dealt with Veolia’s fluff claim without disputing the principle that Veolia were entitled to repayment, culminating in Mr Hart’s letter of 1 February 2013 (paragraph 81 above) agreeing the quantum of the claim, was itself sufficient to give rise to a legitimate expectation that the claim would, subject to the matters raised in that letter, be met.  He described the letter as constituting a decision, promise or assurance to pay the claim, and an acceptance that whatever Brief 58/08 may or may not have meant, HMRC accepted that base and side fluff was not taxable, such that the tax that Veolia had paid on it should be repaid less any deduction in relation to capping and unjust enrichment.  
123.	I accept this submission.  As I have already said the evidence establishes that a policy decision that fluff was not taxable was made in June 2009, and the role of the officers (Mr Hart for Veolia and Mr Hayes for Viridor) was to implement that policy by a process of verification and validation.     
124.	That is entirely in line with the notes of the meeting in Peterborough on 4 November 2009 (attended by Mr Hart), at which there was general agreement that fluff claims would have to be paid but that HMRC should challenge volumes and density and obtain proof of use (paragraph 41 above).  It is not therefore surprising that when Veolia made its fluff claim, initially on 26 February 2010, and quantified on 29 June 2010, Mr Hart’s reaction was to acknowledge the claim and say that he would be in touch in due course to commence verification; and that at the meeting on 22 October 2010 he asked for an evidence pack (paragraphs 76 to 78 above).   Having received the evidence pack and further clarification, he then wrote on 24 June 2011 saying that he was willing to accept that it was Veolia’s intention to use selected soft waste for protection of the base and sidewall liners “and as such this material is not subject to landfill tax prior to 1st September 2009”.  The remainder of the letter was concerned with the details of agreeing “the quantum of this claim” (paragraph 79 above).  That seems to me to be a clear and unambiguous statement by Mr Hart to Veolia that he accepted on behalf of HMRC that base and side fluff was not taxable before September 2009.  What was left to be resolved was the quantum of the claim.  
125.	When one then comes to his letter of 1 February 2013 in which he says that he was now in agreement with their figures and agreed the quantum of the claim (paragraph 81 above), then that seems to me to be a clear and unambiguous statement, read with the earlier letter, that he accepted that Veolia had paid that amount of tax on fluff when it was not in fact taxable.  That did not resolve all the issues, as the rest of the letter makes clear: there was a capping issue which reduced the amount of the claim slightly, and there was the issue of unjust enrichment.  There was clearly therefore more to be agreed or determined before HMRC would be in a position to finalise the amount actually repayable; but this does not to my mind detract from the fact that the letters of 24 June 2011 and 1 February 2013 amount together to a clear and unambiguous representation that HMRC accepted that Veolia had paid tax of a specified amount on base and side fluff when it was not taxable.  I do not see why that should not give rise to a legitimate expectation on the part of Veolia that HMRC would accept liability to make a repayment of an appropriate amount, the precise amount depending on the resolution of the capping and unjust enrichment issues.
126.	So far as Viridor is concerned, Mr Hayes actually inquired about the possibility of them making a claim in March 2010 (paragraph 85 above), so to that extent took the initiative in encouraging a claim.  After the claim was received HMRC raised numerous points on quantum, capping and unjust enrichment, but there is nowhere any suggestion from HMRC that the claim was not a good one in principle.  In December 2011 HMRC agreed to make a repayment in respect of the internal element, the payment itself being made in February 2012 (paragraph 86 above); and in March 2013 HMRC agreed the total quantum, the internals, including an additional amount repayable, the externals and the repayment on the externals, these amounts being repaid on 28 March 2013 (paragraph 87 above).    
127.	Mr Fitzpatrick’s submission was that whatever Brief 58/08 originally meant, it must be part of HMRC’s powers of management to decide that a particular use of waste fell within the scope of it; that HMRC did decide that base and side fluff fell within Brief 58/08; and that although it took them some 3 years to get there, HMRC eventually agreed to pay Viridor an amount representing that part of the claim that was not subject to unjust enrichment, and an amount that was subject to unjust enrichment.  Save that I think for reasons already given that HMRC’s policy decision was not so much that fluff fell within Brief 58/08 but that fluff was a use of material within WRG I accept these submissions as well: it does seem to me that although in Viridor’s case there is not the equivalent of Mr Hart’s letter of 24 June 2011 saying in terms that the material was not subject to landfill tax, the effect of the repayments made by HMRC in February 2012 and March 2013 was to confirm that the tax paid on fluff by Viridor was in principle repayable, subject to agreement on quantum, capping and unjust enrichment; and the effect of Mr Hughes’ e-mail of 14 March 2013 was to agree the overall quantum of externals and the amount subject to unjust enrichment (that is where repayment would only be made on receipt of suitable undertakings).  An actual repayment seems to me to amount to a representation that the repayment is properly due, and taken together I accept that this amounts to a clear and unambiguous representation that HMRC accepted that base and side fluff was not taxable, that repayments were in principle due, and that repayment of the outstanding amount depended solely on satisfactory arrangements to prevent unjust enrichment.  
128.	Mrs Hall did not really dispute that the way in which the respective officers conducted the verification and validation of the claims did amount to representations that fluff was not taxable and was in principle repayable.  As I have referred to above her overarching submission was that the officers were simply implementing a policy decision that had been made on the basis of a mistake of fact as to how to characterise fluff.  That seems to me however not really to go to the question whether their conduct did give rise to a clear and unambiguous representation, but to the separate questions whether the taxpayers put their cards face up on the table, and whether HMRC could resile from the representations.
129.	In my judgment therefore HMRC did through their correspondence make a clear and unambiguous representation to each of Veolia and Viridor that base and side fluff was not taxable, and that claims for repayment of tax on fluff were in principle sound subject to agreement on quantum, capping and unjust enrichment.  
Was there a failure by the taxpayers to put their cards on the table – Veolia?
130.	It is an established principle that where a taxpayer approaches HMRC to ask for a ruling as to how a proposed transaction will be taxed, he has to “put all his cards face upwards on the table”: MFK at 1569E per Bingham LJ.  Bingham LJ went on to explain what he meant by that, namely that he must (i) give full details of the proposed transaction; (ii) indicate the ruling sought; (iii) make plain that a fully considered ruling is sought; and (iv) indicate the use he intends to make of any ruling given (at 1569E-G).  Judge J referred to a taxpayer who approached the revenue with “clear and precise proposals” about the future conduct of his fiscal affairs, and that where a taxpayer had approached the revenue for guidance the Court would be unlikely to grant judicial review unless satisfied that the taxpayer had treated the revenue with “complete frankness” about his proposals (at 1574H-1575B). 
131.	Such a principle is readily understandable where a taxpayer makes an approach to the revenue for a prospective ruling as to a proposed transaction.   I need not consider whether it makes any difference where, as here, the taxpayer makes a claim to the revenue that a past transaction was not in fact taxable, as Mr Grodzinski does not dispute that the principle is at least capable of application.  He says however that there was nothing that Veolia said or failed to say that amounted to a breach of the obligation of complete frankness.
132.	Mr Grodzinski said that to accuse a taxpayer of a lack of frankness was a serious allegation, and in those circumstances Veolia was entitled to know with precision what was said against it, and that the starting point was to look at HMRC’s Detailed Grounds of Defence.  I agree.  Paragraph 6b of the Detailed Grounds makes a general allegation that Veolia (and all other landfill operators) exaggerated the alleged “engineering properties” of fluff and thereby failed to put its cards face up on the table; paragraph 37 then details the representations made by Veolia, by cross-referring to Mr Hart’s witness statement, and then “by way of summary” specifying three particular representations:
(a)  	Veolia’s formal letter of claim of 26 February 2010, where Mr Pickford referred to materials used as a protective layer known as the fluff layer “in cell construction” and said “This layer is a key part of the cell engineering…” (paragraph 76 above).
(b) 	An e-mail from Veolia dated 16 April 2013 in which Ms Wagler referred to the side fluff as follows:
“From an engineering/operations perspective it must be placed as the void is filled for stability reasons.”
(c) 	A letter from Veolia dated 17 June 2013 in which Ms Wagler referred to 	her disappointment at the way HMRC had handled:
“our claim for repayment of Landfill Tax in respect of engineering material used during landfill cell construction.” 
133.	So far as (b) is concerned, this came a long time after Mr Hart had accepted the claim in principle (by his letter of 24 June 2011) and over 2 months after he had agreed the quantum (by his letter of 1 February 2013).  It could not therefore have contributed to his decision to send those letters.  Moreover, the purpose of this part of the e-mail was to explain why the side fluff claim had been calculated by assuming that the side fluff had been laid in four successive accounting periods: it could not all be laid in one go as it would not be stable.  In other words side fluff is laid as the cell is filled up as if you tried to put it in at the outset, it would not be stable, and might fall into the cell.   I read this as not saying anything more sophisticated than that.  
134.	So far as (c) is concerned, this is not only after Mr Hart’s letter of 1 February 2013 but after HMRC had received advice in May 2013 that caused it to think again about the whole question of fluff, and had led to an 8-week period of reflection during which all repayments were suspended.  It too could have had no causative effect.  
135.	Mrs Hall submitted that it did not matter that both the letters referred to in (b) and (c) post-dated Mr Hart’s acceptance of the claim and so could not have influenced it.  She described the obligation to have your cards face up on the table as an obligation to come to court with clean hands, which was a “gateway requirement” and said that the policy reasoning behind this requirement exists regardless of any causal impact it had on the decision under consideration.  I was not referred to any authority in support of this submission and I am not persuaded it is right.  As I understand it, the obligation to put one’s cards face up on the table is based on the simple idea that if a taxpayer is going to ask the revenue for a ruling as to how a transaction falls to be taxed, he has to explain frankly what the transaction is and why the ruling is sought, and if he fails to do so he cannot rely on the ruling as giving rise to a legitimate expectation.  That is entirely understandable.  I do not think it helps, or is accurate, to describe this as an obligation to come to the court “with clean hands”.  That well-known phrase derives from the maxim of equity that “he who comes to equity must come with clean hands” which applies to those seeking discretionary equitable relief.  Even in that context however, it is not a general licence to the Court to refuse relief to those who have acted in some way the Court disapproves of: it only applies where the claimant’s misconduct has an immediate relation to the equity sued for, and is such as to disentitle him to equitable relief.  I do not think this principle should be confused with the “cards face up” principle which is not a principle about the refusal of relief as a matter of discretion, but operates at an earlier stage in the analysis, namely whether a taxpayer asking for a ruling can rely on the ruling as generating a legitimate expectation.  If the taxpayer has not been frank in obtaining the ruling, he cannot rely on it as giving rise to a legitimate expectation; but if there has been no lack of frankness, no misrepresentation, no failure to comply with cards face up obligation by the time the ruling is given, I do not see that a later alleged breach of the obligation is either here or there.
136.	So far as (a) is concerned, it is true that Veolia’s letter describes fluff as a layer used in cell construction and a key part of the cell engineering.  It is debatable whether it is appropriate to describe fluff as part of the cell construction or cell engineering: HMRC’s case now is that the fluff layer is merely carefully managed waste which has had the sharp and heavy objects removed from it, and cannot properly be described as part of the “engineering” at all.   
137.	What however seems to me relevant is whether Veolia’s description of fluff in its letter of 26 February 2010 played any part in HMRC’s decision-making.  Here Mr Hart’s witness statement is instructive.  He does not say that he thought that Veolia’s fluff claim should be allowed because they had told him it was cell engineering.  Rather, his evidence is that Policy had come to the view that fluff was a form of cell engineering within the terms of Brief 58/08, and his assurance activities were therefore “focused on getting Veolia to provide evidence that they were required to and were actually installing this layer rather than determining whether this was cell engineering.”  For reasons I have already referred to I am not persuaded that Policy had decided that fluff was a form of cell engineering within Brief 58/08: the e-mails of 8 June 2009 contain no reference to “cell engineering” and do not evidence any conclusion that fluff was a form of cell engineering within Brief 58/08: what they evidence is a conclusion that the fluff layer was a “use of waste” within the principle of WRG (paragraphs 94 to 97 above).  But the significant thing is that they demonstrate a decision by Policy in June 2009 that fluff was not taxable, a decision for which it cannot be suggested that Veolia (which had not made any fluff claim by that stage) was in any way responsible; and that Mr Hart, by his own account, was not seeking to re-consider this question, but only seeking to verify that Veolia had in fact been required to install, and had installed, the fluff layer.  I do not accept therefore that Veolia’s description in 2010 of the fluff layer as a key part of the cell engineering played any part in the conclusion that fluff was in principle not taxable – this was something decided as a matter of policy in June 2009 and not revisited until after Mr Hart’s letter of 1 February 2013.    
138.	Mr Hart did seek evidence that Veolia had been required to install the fluff layer.  He was provided with an evidence pack.  The documents provided to him included statements that referred to the first layer of waste as part of the protection system for the liner and to a loose cushion layer being essential to avoid damage to the liner; and a number of site operating permits referring to the initial lift of waste as composed of selected waste which excluded large, bulky or sharp objects (paragraph 78 above).  It has not been suggested that the statements in these documents were wrong, and Mr Hart in his witness statement refers to the fact that operator permits might require the removal of hard and sharp objects from the first lift of waste.  The conclusion that Mr Hart drew from this evidence was, as stated in his letter of 24 June 2011, that he was willing to accept that it was Veolia’s intention to use selected soft waste for protection of the base and sidewall liners (paragraph 79 above).  That does not seem to me to be a conclusion that was in any way influenced by the description in Veolia’s letter of 26 February 2010 of the fluff layer as a key part of the cell engineering. 
139.	The further conclusion that Mr Hart drew in his letter of 24 June 2011, that as such the material was not subject to tax (up to 1 September 2009) also does not seem to me to be influenced by Veolia’s description of the fluff as a key part of cell engineering.  On the basis of Mr Hart’s own explanation, he was interested in validating and verifying whether Veolia had a fluff claim, not re-considering whether if it did such a claim constituted cell engineering.  It is true that he also says that he processed Veolia’s claims for repayment of landfill tax on the basis that the side and base fluff was “part of the cell engineering and that a fluff layer was specifically required because it was part of the cell containment itself” but I have difficulty in reconciling this with the contemporary evidence.  As set out above, this suggests that Mr Hart did not reconsider the question of principle whether fluff was taxable, which had been decided by Policy, and that the basis for Policy’s decision that fluff was not taxable was not because it was part of the cell engineering or part of the cell containment itself but because it was a “use of waste”.  As I have said it is in fact clear from his 8 June e-mail that Mr Durkan understood what fluff was – namely black bag waste, sorted so as to be suitable for the fluff layer so as not to damage the drainage layer or liner.    
140.	Since paragraph 37 of the Detailed Grounds refers, as well as the three specific representations pleaded, to the representations set out in Mr Hart’s witness statement, I should refer to the other statements by Veolia which he mentions.  First, in his letter of 26 February 2010 Mr Pickford referred to the fluff layer as “materials acquired”; Mr Hart says this was inaccurate as he had understood that fluff was waste received through the gates at its landfill sites, not material bought in by Veolia.  There is nothing in this point: Mr Pickford did not say that Veolia bought the material but only that it acquired it, and there is no reason to think this was untrue.  Second, in the same letter Mr Pickford referred to the materials as lightly compacted to a depth of 2m “in accordance with site licences”.  Mr Hart says that he understood that Veolia was saying that the fluff layer, the extent of its compaction and the depth of 2m were requirements imposed by the EA.  Again I do not think there is anything in this point.  The Site Management System reports prepared as part of Veolia’s applications (which pre-dated WRG) referred to the fluff layer, the fact that it would be subject to minimal compaction, and that the layer would be approximately 2m (paragraph 78(4) above).  HMRC accept that site permits can incorporate plans for site management drafted by operators, and I assume that these reports might well have been incorporated into the site permits or licences: at any rate there is no reason to conclude that they were not.  Third, Mr Hart refers to a letter of 23 July 2012 in which Ms Wagler said that “it is our view that the fluff layer encases the whole of the waste mass in each landfill cell in order to protect the cell liner from damage and that therefore all of our previous correspondence has merely sought to establish the accurate tonnages of fluff upon which our claim is based.”  Mr Hart says he understood from the reference to fluff encasing the waste in the cell that what was being said was that fluff was part of the cell containment system.  I do not think this is a fair reading of the point Ms Wagler was making.  The point of this letter was to try and assert that the side fluff claim was not a new claim for capping purposes from the original claim (quantified only by reference to base fluff) but was a further quantification of the same claim.  Ms Wagler was therefore trying to persuade Mr Hart that the side and base fluff were in effect the same.  Quite how that was described was very much of secondary importance.  
141.	Paragraph 61 of the Detailed Grounds reverts to what HMRC had been led to believe by Veolia.  In paragraph 61(b) it is pleaded that fluff is not “an engineered material”, but is merely household waste from which sharp objects have been removed, and that “the protection of the liner” comes not from the remaining fluff but from the absence of the sharp objects that have been removed.  Paragraph 61(c) then alleges as follows:
“Notwithstanding that fact, Veolia had described the material as “engineered material” that forms part of the “cell construction”.  It referred to the process by which the case and side walls were lined and referred to the depth of the layers and the applicable compaction rates.  HMRC had been led to believe that the material had been engineered insofar as there was a relationship between the depth of the material used, the degree of compaction in light of what would be placed above it, the stability of the waste cell and the degree of protection that could thereby be afforded to the liner.  This was not the case.  There is not testing of the material or its rate of compaction and the adoption of 2 metres (which is not in any event uniform across the industry) does not arise from any testing or engineering specifications.  The depth is essentially random.” 
142.	Mr Grodzinski said that the Detailed Grounds do not identify any statement by Veolia referring to fluff as “engineered” prior to Mr Hart’s letter of 1 February 2013.  I accept this.  Veolia did describe fluff as “engineered” in a number of notices of appeal to the First-tier Tribunal (the appeal in relation to base and side fluff and two appeals in relation to top fluff pre- and post-September 2009), but although these appear to be mis-dated they must all postdate HMRC’s decisions to reject the claims in February 2014.  Veolia also referred to fluff as “engineered” in a skeleton argument to the Court of Appeal (in an interlocutory appeal in the present proceedings), but this dates from April 2015.  None of these statements can have had any effect on Mr Hart’s decision in February 2013. 
143.	Second, Mr Grodzinski said that although HMRC say that Veolia led them to believe that the material had been engineered in a particular sense (that there was a relationship between the depth of material, the degree of compaction, the stability of waste and the protection of the liner) what is conspicuously lacking is any attempt to tie that to anything that Veolia actually said.  I accept this submission as well.  I can well understand that HMRC now have a much better understanding than they did in 2013, let alone in 2009, as to the extent to which there was any particular technical specification behind the compaction rates and depth of the fluff layer.  I am quite prepared to assume that HMRC may be right that the fluff layer is no more than a layer of household waste which has had sharp and heavy objects removed so as not to risk puncturing the liner, and that there was no particular science or testing behind the selection of the depth of the fluff layer: the general practice may have been for a layer of 2m not because there was any particular engineering reason for this but simply because that was a typical depth for the ‘first lift’.   But none of this proves that Veolia led HMRC to believe the contrary.    
144.	Finally paragraph 61(d), as well as pleading that the placement of fluff at the base and side of the cells is not cell engineering, pleads that although site permits can sometimes require operators not to place sharp objects by the liner, that is not the same as requiring that operators place fluff layers on the base or sides of the cells; it is just a form of careful waste placement and management.  As Mr Fitzpatrick put it when answering a similar issue in relation to Viridor, this seems more like a conceptual distinction, or one of nomenclature, than a factual difference.  If a site permit requires that sharp, heavy or bulky objects are removed from the first layer of waste placed in a cell so that the liner is not at risk of being punctured (something which I do not understand HMRC to dispute), and if the practice is to call this layer a soft or fluff layer (which is the evidence from Mr Durkan’s e-mail of 8 June 2009), then I do not see in what sense it is wrong to say that the site permit requires operators to place fluff layers on the base and sides of the cell.  That does not answer the question, which will be decided in the tribunal appeals, whether placing carefully selected household waste in this way does or does not mean that it has been disposed of “as waste” within the meaning of FA 1996, that is with the intention of discarding it; but even assuming that HMRC are right about this, I do not see that it follows that there was anything misleading, or any lack of candour, in an operator saying that its site permits required it to place fluff layers down.
145.	In my judgment the allegation that Veolia failed to place its cards face up on the table is not made out in relation to the particular matters pleaded.
Was there a failure by the taxpayers to put their cards on the table – Viridor?
146.	The Detailed Grounds of Response in Viridor’s case closely follow those in Veolia’s.  In this case paragraph 38 of the Detailed Grounds cross-refers to Mr Hayes’ witness statement, and, by way of summary, refers to 4 particular representations:
(a) 	In its letter of claim of 4 June 2010, Viridor referred to fluff as “engineering material for the construction of cells” and as used “for engineering purposes.” 
(b)	In a letter of 17 July 2012 written on behalf of Viridor in relation to reverse fluff, KPMG referred to the reverse fluff layer as concerning the “design and building of the structure” and its use as “an integral part of the building of the capping system”.
(c)	In his witness statement Mr Adams said that the EA requires each landfill site to contain a fluff layer and this is stipulated in the landfill permits they issue.
(d) 	In Viridor’s Statement of Facts and Grounds, Viridor refer to basal and top fluff as a “crucial structural component of a landfill cell”.
147.	So far as (b) is concerned, this refers to reverse fluff.  It is difficult to see how it can have affected HMRC’s decision on base and side fluff.  So far as (c) and (d) are concerned, these are statements in documents prepared for these proceedings; they cannot have had any influence on HMRC’s decision to agree that base and side fluff was not taxable.  
148.	That leaves (a), the statements in the letter of claim.  What Mr Hayes says about this is that “HMRC understood from this passage that fluff material was an engineering requirement and thus necessary for the construction of the actual cell containment itself.  HMRC therefore understood that the claim fell within the terms of [Brief] 58/08.”  However he does not explain who he is referring to by HMRC.  He cannot be referring to the initial decision made by Policy that fluff was not taxable as that was a decision made in June 2009, before Viridor’s letter was written.  Nor does it seem that he is referring to himself as he later says:
“Policy took the view that the characteristics and function of this material meant that, as a matter of fact, it did amount to a form of cell engineering within the terms of [Brief] 58/08.  It has always been my view that this was a mistake: I considered fluff merely to be well managed waste and that these claims should not be paid.” 
	That I think amply bears out Mrs Hall’s submission that the role of officers such as Mr Hayes was not to reconsider the policy decision that fluff was taxable, but to implement the policy by validating the amount of a claim.  But it seems to me to follow that Mr Hayes in implementing the policy was not doing so because Viridor had described the use of fluff in any particular terms; he was doing so, despite his own misgivings, because that was the decision Policy had come to.  And as with Veolia, there is nothing to suggest that the decision made in June 2009 was based on anything said, or not said by Viridor, which had not then made a fluff claim, nor indeed does it appear from the contemporaneous material that the decision made in June 2009 was that the fluff layer was cell engineering within the meaning of Brief 58/08: what that suggests is that the decision was that it was a use of waste within WRG.
149.	Mr Hayes refers to some other material in his witness statement.  In a letter of 9 December 2010, Viridor appended an Operations, Development and Management Plan (or ODMP) for one of their sites.  An ODMP is an internal document used by Viridor which essentially sets out the procedures for how they should operate the site.  Paragraph 5.2.3 of this referred to only selected waste, excluding large, bulky or sharp items being used to form the initial lift of waste, this selected waste being subject to a minimal amount of compaction and used to form a buffer layer no less than 2m in depth.  Mr Hayes’ comment is that: 
“HMRC had understood that the specification in the ODMP reflected some prior specification set out in regulations or Environment Agency guidance that indicated that the depth of waste was derived from some form of performance driven design or specification and played an engineering function.” 
Again he does not explain who he means by HMRC here; but in any event, I see nothing in the ODMP which justifies the apparent understanding that the depth of waste was derived from some form of prior specification in regulations or guidance.  It does not say so.  What Viridor’s letter says is that when constructing a cell Viridor is required to protect the liner by a placing a fluff or protective layer, the fluff layer usually comprising selected soft domestic waste that has been sorted to remove any sharp objects, and being laid to a depth of 2m across the base and sides, the thickness of the layer being detailed in the ODMP.  This is not an assertion that the 2m depth is a specific regulatory requirement; nor for that matter is it an assertion that the layer derived from some form of performance driven design or specification: it is an assertion that it was done to protect the liner.  In fact the ODMP deals separately with “Engineered Containment System” (in section 4) and “Waste Deposit and Emplacement” (in section 5) and the requirement for the fluff layer comes in the latter.  If anything, this suggests that the fluff layer is not part of the engineering of the containment system but part of the process for careful depositing of waste.
150.	As with Veolia, in my judgment the allegation that Viridor failed to place its cards face up on the table is not made out in relation to the particular matters pleaded.
151.	I have concluded in the case of both Veolia and Viridor that a clear and unambiguous representation was made by HMRC that base and side fluff was not taxable and their claims for repayment were in principle well founded; and that there was no failure by them to put their cards face up on the table.  It follows that, subject to one subtlety, they have each established a legitimate expectation of being repaid.  
152.	The subtlety is that the phrase “legitimate expectation”, although a very familiar one which trips off the tongue easily, contains within it what is not an entirely easy question, namely what it means to say that an expectation is legitimate.  Certainly one can say that for an expectation to be legitimate, it must be reasonable; and that in circumstances like the present, it is not reasonable unless both the relevant guidance or ruling is clear, unambiguous and devoid of relevant qualification, and there has been no failure by the taxpayer to put their cards on the table, but it is unclear what more, if anything, is required.  There is some authority that the force of the word “legitimate” is that the expectation will be protected by law, and that this may depend, for example, on whether there has been detrimental reliance on the statement: see R v Secretary of State for Education and Employment ex p Begbie [2000] 1 WLR 1115 (“Begbie”) at 1125C, 1127C per Peter Gibson LJ and 1133H per Sedley LJ.  It is common ground that it is not in general essential in a legitimate expectation case for the claimant to have relied on 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: R (Bancoult) v Secretary of State for Foreign and Commonwealth Affairs (No 2) [2008] UKHL 61 at [60] per Lord Hoffmann.  But the statements in Begbie do suggest that even in cases where there has been a clear and unambiguous representation, the law will not always regard an expectation as worthy of protection and hence as a legitimate one.  In the present case however it was not I think disputed that if I found, as I have, that there was a clear and unambiguous representation, and no breach of the cards face up principle, then this would give rise to a legitimate expectation of the type the law would prima facie protect. 
Objective justification/conspicuous unfairness – the principles
153.	The remaining question is whether HMRC’s decision to refuse repayment is objectively justifiable, or conspicuously unfair (as appears below the argument proceeded on the basis that these could be treated, at any rate at this level, as two sides of the same coin).  Save for one point there was little dispute as to the principles.
154.	The starting point is the judgment of the Court of Appeal given by Lord Woolf MR in R v North and East Devon Health Authority ex p Coughlan [2001] QB 213 (“Coughlan”).  Here the health authority had assured Miss Coughlan that a particular facility for the long-term disabled (as she was) would be her home for life, but later decided to close the facility and move her somewhere else.  Lord Woolf’s judgment classified cases where a public body proposed to depart from some previous statement into three: (a) where the public body was only required to bear in mind its previous policy or representation, giving it such weight as it thinks fit; (b) where the promise or practice induced a procedural legitimate expectation, for example of being consulted; and (c) where the promise or practice induced a legitimate expectation of a substantive benefit.  It is not disputed that if, as I have found, the taxpayers in the present case had a legitimate expectation, it is of this third type.  Lord Woolf’s judgment makes it entirely clear that in this third category the review by the Court is not limited, as it is in the first category, to a review on Wednesbury grounds: the Court itself has the task of “weighing the requirements of fairness against any overriding interest relied upon for the change of policy”, and when necessary has to determine “whether there is a sufficient overriding interest to justify a departure from what has been previously promised” (at [57]-[58]).  A bare rationality test would constitute the public authority judge in its own cause, as a decision to prioritise a policy change over legitimate expectations would almost always be rational even if unfair (at [66]); the relevant question was whether the decision was an abuse of power (at [67]); and abuse of power might take many forms, including reneging, without adequate justification, on a lawful promise or practice (at [68]).  The proper test, which emerged from the revenue cases such as R v IRC ex p Unilever plc [1996] STC 681 (“Unilever”), was whether the decision was so unfair as to amount to an abuse of power; and in such a case there was no question of the Court deferring to the Inland Revenue’s view of what was fair (at [78]).  The propriety of the authority’s decision should be tested by asking whether the need which the authority judged to exist (in that case to move Miss Coughlan to a different facility) outweighed its promise (in that case that the existing facility would be her home for life) (at [83]).  On the other hand, although it is for the Court to balance the conflicting interests, not just to assess the rationality of the public body’s decision, Lord Woolf does say (at [89]):
“in drawing the balance of conflicting interests the court will not only accept the policy change without demur but will pay the closest attention to the assessment made by the public body itself.” 
155.	It is undisputed therefore that it is for the Court itself to assess whether the departure from the previous representation is objectively justified, and that this requires the Court to assess whether it is so unfair as to amount to an abuse of power.  Mr Grodzinski said that there had been a variety of formulations of when a measure will fail this test, but perhaps the best known and most commonly used, which he was content to adopt, at any rate at this level, was whether the frustration of a legitimate expectation was “conspicuously unfair”.  That phrase is taken from Unilever where it was held to be unfair for the Revenue to enforce a time limit for claims to group loss relief which for many years it had not insisted on: see at 695a per Simon Brown LJ referring to it being: 
“illogical or immoral or both for a public authority to act with conspicuous unfairness and in that sense abuse its power.” 
156.	Mr Grodzinski submitted that what was meant in this context by “conspicuous” unfairness was unfairness that was readily visible or obvious; and similarly that when Bingham LJ referred in MFK to unfairness “significant enough to be an abuse of power” (at 1572D), this was to be contrasted with insignificant unfairness.  I do not accept this submission.  In Unilever Simon Brown LJ referred (at 697c) to:
“determining the border between on the one hand mere unfairness – conduct which may be characterised as ‘a bit rich’ but nevertheless understandable – and on the other hand a decision so outrageously unfair that it should not be allowed to stand.” 
That seems to me to make it clear that what Simon Brown LJ meant by “conspicuous” unfairness was not conduct that the Court could readily discern to be unfair, but conduct that went beyond being just a little bit unfair and was a good deal more unfair than that.  I read Bingham LJ’s reference in MFK to “significant” unfairness in the same way; elsewhere (at 1568E) he referred to “substantial” unfairness, and both “significant” and “substantial” unfairness seem to me to refer naturally to unfairness of some considerable extent, and not simply to be intended to cut out the insignificant or insubstantial.  A judgment should of course be read as a whole, not construed like a statute, but even in the case of a statute, “substantial” has been said to be not the same as “not unsubstantial”, but to be the equivalent of considerable, solid or big: Palser v Grinling [1948] AC 291 at 317 per Visc Simon.  In Hely-Hutchinson Whipple J referred (at [48]) to the relevant exercise as one of:
“determining whether the unfairness scales tip so far towards the taxpayer as to make frustration of his or her legitimate expectation an abuse.” 
	That seems to me to be another way of expressing the same idea that I have tried to express, and I agree.  It is only fair to add that in reply Mr Grodzinski moderated his position somewhat and accepted that the relevant unfairness had to be some way across the line.  
157.	Shortly after Coughlan the question of the standard of review was revisited by the Court of Appeal in Begbie.  This concerned a statement in a letter made by the Secretary of State about assisted places in schools, which in a small but significant way by mistake misstated his policy; the mistake was corrected about 5 weeks later.  (It was in that context that the Court said, as I have referred to, that whether an expectation was legitimate might depend on whether it was acted on.)  Laws LJ, building on the analysis in Coughlan, made some remarks of general application.  Having said that abuse of power had become, or was fast becoming, the root concept in public law (at 1129F), he cautioned against treating the first and third categories in Coughlan as hermetically sealed:
“The facts of the case, viewed always in their statutory context, will steer the court to a more or less intrusive quality of review. In some cases a change of tack by a public authority, though unfair from the applicant's stance, may involve questions of general policy affecting the public at large or a significant section of it (including interests not represented before the court); here the judges may well be in no position to adjudicate save at most on a bare Wednesbury basis, without themselves donning the garb of policy-maker, which they cannot wear….
In other cases the act or omission complained of may take place on a much smaller stage, with far fewer players. Here, with respect, lies the importance of the fact in [Coughlan] that few individuals were affected by the promise in question. The case's facts may be discrete and limited, having no implications for an innominate class of persons. There may be no wide-ranging issues of general policy, or none with multi-layered effects, upon whose merits the court is asked to embark. The court may be able to envisage clearly and with sufficient certainty what the full consequences will be of any order it makes. In such a case the court's condemnation of what is done as an abuse of power, justifiable (or rather, falling to be relieved of its character as abusive) only if an overriding public interest is shown of which the court is the judge, offers no offence to the claims of democratic power.
There will of course be a multitude of cases falling within these extremes, or sharing the characteristics of one or other. The more the decision challenged lies in what may inelegantly be called the macro-political field, the less intrusive will be the court's supervision. More than this: in that field, true abuse of power is less likely to be found, since within it changes of policy, fuelled by broad conceptions of the public interest, may more readily be accepted as taking precedence over the interests of groups which enjoyed expectations generated by an earlier policy.”
158.	Laws LJ gave further guidance in R (Nadarajah) v Secretary of State for the Home Department [2005] EWCA Civ 1363 (“Nadarajah”).  He said that abuse of power, although a useful name as it caught the moral impetus of the rule of law, did not tell you, case by case, what is lawful and what is not (at [67]).  He then (at [68]) articulated the proposition that a public body’s promise or practice as to future conduct might only be departed from where to do so was:
“a proportionate response (of which the court is the judge, or the last judge) having regard to a legitimate aim pursued by the public body in the public interest.”  
In applying this test, proportionality is to be judged by the competing interests arising in the particular case.  Factors which will be likely to make the denial of the promise harder to justify are where the representation relied on amounts to an unambiguous promise, where there is detrimental reliance, where the promise is made to an individual or specific group.  On the other hand where the decision-maker is concerned to raise wide-ranging or macro-political issues of policy, the expectation’s enforcement in the courts will encounter a steeper climb (at [69]).  
159.	I was also referred to Paponette v A-G of Trinidad and Tobago [2010] UKPC 32 for the proposition that although the initial burden lies on the applicant to prove the legitimacy of his expectation – that is, to prove the promise, and that it was clear, unambiguous and devoid of relevant qualification (and if he wishes to reinforce his case by saying that he relied on the promise to his detriment, then he must prove that too) – once these elements have been proved, the onus shifts to the authority to justify the frustration of the legitimate expectation, and it is for the authority to identify any overriding interest on which it relies.  It is then for the Court to weigh the requirements of fairness against that interest: see at [37] per Lord Dyson.  
160.	Mr Grodzinski formulated the following further propositions of law:
(5)	  	The Revenue cannot defeat a claim for legitimate expectation by asserting that its original guidance or statement conflicts with what it subsequently considers to be a different application of the taxing statute.
(6)	 	In some cases HMRC will be allowed to resile from the legitimate expectation they have created, provided they satisfy the Court on the material before it that there was an objective justification for doing so which is proportionate in all the circumstances.  The burden of establishing justification is on the Revenue.
(7)	 	It is for the Court to decide whether the Revenue has justified its decision, applying the question of whether the decision is unfair.
Save that proposition (7) would I think more accurately reflect the authorities if it read “whether the decision is so unfair as to amount to an abuse of power, that requiring conspicuous or substantial unfairness” (in the sense explained above), I accept propositions (6) and (7) which are justified by the authorities I have referred to and which were not in effect disputed.    
161.	For proposition (5) Mr Grodzinski referred me to R (GSTS Pathology) v HMRC [2013] EWHC 1801 (Admin) (“GSTS”).  In response to a request concerning the VAT treatment of supplies to be made by a prospective joint venture, HMRC had in 2008 specifically confirmed that the supply would be standard rated, and repeated that confirmation in 2010; but in 2013 HMRC decided that the supplies were in fact exempt after all.  Leggatt J considered the principles applicable to legitimate expectation at [72]-[84].  One particular submission made for HMRC was that HMRC had a very narrow discretion to continue with what it had come to believe was an incorrect view of the law, as that would allow for the perpetuation of a position inconsistent with the true legal position (at [80]).  Leggatt J’s response to that (at [82]) was:
“there seems to me to be a significant distinction between the situation where the law is clear that the Revenue in the exercise of its managerial discretion declines to enforce and a situation where, as in this case, the true position in tax law is uncertain. There is no doubt that the managerial discretion of the Revenue may extend even to agree not to collect tax which, as a matter of law, is undoubtedly payable if it considers this to be in the overall interest of good administration and maximising the collection of Revenue. I would agree however that the discretion of the Revenue in such a case must be a very narrow one. But that, in my view, is very different from a case in which (1) the Revenue has given advice or guidance which it believed to be correct at the time that the advice or guidance was given, and (2) what has happened since is not that there has been any material change in the law but simply that the Revenue has changed its view as to what it believes to be the correct tax position.” 
	At [95] he concluded that the correct description of what had happened in that case is that the question had been reconsidered and a different view taken; there had not been any relevant change in the law.  At [96] he said that if a tax treatment stated in a ruling can change, not because of any change in the law but just because HMRC has changed its view, the value of such rulings would be very substantially undermined.  At [97] he said:
“The counter argument is that HMRC cannot reasonably be obliged to perpetuate indefinitely what is now considered to be a mistaken interpretation of the law.  To do so would be inconsistent with its duty to collect what it believes to be the correct amount of tax required by law. 
98.	Where the balance is struck between these competing arguments may depend on the particular facts of the case.”
He then set out the features of that case which led him to conclude that HMRC could not impose a different tax treatment without unfairness.  
162.	That I think does not fully support Mr Grodzinski’s proposition (5).  It certainly shows that a mere change in HMRC’s view of the law cannot always justify frustrating an expectation: to do that would undermine the whole point of giving rulings and guidance in the first place.  As Whipple J said in Hely-Hutchinson (at [53]), another case where HMRC had issued guidance and then come to regard that as based on a wrong view of the law, the fact that HMRC came to view the original guidance as a mistake which had given those taxpayers who had relied on it a windfall to which they were not entitled is a feature typical of legitimate expectation in tax cases.  But equally, Leggatt J does not say that a change in HMRC’s view of the law is always irrelevant, and in that case he relied on such matters as the extent of the reliance by the claimants in setting up their business, the fact that the extent of this reliance was made clear to HMRC when the rulings were sought, and the uncompensatable losses they would suffer if now subjected to a different tax treatment.  I would therefore accept Mr Grodzinski’s proposition (5) only in a modified form to the effect that the fact that the Revenue considers that its original guidance or statement conflicts with what it subsequently considers to be the true application of the taxing statute is not by itself sufficient to justify frustrating a legitimate expectation, but can be a factor to be taken into account.   
163.	Mrs Hall said that this was not just a case of HMRC changing its view of the law, but was a case where HMRC had recently realised that it had originally proceeded on a mistaken view of the facts.  That was a reference to HMRC’s position that it was only in May 2015, after receipt of expert advice, that HMRC appreciated that fluff was not cell engineering and hence not within Brief 58/08.  I have already given my reasons why I do not accept that account of what happened, but it raised the only significant point of principle between the parties, which I do have to resolve, and that is whether when considering the fairness of frustrating the taxpayers’ expectations, I should be asking the question whether to allow effect to be given to the decision the Commissioners took in December 2013 was conspicuously unfair in the light of the matters they then took into account, or whether I consider that it would now in 2016 be conspicuously unfair in the light of matters now relied on by HMRC.      
164.	Mrs Hall submitted that it was the latter.  She said that when attempting to weigh the balance as required by Coughlan the Court had to have regard to all of the facts and circumstances, and to limit itself only to the facts known to the Commissioners at the time that they made the decision would be to disregard a core aspect of HMRC’s case.  She referred to R (on the application of Nash) v Chelsea College of Art & Design [2001] EWHC Admin 538 (“Nash”), where Stanley Burnton J at [34] said that the Court would be cautious about accepting reasons subsequently put forward for an impugned decision, but did not rule it out.    
165.	Mr Grodzinski submitted (i) that the legality of decisions on judicial review must be judged by reference to the factors which the decision-maker took into account; and (ii) that the Court would not generally accept an ex post facto reason put forward to justify a decision, particularly where those reasons are inconsistent with those which appear from the face of the decision under challenge.      
166.	On this I prefer Mr Grodzinski’s submissions.  So far as (i) is concerned, although Mr Grodzinski initially said that it was so elementary that he could not find authority for it, he later referred to the way in which Lord Woolf referred in Coughlan to the exercise undertaken by the Court being one of assessing whether the need identified by the authority outweighed its promise, and to the Court paying the closest attention to the assessment made by the public body itself.  It does seem to me to follow from the nature of the exercise the Court is undertaking.  As I understand the principles to be derived from Coughlan, Begbie, and particularly Nadarajah, although the question of fairness is ultimately one for the Court, the exercise the Court is engaged on remains one of reviewing or supervising the decision taken by the decision-maker.  It is not taking the decision afresh for itself.  What it is doing is assessing whether the response of the decision-maker was “a proportionate response … having regard to a legitimate aim pursued by the public body in the public interest”.  This requires focus on what the aim was that the public body was pursuing, whether it was legitimate and whether the response was proportionate, all of which are, it seems to me, to be judged by reference to the decision it actually took and the reasons for it, not matters that have only subsequently come to light.  
167.	That was the view I had already come to before considering R (British Sky Broadcasting Group plc) v Customs and Excise Commissioners [2001] STC 437 (“BSB”), a case cited by Mr Grodzinski not in this context but another one.  I have not therefore heard any submissions directly on this aspect of it, but it does seem to me directly in point.  In that case a submission was made by Mr Pannick for the taxpayer (see at [10]) that: 
“the court should judge the question of fairness not by considering the material before the commissioners at the relevant time, but in the light of all the material the court has when it is determining the issue in dispute.” 
That seems to me materially identical to the submission made by Mrs Hall in this case for HMRC.  It was squarely rejected by Elias J at [16]-[17] on the basis that:
“Judicial review is about testing the legality of administrative action; save in exceptional cases, such as if jurisdiction is in issue, that can only properly be judged in the light of the factors which were known or ought to have been known by the administrator when the decision was taken.” 
	That as can be seen is entirely in accordance with the view I had already formed; and I do not think it can affect the principle that in that case it was the taxpayer that wanted to look at other facts, and in this case it is HMRC. 
168.	So far as (ii) is concerned, Mr Grodzinski referred me to R (on the application of Privacy International) v HMRC [2014] EWHC 1475 (Admin) where Green J at [67] reformulated the principles stated in Nash.  I accept that that suggests that although the Court can admit reasons later put forward, the purpose of doing so is to identify or elucidate the reasons of the actual decision-maker, not to permit the public body to compose new reasons as a retrospective justification for the earlier decision.  In my judgment I am therefore confined to looking at the factors in fact taken into account by the Commissioners.
Factors taken into account: amount of tax at stake
169.	Those factors can be found in the notes of the two meetings of the Commissioners on 16 and 19 December 2013 (paragraphs 67 and 70 above), to which should be added Mr Graham’s Main Briefing Paper of 10 December 2013, and his follow-up note of 18 December 2013 (paragraphs 65 and 69 above).  
170.	Only two matters are mentioned in the notes of the meeting of 19 December 2013 (or at any rate the unredacted parts – the redacted parts presumably refer to legal advice), namely the amount of tax at stake, and “the behaviours of the companies (boundary pushing)” or “the behaviour of the industry and their advisers”.  So far as the amount of tax at stake is concerned, Mr Graham’s Main Paper gives the figure for the total amount of base and side fluff claims received as £188m of which £85m had yet to be repaid.  In his follow-up note he explained that one of the major claimants was missing from the original paper, and hence he revised the figures for base and side fluff to a total of £236m claims received, of which £133m had been repaid.
171.	Mr Grodzinski said that the fact that a large amount of tax is at stake does not by itself provide justification for resiling from a promise.  He referred to what Judge J had said in MFK at 1575D:
“The suggestion that a huge amount of tax would be lost to general funds as a consequence of an order for judicial review is an argument without force. The remedy of judicial review for improper abuse of power – if established – should be available equally to all taxpayers irrespective whether their potential liability is huge or small. If persuaded that judicial review would otherwise have been appropriate I should have exercised my discretion in favour of granting it.” 
Mr Grodzinski pointed out that the more tax was at stake, the larger the disappointment for the taxpayer if his expectation is defeated.
172.	I accept that the amount of tax at stake cannot by itself be a justification for resiling from a promise.  This is what Judge J said, and I see no reason to disagree.  If the only relevant facts are that the Revenue have created a legitimate expectation that a taxpayer will be taxed on one basis, and now wish to tax the taxpayer on a different basis because it would be very costly to stick with the original basis, it is indeed difficult to see that that could ever be fair, or amount to a proportionate response in pursuit of a legitimate aim.  Collecting the tax that is properly due is no doubt a legitimate aim, indeed the primary duty of HMRC; but the suggestion that that duty might by itself entitle HMRC to override a legitimate expectation they had created was the very argument squarely rejected in MFK.  Once that principle is accepted – that HMRC’s statutory obligation to collect taxes does not automatically trump a legitimate expectation (cf Hely-Hutchinson at [43] per Whipple J) – it cannot make any difference to the principle whether the amount in issue is large or small.  
173.	Mrs Hall did not dispute that this was so where what was in issue was an expectation created in one taxpayer.  But she said that one had to look at the context.  Here the context was entirely different: this was a sector-wide challenge to the tax which meant the tax itself was under threat, with up to one-third of the tax take subject to litigation.  That seems to me on analysis not to be an attempt to rely on the large amount of tax as a justification in itself, but as really another facet of the other factor relied on, that is the boundary-pushing behaviour of the industry and their advisers.  
Factors taken into account: boundary-pushing behaviour – legitimate aim?
174.	Mr Graham had referred to this behaviour in both his papers.  In his Main Paper, in a section headed “Boundary pushing following WRG” he had referred to the waste industry, orchestrated by their advisers, having started submitting claims for base and side fluff in September 2008, and the accountancy firms and their clients having subsequently “started to push the boundaries of WRG even further” citing the gas claims (starting in September 2009 and totalling some £2.8bn to date) and the reverse fluff claims (starting in December 2010 and totalling nearly £500m to date and rising).  In his follow-up paper he referred to the fact that one of the matters on which the Commissioners wanted further information was “the signal we wish to send to the industry”.  I have referred to this above but since it is the best evidence of what the Commissioners had in mind when referring to the conduct of the industry and their advisers it is worth repeating the points Mr Graham made, as follows:
(1)	 	A year after WRG HMRC had put in place what was intended to be a temporary legislative fix pending consultation but the consultation did not result in changes to the tax as the consultees could not agree on the need for changes. 
(2)	 	Claims were invited to implement the effect of WRG but HMRC did not and could not have foreseen that challenges to the tax would snowball in the manner they had.  HMRC did not envisage that the claims could amount to almost a third of the tax paid in the lifetime of the charge.
(3)	 	“It is clear to us now that the early claims for base and side fluff were part of a concerted campaign of boundary pushing which started with the original WRG case itself.”
(4)	 	Had it been possible to foresee the extent of the boundary pushing their approach to WRG and the consultation would almost certainly have been different.
(5)	 	Almost as soon as the new legislation took effect advisers were filing claims for alleged uses of material outwith its scope.  They had seen three new types of claim that year which the EA advised were “artificial tax constructs that have no founding in landfill cell engineering.”  
(6)	 	In support of “our view that WRG related claims are wholly artificial”, most of the major players had indicated that they would prefer not to be party to the claims, but could not now resile because of the competitive disadvantage they would suffer if they withdrew unilaterally and the litigation was found in the claimants’ favour.
(7)	 	The major operators were also now subject to claims from their own customers that they had been overcharged tax, claims which were also being orchestrated by the major accountancy firms, some of which were working on a contingent fee basis.
(8)	 	“For these reasons, and because of the overall scale of the challenge to the tax, we believe it is right for the Department to take a robust position in relation to all aspects of the challenges, including base and side fluff.”
It seems to me that in the absence of any other evidence, I should proceed on the footing, as Mr Grodzinski asked me to, that the Commissioners’ decision was taken on the basis of the matters set out in this note.
175.	Were the Commissioners pursuing a legitimate aim in doing so?  Before answering this, it is worth reviewing the history to see what Mr Graham was referring to.  It is impossible to read the file without being aware of a growing sense of concern if not frustration within HMRC at the way in which WRG was used as a springboard off which to bring more and more challenges to landfill tax.  WRG itself was concerned with inert materials taxed at the lower rate, and HMRC’s initial estimate of its impact was about £13m a year for 3 years (paragraph 24 above).  By the time that Brief 58/08 was published it was appreciated that it might involve some active waste such as car frag (but not I think biodegradable waste) and the estimate had risen, but it was still a very small percentage of the total tax (paragraph 29 above); by January 2009 however claims for £101m had been received against a then estimate of £105m in total, leaving aside the first gas claim which had been made in the sum of a further £101m (paragraph 33 above).  By October 2009, Mr Berry was reporting that KPMG were aggressively marketing gas and fluff claims and that the total stood at £561.5m (paragraph 40 above).  That was then followed by the reverse fluff claims.  By September 2011 Mr Berry was reporting the total of all claims to be £1.67bn, and the first claims had come in for fluff post September 2009, challenging the effectiveness of the attempt to bring fluff into tax by art 3(1)(g) of the 2009 Order (paragraph 50 above).  By January 2012 HMRC were estimating the total at stake to be up to £3.6bn (£2.5bn for gas claims), and were referring to the aggressive approach of the industry and their representatives which had resulted in a significant increase in challenges to the tax since WRG, including challenges to the 2009 Order (paragraph 55 above).  In October 2012 Mr Berry referred to a major accountant mass marketing the services of constructing a claim on behalf of landfill site operators, and to the major accountants having previously shown little interest in “our taxes” but, having seen the opportunity that WRG gave, then making money from it ever since; and Mr Graham referred to being told that “top fluff” and “reverse fluff” were terms coined by an accountancy firm, and would not be recognised by operatives at a landfill site (paragraph 58 above).  In February 2013 Mr Graham addressed the pan-industry meeting, referring to exceptionally high levels of challenge, more and more challenges building on the case law and the boundary pushing which pushed and extended the concept of material used in landfill sites from WRG, which concerned inert material, to base and side fluff, top or reverse fluff, and the gas claims, and urging the industry to take a collective step back from litigation, and get the tax back onto a sensible and workable footing, the “simple, even keel” that Parliament intended (paragraph 60 above).  This appeal did not work: in his follow-up note of 18 December 2013 Mr Graham referred to three new types of claim they had seen that year which the EA had advised were artificial constructs (see paragraph 177 below).  
176.	Those were the circumstances in which Mr Graham referred in his follow-up note to a concerted campaign of boundary pushing.  Mr Grodzinski said that it was unfair for Mr Graham to describe base and side fluff claims as part of such a campaign; that it was astonishing to say that it was inappropriate boundary pushing for WRG to have brought a claim that was upheld by the Court of Appeal; and that it was also astonishing, when HMRC had issued Brief 58/08 inviting claims to be made, to suggest that there was anything inappropriate in his clients or other landfill site operators accepting that invitation and submitting base and side fluff claims.  He was able to point to the fact that Mrs Hall twice said that base and side fluff claims were not boundary pushing.  On the first occasion, in answer to a question in what sense making claims for base and side fluff was boundary-pushing, she said it was not on its own, and that:
“we have always been at pains to make the very important distinction between the allegations of tax avoidance with regard to top fluff and a claim that the asserted use for base fluff has been exaggerated.” 
	On the second occasion she said that WRG itself was not boundary-pushing:
“Nor, as I have indicated, do we say that the base and fluff claims can fairly be so characterised.  They are exaggerated, and it could be said that that is boundary-pushing; it is a difficult and elusive concept.  But it is distinct from the tax avoidance allegations that we make with regard to reverse fluff.” 
In these circumstances, Mr Grodzinski said that the Commissioners had taken their decision in reliance on a factor that was not a proper factor at all.  Mr Graham had lumped together all the various landfill tax claims, but the decision the Commissioners had to take was only about base and side fluff, and on that Mr Graham’s characterisation of it as boundary pushing was wrong.  The decision was therefore flawed for that reason alone.
177.	Despite Mrs Hall’s statements, I think one needs to be cautious.  Both counsel as can be seen appear to have taken the term “boundary pushing” as an allegation of impropriety – Mr Grodzinski glossing it as inappropriate behaviour and Mrs Hall treating it as akin to tax avoidance, although somewhat reserving her position on the second occasion.  But although it appears to have become something of a vogue phrase within HMRC, it is not a term of art, and no attempt was made in argument to explore precisely what is meant by it.  Some light however is cast on this by an exchange of e-mails towards the end of November 2013.  On 20 November 2013 Mr Ian Quelch (Deputy Director, Business Customer & Strategy) e-mailed, among others, Mr Ian Stewart (Director, Indirect Tax) referring to a discussion at which Mr Harra had explained to Ms Indra Morris (Director General, Tax & Welfare at HM Treasury) that:
“although we think the Big 4 have moved away from marketing tax avoidance schemes, we do think they’re still pushing boundaries quite hard.” 
	That led to a request for examples, and Mr Quelch suggested that one example might be landfill tax (fluff); in a further e-mail he suggested a short brief for each example, covering various matters including: 
“why we feel that the approach / interpretation (while not aggressive avoidance as such) is “boundary pushing” ie unacceptable / a threat to the Exchequer etc.” 
  	That led to a paper prepared for Ms Morris headed “Boundary pushing – “use” of material in landfill sites”.  It does not bear the name of an author or a date. The parties appear to have agreed on a date of 29 November 2013; it certainly cannot be any earlier as it refers to the decision of the BT CIP on that date, and I accept that it is was either then or shortly afterwards.  The paper recites the history, introduced by saying that since WRG:
“the boundary of taxable/non-taxable material has been constantly pushed by landfill site operators, orchestrated by the “Big Four” Accountancy Firms” 
	It then references the base and side fluff, gas and reverse fluff claims, and then three examples of “other imaginative “uses” of waste” (waste “used” to create cells separating asbestos from other waste; waste “used” to stabilise other more liquid wastes; and inert waste used to create complex cell systems to separate different types of waste from each other).  The paper makes very similar points to Mr Graham’s follow-up note of 18 December 2013, although in more detail, and indeed he may well have drawn on it for writing his note.  Under a heading “Why this is a threat to the Exchequer” the paper not only refers to the amount of revenue at issue being high and a large and increasing proportion of the total amount of tax collected, amounting to over 30% of the entire tax take from landfill tax from its introduction in 1996, but adds:
“In addition to the threat to the Exchequer, these claims are particularly unhelpful in that the objective of the tax is to encourage recycling and reduction in the total amount of disposal to landfill sites.  By reducing the amount of waste liable to tax this objective is being undermined.” 
178.	It appears in the light of these documents that the concern that HMRC had was that although the large accountancy firms had moved away from marketing aggressive tax avoidance schemes as such, they were taking the initiative in promoting claims which sought to test the boundary between what was taxable and what was not, and to extend that boundary in the taxpayer’s favour (and to the prejudice of the Exchequer).  The documents also show HMRC’s concern at this type of behaviour; one can see that if accountants are not just advising their clients whether a particular state of affairs is taxable or not, but actively encouraging novel types of claim against the Revenue, HMRC might well regard this with disapproval, especially if they involved large amounts of tax and/or undermined the policy of the tax in question as the boundary pushing paper referred to.  But it is not I think necessarily the same as saying that the arguments put forward in any particular case are spurious or artificial, although the author of the boundary pushing paper clearly thought that some at least of the landfill tax claims were.  
179.	In the context of landfill tax, it seems to me that what was characterised as boundary pushing was the repeated attempt to extend the principle in WRG (which was, or at any rate was thought to be, that waste was not disposed of as waste if it was used on the site) by putting forward new and increasingly imaginative examples of the use of waste.  In that sense, the base and side fluff claims were indeed an attempt to extend the principle laid down by WRG, and none the less so because HMRC accepted, after Mr Durkan’s and Mr Berry’s trip to Scotland, that the extension was justified; and the gas claims and reverse fluff claims were attempts at further extensions, as were other more creative arguments such as the three examples specified in the paper, or a further argument (referred to by Mrs Hall but not dealt with in the evidence) that waste placed in a landfill site could be said to be used, and hence not taxable, on the basis that the site had been turned into a golf course.  Indeed in this sense WRG itself was no doubt an attempt (in the event successful) to move the boundary between what was taxable and what was not, as that too was a repayment claim where the waste had until then been regarded by the industry as taxable.    
180.	In these circumstances, despite Mrs Hall’s statements, I do not accept that Mr Graham’s characterisation of the claims as boundary pushing is astonishing, nor do I think that the Commissioners were likely to have been misled by it.  Mr Harra had made the point at the first meeting that HMRC had issued Brief 58/08 inviting claims for base and side fluff, and said “we need to be careful of criticising the boundary pushing in these circumstances”; Mr Lodge had also referred to the brief inviting the claims; and Mr Troup had accepted that the companies would consider they had a legitimate expectation as a result of the brief (paragraph 67 above).  The Commissioners were therefore well aware that the base and side fluff claims were being said to have been made in response to an invitation in the brief.  I reject the submission therefore that the Commissioners’ decision was flawed on this ground. 
181.	I can now return to the question whether the Commissioners were pursuing a legitimate aim.  The successive challenges to the tax formed the context in which Mr Graham wanted, and the Commissioners must have agreed, to send a signal to the industry by taking a “robust position in relation to all aspects of the challenges, including base and side fluff.”  That echoes what had been said in a paper prepared for the BT CIP on 21 November 2013 by him (and Ms Harlen, a Deputy Director responsible for the environmental taxes policy team), a copy of which was annexed to his Main Paper for the Commissioners, which said that not repaying the base and the side fluff claims:
“sends a strong and consistent message that we are prepared to robustly resist challenges to landfill tax.” 
182.	Was this a legitimate aim?  I consider that it was.  The impression one gets is that until WRG landfill tax, a relatively minor tax applicable only to one industry, had run reasonably smoothly, but that ever since WRG HMRC had seen the tax become as it were a playground for accountants and lawyers.  HMRC had taken the unusual step of getting representatives of the industry to a meeting to appeal to them to step back from litigation and get the tax back onto an even keel, but this had not produced the desired for result.  Moreover the challenges to the tax did not just seek to define more precisely the line between what was taxable and what was not; many of the challenges were such as to undermine the policy objectives of the tax.  The policy behind the tax is fairly self-evidently that identified in the boundary pushing paper, namely to put a cost on the depositing of waste, particularly active waste, into landfill and so act as a disincentive; yet the gas claims were a direct challenge to that, being premised on the basis that biodegradable waste deposited in landfill escaped taxation because it was used to produce electricity – a claim that has in fact now been rejected by Rose J in the Upper Tribunal (see Patersons of Greenoakhill Ltd v HMRC [2014] UKUT 0225 (TCC)), but is being pursued to the Court of Appeal.  The size of the gas claims (£2.8bn by December 2013) is an indication of the way in which if successful they would emasculate the tax and undermine the policy intention behind it.  
183.	Similarly the fluff claims also involve biodegradable waste being deposited in landfill cells but being said nevertheless to escape taxation.  By May 2012, when HMRC issued Brief 15/12, they had concluded that the so-called top or reverse fluff layer in reality constituted waste that was discarded carefully and was taxable (paragraph 56 above); and by May 2013 they had been advised that similar arguments could apply to base fluff (paragraph 61 above).  Such claims also represented an attack on the fundamental policy objective that ordinary household waste deposited in landfill sites should be taxed; and once reverse fluff was included, the much larger volume of the top layers compared to the base layers demonstrated the scale of the challenge to the tax represented by fluff claims: by December 2013 reverse fluff claims were nearly £500m and rising.  (It seems likely that they have now grown significantly – I was not told the current level of claims, but Veolia’s claim to the tribunal for reverse fluff post-September 2009 (on the basis that it is not caught by the 2009 Order) by itself comfortably exceeds £100m).  
184.	In these circumstances it seems to me well within the scope of legitimate aims for the Commissioners to want to make it entirely clear to the industry that if they were going to go down a route of repeated challenges to the tax, constantly seeking to extend the concept of waste being used, and in doing so undermining the fundamentals of the tax, HMRC would take every point available to them to defend it.  That does not seem a particularly surprising or unreasonable attitude for HMRC to wish to take, or message to wish to send.
185.	Before coming to the question of conspicuous unfairness, there is one other matter to mention just to get it out of the way.  Mrs Hall said that continuing to pay out on base and side fluff claims would make it more difficult for HMRC to defend the top or reverse fluff claims.  The industry had consistently argued that what applied to base and side fluff was equally applicable to top fluff, so for HMRC to accept that base and side fluff was not taxable (because it was “used”) would undermine their case that top fluff was not “used”, but merely well managed waste – or, as Mrs Hall put it, HMRC would by continuing to pay out base and side fluff claims be “bolstering” the taxpayers’ arguments or “feeding the top fluff machine”.  This is not I think a point on which any separate weight can be placed.  It is not referred to in Mr Graham’s follow-up note.  And although Mr Graham says in his evidence that this was part of the thinking of the HMRC team concerned, and there is indeed a reference to it in the paper of 21 November 2013 for the BT CIP, a copy of which was annexed to his Main Paper (“repaying these claims when we know they are not legitimate and then legally challenging claims for reverse fluff is inconsistent and might undermine any legal defence of non payment of reverse fluff claims”), the point does not appear to have been picked up by the Commissioners – at any rate it is not mentioned in the notes of either of their meetings.  Nor does it seem a particularly strong point.  I can see that continuing to pay out base and fluff claims without qualification might lead to the taxpayers arguing that HMRC, having accepted the non-taxability of base and side fluff, were being inconsistent in denying the same treatment to top fluff; but one would have thought this argument could be almost entirely pre-empted by HMRC only repaying base and side fluff to those who had been led to believe they would receive repayments, accompanied by an explanation that HMRC now believed that base and side fluff was properly taxable but were continuing to make repayments solely to avoid unfairness in the light of the legitimate expectations the taxpayers had been encouraged to have.  I propose to ignore this particular point.
Proportionate response / conspicuous unfairness
186.	That leaves the question whether the decision to stop paying base and side fluff claims even to those who had been led to believe that their claims would be paid was a proportionate response; as the case has been argued before me, that will be answered by asking whether the decision is conspicuously unfair, so unfair as to amount to an abuse of power.  
187.	The way in which it was put by Mrs Hall was that in the face of what she described as a mass market challenge to the tax, it was perfectly reasonable for HMRC to pull up the drawbridge.  She characterised that as a “macro decision” within the principles expounded by Laws LJ in both Begbie and Nadarajah and hence one where the Court should be slow to interfere, relying on the fact that the Commissioners did not drill down into the detail of individual claims.  I agree that the Commissioners were obviously taking a decision in relation to the industry as a whole.  But I do not think this necessarily puts the decision at the macro-political end of the spectrum of the type that Laws LJ was referring to.  He referred (in Begbie) to “questions of general policy affecting the public at large or a significant section of it” as opposed to acts that take place “on a much smaller stage with far fewer players”; and (in Nadarajah) to “wide-ranging or macro-political issues of policy” as opposed to “an unambiguous promise … made to an individual or specific group.”  That seems to me to focus not so much on how finely-grained or broad-brush the public body’s decision was when it decided to resile from the expectation, but rather on the nature of the policy, representation or promise that gave rise to the expectation in the first place.
188.	In the present case, I have found that the expectations were generated not by Brief 58/08 as such but by the letters written by HMRC to each of Veolia and Viridor.  These were individual letters written to individual taxpayers.  They were, as is evident, written because of a policy decision previously taken by HMRC that base and side fluff claims were not taxable; but the fact remains that from the viewpoint of the individual taxpayer their expectations were not generated by statements of broad policy affecting the public at large or a significant section of it, but by individual statements made directly to them.  There is nothing macro-political about the letters written by HMRC to Veolia and Viridor.  True it is that they were not the only landfill site operators potentially affected, and that it may be difficult for the Court to “envisage clearly and with sufficient certainty what the full consequences will be” of any decision it makes, but nevertheless this case seems to me to lie more towards the end of the spectrum where the facts are “discrete and limited” than the end where the decision has “implications for an innominate class of persons”.  
189.	In those circumstances it seems to me that I have to consider whether the decision is conspicuously unfair not by reference to the industry as a whole but by reference to the impact on the individual taxpayers before me, with an intense focus on whether it is conspicuously unfair to defeat their expectations given their individual circumstances.  
Viridor
190.	I will start with Viridor.  The relevant considerations seem to me to be these.  First, the Commissioners’ decision only has the potential for significant unfairness if the true position as a matter of tax law is that fluff was in fact taxable.  That is because if the true position is that fluff was not taxable, Viridor can (and one must assume will) establish that in due course in its appeal to the tribunal.  So one only needs to assess the unfairness on the assumption that fluff was in fact taxable.  Indeed it will be recalled that Thirlwall J directed that these claims proceed on that basis (paragraph 10 above).
191.	Second, as referred to above (paragraph 105), this is not a case of the paradigm type where a taxpayer arranges his affairs in the expectation, derived from general HMRC guidance or a specific ruling, that that they will be taxed in a particular way.  So while I have accepted that Viridor had a legitimate expectation, that was not an expectation when it laid down the fluff layers that in doing so it would be exempt from tax; it was an expectation, created subsequently, that it would obtain a repayment.  
192.	Third, Viridor has in fact received substantial repayments.  It has been paid all its internals, together with a large proportion of its externals, representing the amount which HMRC was persuaded to accept represented its economic loss.  The theory is that if it had not charged tax on the waste that was going to be used for fluff, its charges to its customers would have been lower and its market share and hence its profits greater.  I must confess to not really having understood this.  If it had been clear that fluff was not taxable, no doubt Viridor’s charges would indeed have been lower, but so one would have thought would have been those of all the other operators, so it is not obvious why this should have had any impact on market share.  But I was not addressed on any of this, so will assume there was a cogent argument for the claim.  Both these amounts (the internals and the portion of externals representing economic loss) have been paid to Viridor for its own use and benefit.  The precise figures are commercially sensitive but together these amount to very substantial sums.    
193.	Fourth, the only outstanding repayment it has not received is the balance of the externals.  It could only have received that sum by entering into reimbursement arrangements under which the benefit would not be retained by Viridor but paid to its customers.  It would appear to follow that pursuing a claim for repayment would not benefit Viridor in its own pocket at all; all it would do is allow it to reimburse its customers.  It is not clear in those circumstances how Viridor itself is prejudiced in any significant way by being refused further payment.  In truth, as Mr Graham told the Commissioners at their second meeting, Viridor’s legitimate expectation claim is being made for its customers.  But it is difficult to see that the customers themselves could have any legitimate expectation that HMRC would repay the fluff claims: there is no direct relationship between them and HMRC, Brief 58/08 (even if, contrary to my view, it made a clear representation) was not addressed to them, and it is not suggested that HMRC ever entered into correspondence with them leading them to believe that repayment would be made.  So this is not a case where the claim is being brought in form by Viridor but in reality to vindicate the customers’ own expectation claims.  
194.	Fifth, it is equally not a case where failure to repay Viridor is likely to leave it exposed to claims from its own customers.  Mr Adams’ evidence is that three of its customers have indeed written to Viridor asserting claims against it, claims which Viridor has rejected in correspondence.  I have not been addressed in any detail as to whether there is anything in those claims (and the customers are of course not parties to these proceedings and I am not to be taken as deciding anything that affects their rights), but I can see that if fluff was in truth not taxable they might have claims of a restitutionary nature, the essential nature of their claims being that the landfill tax was passed on to them, so that if the amount they paid assumed that fluff was taxable they were overcharged.  But if the true position is that fluff always was taxable, I have great difficulty in seeing that they could have any claims at all.  On that basis, the amount they were asked to pay assumed, correctly, that fluff was taxable, and the basis for any restitutionary claim would appear to be lacking.  Nor is there any reason to think they could assert legitimate expectation claims against Viridor, which is not of course a public body and is not said to have made any assurances to its customers anyway.
195.	Sixth, Viridor’s detrimental reliance on the expectation is limited.  This is not a case (as GSTS was for example) where the taxpayer set up a business in a particular way having sought a ruling from HMRC, and where to change the basis on which the business was taxed would lead to large uncompensatable losses.  Mr Fitzpatrick referred to the evidence of Mr Adams to the effect that in order to prepare itself to enter into reimbursement arrangements (as required before the final amount of repayment could be received), Viridor commenced an extremely detailed review of gatehouse records at each site to ascertain which customer’s waste was likely to have been suitable for the fluff layer, and that this was a very significant exercise requiring a team of people and a review by a number of directors; in addition it had the assistance of KMPG and ended up incurring fees to them of the order of £75,000.  I accept that this is evidence of some detrimental reliance, but although £75,000 is not de minimis, it is not a large sum compared to the amounts in issue.  
196.	Mr Fitzpatrick said that this work was carried out in the confident belief that all Viridor had to do was identify the relevant customers and the repayment would be made.  This is no doubt true, and I accept that if HMRC had not created any expectation, Viridor might not have spent the time and money on this exercise.  But on analysis this too is of limited weight.  If it turns out that fluff was in truth not taxable, Viridor would have to do this work anyway in order to secure any further repayment, as otherwise it will not be able to give the undertakings needed to avoid the unjust enrichment defence.  If on the other hand HMRC are right and fluff was taxable all along, then Viridor has received a very substantial repayment already (many times the £75,000 which it has spent), which as a matter of tax law it was not entitled to.  Strictly speaking that is the assumption I should make for the purposes of these proceedings, and in those circumstances the detriment suffered by Viridor is inconsequential compared to the benefits it has already had from HMRC.  
197.	In these circumstances I have not been able to discern any substantial prejudice to Viridor in HMRC now refusing to pay the balance of its claim.  If I ask whether the Commissioners’ decision was in their case conspicuously unfair, or so unfair as to amount to an abuse of power, my answer is No.  It is no doubt a disappointment to Viridor that HMRC has changed its mind, and that might be said to be a bit unfair, but looking at the overall position the decision seems to me a long way short of being conspicuously unfair, or being one which involves significant or substantial unfairness.  
Veolia
198.	The position with Veolia is much less clearcut.  On the one hand, I do not find it difficult to understand why the Commissioners should wish to put a stop to the repayments.  On the basis of Mr Graham’s follow-up note, the base and side fluff claims were a relatively early skirmish in what had become by the time the Commissioners met an all-out attack on the tax as a whole, and Mr Graham was no doubt right to say that had HMRC known at the outset the extent of the challenge, the whole approach would have been different.  When one adds to that the belief that HMRC’s initial view that fluff was not taxable was mistaken, and the strong suspicion that some at least of the claims were artificial, the desire to send the message that HMRC would defend the tax robustly and no longer make any repayments unless they were truly due is understandable. 
199.	The whole theory behind the doctrine of legitimate expectation as expounded in MFK is based on HMRC having a managerial discretion as to how best to collect tax.  As Bingham LJ puts it (at 1569B) the revenue is not a tax-imposing authority but a tax-collecting agency; or as Mr Beloff put it in argument (at 1566H), it is Parliament which decides what taxes shall be paid, and the revenue has no general discretion to remit taxes Parliament has imposed.  That has to be read subject to Bingham LJ’s comments on the width of the revenue’s managerial discretion (in an oft-cited passage at 1568E-1569A).  But as that makes clear what makes assurances given by the revenue lawful (and hence capable of generating legitimate expectations) is that they have been found by the revenue as a matter of experience to be conducive to collecting the proper amounts of tax, as they help to “encourage co-operation between the Inland Revenue and the public.”  In the present case I think HMRC could be forgiven for thinking that far from encouraging mutual co-operation between the landfill site sector and themselves, the attempt to be helpful in Brief 58/08 had simply turned out to be a means of handing the taxpayers the material with which to open another front in the campaign.  That seems quite a long way from what Bingham LJ envisaged.  
200.	On the other hand, HMRC made a clear decision as a matter of policy that base and side fluff was not taxable; and Mr Hart made a specific, individual and unambiguous statement to Veolia that he accepted that their use of fluff was not taxable, and subsequently that the quantum of the claim was, subject to certain limited matters, agreed, and those matters too were agreed subject to the approval of the TDRB.  Like Viridor, Veolia had not arranged its affairs in the first place in the belief that fluff was not taxable, but this correspondence did lead it to believe that repayment would be made; and like Viridor, Veolia spent a considerable amount of management time, and incurred fees to KPMG (in Veolia’s case for assistance with an analysis of its economic loss, which cost some £63,000) in the confident expectation of being repaid.  In addition Ms Wagler says that the anticipated receipt of funds from HMRC, although not specifically accrued, was taken account into consideration in agreeing the budget for 2014; the evidence however on this does not go into detail and leaves it unclear what, if any, practical consequences this might have. 
201.	Had those been the only relevant considerations, I accept that there would have been some unfairness, but I would not regard it as so far across the line as to merit the description conspicuous or substantial.  The mere fact of HMRC raising a taxpayer’s hopes by telling it that it is due a refund, and then dashing them by telling it that on further consideration no refund is due, is bound to cause the taxpayer disappointment but is not I think in itself necessarily productive of unfairness.  What may make it so is the extent to which the taxpayer has relied to its detriment in the meantime, but although I have accepted that there was in Veolia’s case some detrimental reliance, it is not of the most extensive type and is small compared to the amount of tax in issue.  It may be unfair to Veolia that it was led to spend time, and money on KPMG’s fees, which may now be wasted; but equally it is not obviously fair to the general body of taxpayers that because Veolia has incurred costs of some £63,000 that HMRC should be obliged to pay it millions of £ (in fact over 100 times that amount) which as a matter of tax law it must be assumed not to have been entitled to.      
Comparative unfairness
202.	Mr Grodzinski however relies on one other factor which he says tips the balance firmly in Veolia’s favour.  This is that alone of its competitors it has received no payment at all.  The evidence on this is as follows.  First, on 29 May 2013 Ms Wagler e-mailed her colleagues to say that HMRC were holding up Veolia’s repayment claims even longer.  That was something she had been told in a telephone call earlier that day by Ms Barbara Bell of KPMG, who had herself been told it by Mr Graham.  In her e-mail Ms Wagler referred to payments received by other operators which she said “include the internals + the economic loss for Viridor” (paragraph 82 above).  I infer that she was probably told this by Ms Bell, even though Ms Bell’s note of the call does not mention it.  Whatever the source of the information however, Ms Wagler referred to it in a letter dated 17 June 2013 to Ms Angela Horton of HMRC, where she said:
“As of today we are the only large operator who has not received any of the remittance from HMRC in respect of this overpaid Landfill tax on material used in the fluff layer.” 
I have not seen any reply.  Finally, in his follow-up note for the Commissioners, Mr Graham said:
“All bar one of the major players have had a proportion of their base and side fluff claims paid.  The element that has been paid relates to “internally” generated waste, i.e. waste that is provided to the landfill operating company by an associated (group) company.  Because in this instance the site’s ‘customer’ is a connected party there was no need to delay the repayments in order to consider unjust enrichment.” 
	He also referred to one case where the element of the base and side fluff claim which the taxpayer was able to retain as a consequence of the unjust enrichment negotiations had been paid.  I was also told by Mr Grodzinski, without dissent from Mrs Hall, that there were six large operators (including Veolia and Viridor).  
203.	Although the evidence is not perhaps as full as it might be, I am on this material prepared to assume that the other five large operators are Veolia’s direct competitors; that each of them has been repaid the internal element of its base and side fluff claims; but that save in one case (which I take to be Viridor), there is no evidence that any of them have been repaid any of their externals.  
204.	Mr Grodzinski said that it was well established that the Commissioners were under a duty to treat taxpayers fairly and consistently with each other: see R v IRC ex p National Federation of Self-Employed and Small Businesses Ltd [1982] AC 617 at 651F per Lord Scarman (“a legal duty owed by the revenue to the general body of taxpayers to treat taxpayers fairly”); Unilever at 692d per Sir Thomas Bingham MR (“what may seem fair treatment of one taxpayer may be unfair if other taxpayers similarly placed have been treated differently”); and BSB at [8] and [18] per Elias J.  
205.	Mr Grodzinski relied in particular on Hely-Hutchinson where Whipple J referred to all these cases and said at [38]:
“It is clear that the Commissioners must treat taxpayers fairly as between each other, and must not discriminate between classes of taxpayers. I accept that the duty identified by Mr Mullan exists, and is an important part of the Commissioners' functions. But that does not mean that every case of inconsistent treatment amounts to an abuse of the Commissioners' powers, far from it. The three domestic cases on which Mr Nawbatt relies are illustrations of inconsistency falling short of abuse. There may be other cases where the nature or scale of the different treatment will be so unfair as to be abusive. The issue for the Commissioners, and for the Court on judicial review of a decision of the Commissioners in a case of this kind, is to establish where that unfairness falls on the scale; specifically, to determine whether it is so conspicuously unfair as to amount to an abuse of the Commissioners' powers.” 
She went on to say (at [43]) that:
“In determining what amounts to unfairness so marked that it constitutes an abuse of power, it is important to remember that “the categories of unfairness are not closed ” (per Bingham MR in Unilever at p 690 f) and therefore the circumstances in which the Commissioners may be required to forgo tax can travel beyond cases of detrimental reliance (although the fact that a taxpayer has relied to his or her detriment on the Commissioners' promise is in many cases the source of the complaint of unfairness). Specifically, the Commissioners are incorrect to submit, as they do in their skeleton, that “A public authority cannot be required to continue to apply the wrong tax treatment just in order to ensure consistency of treatment” (para 23); the Commissioners can be required in an appropriate case to continue to apply the wrong tax treatment to ensure consistency of treatment, where the alternative would be conspicuously unfair, and an abuse of power.” 
The facts of that case were not dissimilar to the present in that following a decision of the Court of Appeal in 2002, HMRC had in 2003 published a Technical Note which gave guidance and which in effect invited claims for repayment or reduction in CGT.  A number of claims were made and some at least were accepted; the evidence of one tax advisor was that the majority of his clients’ claims were accepted.  HMRC then came to the conclusion that the 2003 guidance was wrong in law, and issued a brief in 2009 withdrawing it.  On those facts Whipple J did not come to any final decision on whether withdrawing the benefit of the 2003 guidance was conspicuously unfair, but did say (at [75]):
“But I record my instinctive response, which is that RCB 30/09 and the Closure Notices based on it were very unfair. By RCB 30/09, the Commissioners deliberately took away from the subset an advantage which they had many years previously, by mistake, conferred on the whole of the 2003 cohort. The members of the cohort who were not affected by RCB 30/09 retained their advantage, permanently; the subset lost out, and were comparatively worse off as a result. That was discriminatory.” 
Mr Grodzinski invited me to take the same view in the present case.
206.	Mrs Hall relied on a number of cases where it has been said that just because a mistake has been made in favour of one taxpayer, that does not constitute a reason for perpetuating the mistake in favour of another.  In Customs and Excise Commissioners v National Westminster Bank plc [2003] EWHC 1822 (Ch) (“National Westminster”), the taxpayer made a claim for repayment of overpaid VAT in connection with a car leasing business.  The claim was refused by the Commissioners on the ground of unjust enrichment, on the basis that the cost of VAT would have been passed on to the taxpayer’s customers.  Other taxpayers in a similar position, who were trade rivals of the taxpayer, had received repayments without the unjust enrichment defence being invoked.  The tribunal held that this was in breach of the European principle of equal treatment.  Jacob J held they had no jurisdiction to consider the point but did in fact address the question, finding that a case of unfair treatment was not made out, and that there were objectively justifiable reasons why repayment should be made.  At [64] he said:
“Just because a tax gatherer makes a blunder which favours some taxpayers by way of a windfall does not mean that he should perpetuate the blunder in favour of others.  A number of wrongs do not necessarily make a right.  The interests of the general community are involved – taxpayers collectively have an interest that tax properly due should be collected, and that there should not be repayments to people who are not entitled to them.” 
207.	Jacob J’s judgment in National Westminster was followed by Collins J in R (Gallaher Group Ltd) v Competition and Markets Authority [2015] EWHC 84 (Admin) (“Gallaher”), a case where the defendant authority had commenced an investigation into the tobacco industry and the claimants had entered into settlements which involved accepting that there had been an infringement in returned for reduced penalties.  After other parties successfully appealed the issue of infringement to the Competition Appeal Tribunal the claimants sought to appeal out of time but were refused on the basis that not having themselves appealed they could not take advantage of a successful appeal by someone else.  However one of the other companies which had entered into a settlement (TMR) had been told by the authority that if there were a successful appeal by someone else they would be repaid the penalty they had agreed to pay.  That was due to an inadvertent mistake but the authority did make the repayment to TMR, and the claimants complained that this was unfair to them.  Collins J rejected the claim, saying at [50]:
“as in the gathering of tax, the interests of the general community are involved.  There is a collective interest that there should not be repayments of sums unless there is an entitlement to such repayments.  It seems to me that in the circumstances the principle that as a general rule a mistake should not be replicated where public funds are concerned should apply.” 
208.	R (City Shoes Wholesale Ltd) v HMRC [2016] EWHC 107 (Admin) (“City Shoes”) was another case where taxpayers complained of discriminatory treatment in that they had not received a particular tax treatment where others similarly placed had, but the Court (Whipple J) rejected the claim.  But in that case the basis of her decision was that those who had benefited were not in a comparable position because they had been accepted for registration onto the scheme (and had thereby acquired a legitimate expectation) whereas the claimants had not: see at [84]:
“it is argued that the Decision was discriminatory because others in a materially identical situation to the Claimants were permitted to benefit from the LDF without limitation. The Claimants compare themselves with the Category 2 taxpayers, and contend that those taxpayers are not materially different, because the only thing that distinguishes them is the timing of their applications, which (so they argue) is not “material”. The answer to this point is that the Category 2 taxpayers were, in fact and law, in a different position, not because of the timing of their applications, but because the Commissioners had accepted their applications and issued registration certificates to them. It was not the date of application which divided them, but the fact of registration within the LDF. This was a difference of fact, certainly. But it was more: it meant that Category 2 taxpayers did have a legitimate expectation of receiving the full benefits set out in the LDF in its unaltered state, because their applications had been accepted and their eligibility for those benefits had been confirmed.” 
209.	In my judgment these cases are distinguishable.  City Shoes is a clear example of a case where Whipple J found that the position of the claimants and that of the comparators were not materially similar, precisely because the latter group could rely on a legitimate expectation and the claimants could not.  That is different from the present case where Veolia on my findings did have a legitimate expectation and there is no reason to think that it was any less strong than those of its competitors.  National Westminster and Gallaher seem to me to rest on a different principle, that of not perpetuating a mistake.  In National Westminster the taxpayer could not take advantage of the fact that the Commissioners had not taken the unjust enrichment defence against other taxpayers when they might have done, in Gallaher the taxpayers could not take advantage of the assurance that had been given to TMR when it should not have been.  In neither case did the taxpayer have any legitimate expectation of any particular tax treatment at all, so allowing their claims to succeed would give them a benefit at public expense which they were neither entitled to, nor had expected to have, simply because someone else had erroneously been permitted to have such a benefit.
210.	In the present case however Veolia did have a legitimate expectation that it would receive a repayment in relation to base and side fluff, and the question is whether it was (conspicuously) unfair for the Commissioners to resile from it.  That seems to me to open the way for Veolia to ask the Court to assess this question by reference among other things to comparative unfairness.  In other words Veolia’s argument is not just “you let X have the repayment so you must let me have it too” (which in general is not enough: R (Weston) v IRC 76 TC 207 per Moses J, cited in City Shoes at [69]); it is “it is unfair of you to take away what you promised me, not least because you have not taken it away from others you made similar promises to.”  In this respect the present case is indeed comparable to Hely-Hutchinson.  Whipple J not only considered that the comparative unfairness between those who had benefited from the promise and those like the claimants who had not was a relevant consideration, but said that her instinctive response was that the decision was very unfair.  
211.	Mrs Hall said that unlike Hely-Hutchinson where Whipple J did not have an explanation of the Commissioners’ decision, in this case (as in City Shoes) the Court had an account of the factors that the Commissioners took into account, something that Whipple J in the latter case described as “the better working model”: see at [70] where she said that where comparative unfairness is alleged the Court is likely to be heavily dependent on the evidence provided by the Commissioners.  Mrs Hall said that in this case it could be seen that the Commissioners had taken into account comparative unfairness.  I accept that the evidence is that the Commissioners recognised the potential for unfairness in this regard: at the first meeting Mr Lodge asked a question about commercial equitability and Mr Troup acknowledged that there would be some unfairness in that some companies had had their claims processed while others would now have their claims refused.  This was one of the points on which they asked for (and received in Mr Graham’s follow-up note) further information (paragraph 67 above).  I also accept that the Commissioners must have regarded the factors that they relied on as outweighing any possible unfairness in this regard.  But this does not by itself amount to an answer to the point, as it is established that the Court must be the judge of whether the decision is conspicuously unfair.  
212.	Mrs Hall also said that the Commissioners accepted that it was not possible to recoup the repayments from the companies to whom repayments had been made, and that this was in itself an objective difference between Veolia and the other companies.  I accept that the Commissioners were entitled to take the view that it would be difficult if not impossible to recoup payments that had been made (I need not decide if they were in fact right as a matter of law); but this does not seem to me to provide any sort of justification for treating the companies differently.  What it does is illustrate that the decision not to make any further repayments had the consequence that those who had had them could keep them, but Veolia, who had not, would receive nothing.  That does not excuse the difference in treatment: it just explains what it consists of.    
213.	For these reasons I consider that it is appropriate to take into account any comparative unfairness in the overall assessment.  
214.	In my judgment there was obviously some unfairness in Veolia not receiving a penny of repayments while all five of the other major players had received at least some repayments.  What is far less obvious, at any rate to me, is whether that unfairness is properly to be characterised as conspicuous or substantial.  At first blush there appears to be force in Mr Grodzinski’s submission that it must be conspicuously unfair for Veolia alone to be left with nothing.  But matters are not as simple as that.  The comparative unfairness relied on is a comparison with the group of other major players, who are Veolia’s competitors, and what is said to be unfair is that they have received repayments when Veolia has not.  The evidence is to the effect that although Viridor has received repayment of its internals and a proportion of its externals (representing its economic loss) the other members of this group have received repayment only of their internals.  Since the unfairness relied on is Veolia’s position in being treated differently from the rest of the group as a whole, that no doubt would support a case that it would have been very unfair for Veolia to have made a claim for repayment of its internals and not to have been paid it while everyone else was repaid theirs.  But those are not the facts.  The evidence is that Veolia made no claim for repayment of internals.  Its only claim was for repayment of externals, and in that respect it is in the same position as the rest of the group (other than Viridor) in not receiving any such repayment.  Admittedly Viridor has in addition been repaid a substantial proportion of its externals, but the comparison relied on was not with Viridor as such but with the group as a whole, and Viridor is the only member of the group in that position.  The comparative unfairness is on analysis therefore nothing like as stark as might at first appear.
215.	In these circumstances I return to the question whether the decision to withhold repayment from Veolia was conspicuously (or substantially, or outrageously) unfair, so unfair as to amount to an abuse of power?  I have not found this an easy question but in the end (accepting as I do that the onus is on HMRC) I find that it was not.  Veolia is in the same position as the group of major players as a whole in not receiving any repayment in respect of its externals, and although, unlike them, it has not received any repayment in respect of internals, it has not made any such claim so can scarcely complain of this.  Viridor might well be regarded as fortunate to have received a repayment for its economic loss before the Commissioners’ decision brought the shutters down, but that does not seem to me to make it conspicuously unfair for the rest of the group, including Veolia, not to have done.  The Commissioners were alive both to the fact that HMRC had engendered expectations of repayment, and to the risk of comparative unfairness, but, as I have already accepted, must have considered that the factors they referred to outweighed these considerations.  Although the Court is the final arbiter (or “last judge” as Laws LJ put it in Nadarajah) of the question of conspicuous unfairness, that does not mean that it ignores the assessment made by the public body.  In Unilever Sir Thomas Bingham MR said (at 692d) that “in all save exceptional circumstances the revenue are the best judge of what is fair”; and in Coughlan Lord Woolf MR said (at [89]) that the Court will “pay the closest attention to the assessment made by the public body itself”.  That guidance suggests the Court should have a degree of reticence before castigating as conspicuously or substantially unfair the decision of the Commissioners in weighing up what are essentially incommensurable matters, namely the public interest on the one hand against the potential unfairness to individual taxpayers; and on the facts of this case I am persuaded that the Commissioners’ decision was not so unfair to Veolia as to fall into that category.
216.	It follows that in my judgment the decision of the Commissioners to refuse any further repayments was not unlawful either in Veolia’s case or, for the reasons I gave earlier, in Viridor’s case.  
Other matters 
217.	That makes it unnecessary to consider an alternative argument relied on by Mrs Hall to the effect that repayment would now be ultra vires.  As developed that submission was bound up in her submission that HMRC had made a mistake in thinking that fluff fell within Brief 58/08, and that now it had appreciated that fluff was not part of cell engineering and so not within the Brief, it did not have the power to make the repayment claims.  I have considerable doubts about this submission but it is not necessary to pursue them as that is not the basis on which I have found the legitimate expectation established, and in any event it does not arise.  
218.	It is also unnecessary to consider Mrs Hall’s contingent application for a stay.  She accepted that there would be no need for a stay if I concluded that I could reach my determination without the risk of inconsistent findings – inconsistent, that is, with the findings on the issues of fact which will be before the tribunals hearing the appeals.  I have indeed been able to reach my determination without resolving any of the issues of fact which it was suggested might give rise to an overlap.  The essential issue in the tribunal appeals will be whether fluff was disposed of as waste, that is whether the person making the disposal did so with the intention of discarding it.  I have not attempted to decide that issue, or even express any views on it.  The specific issues which Mrs Hall identified were (i) whether fluff was ‘used’, or used for ‘cell engineering’; (ii) whether use has been exaggerated by the claimants; and (iii) whether top fluff is or is not a concoction.  I have certainly not found it necessary to decide (i) or (iii) of these; I have had to decide whether Veolia and Viridor failed to put their cards face up on the table but I have done so by reference to the specific matters relied on.  In any event I do not accept that the question what the taxpayers told HMRC about fluff will be directly relevant to anything the tribunals have to decide.  The issue for the tribunals will be what the taxpayers in fact did with the fluff on (or in) the ground; and whether that amounts to a disposal of waste with the intention of discarding it within the meaning of FA 1996, or on the other hand is such a retention and use of fluff that they cannot be said to have intended to discard it.  I therefore do not regard it as necessary or appropriate to grant a stay.
219.	I am grateful to all counsel for their very considerable assistance.
Postscript
220.	I circulated a draft judgment in the above form to counsel for the parties inviting them to submit any typographical corrections and other obvious errors in writing in the usual way.  I received a response from Mr Grodzinski asking me to reconsider the substance of the draft judgment, specifically the statement in paragraph 214 above that Veolia had not made any claim in respect of its internals (see also paragraphs 82 and 215), which he said was factually incorrect.  I replied that I would be prepared to re-consider the draft judgment, and subsequently through my clerk indicated that I was vacating the hand-down and invited submissions.  That led to further submissions from first Mr Grodzinski and then Mrs Hall, and a request from Mr Grodzinski to file reply submissions and/or hold a further oral hearing.
221.	That raises a number of issues, which I will try and disentangle.  
222.	First, this point only affects Veolia and has no impact on Viridor’s case.  I will therefore dismiss Viridor’s application for the reasons given above.  
223.	Second, I have no difficulty in principle with the Court being invited to reconsider a part of the draft judgment.  The purpose of circulating a draft judgment is primarily to enable counsel to draw to the attention of the Court minor corrections or amendments before the judgment is formally handed down; to prepare, and if possible agree, drafts of orders giving effect to the judgment; and to prepare submissions on consequential matters such as costs and permission to appeal: see Civil Procedure (the White Book) 2016 §40.2.5.  But the draft is a draft and not a final judgment, and for precisely that reason the Court retains the ability to reconsider and revise the judgment, whether invited to do so by the parties, or on the judge’s own initiative if, on re-reading the draft, he or she thinks it appropriate to do so: R (Mohamed) v Secretary of State for Foreign and Commonwealth Affairs (No 2) [2010] EWCA Civ 158 (“Mohamed”) at [3].  The jurisdiction to alter a draft judgment is therefore not in doubt: Robinson v Bird [2003] EWCA Civ 1820 at [91].  
224.	The Court indeed retains a jurisdiction to re-open its judgment even after it has been handed down, provided that it has not been perfected by the order being sealed.  This was confirmed by the Court of Appeal in re Barrell Enterprises [1973] 1 WLR 19, and the leading case is now re L (Children) (Preliminary Finding: Power to Reverse) [2013] UKSC 8, in which the Supreme Court disapproved statements to the effect that the jurisdiction is limited to exceptional circumstances, and held that it should be exercised in accordance with the overriding objective.  Whatever the limits on this jurisdiction, the ability of a judge to alter a draft judgment that has not been handed down cannot be any narrower, and is probably in theory at least entirely unfettered.
225.	Third, it follows that if a draft judgment contains a demonstrable error of fact, it is open to a judge to correct it.  Not only is this so, but I would have thought he or she should normally do so.  Otherwise the judgment will be handed down despite containing a factual error.  If the error makes no difference to the result, there is no reason not to correct it; if however it does make a difference to the result, to decline to correct it would mean the judgment was flawed, and no doubt lead to an appeal where one might otherwise have been unnecessary.
226.	Fourth, the circulation of a draft judgment is not however intended to provide an opportunity for the unsuccessful party to re-open or re-argue the case, or to repeat submissions made at the hearing, or to deploy fresh ones: Mohamed at [4].  A fortiori, the circulation of a draft judgment is not intended to provide an opportunity for the unsuccessful party to change his case, or adduce new evidence.  It is not in the interests of efficient case management for a litigant, having seen from a draft judgment in detail why he has lost (or is about to lose), to be permitted to try and make good any gaps that the judge has found in his case by new evidence or argument.  The trial is the opportunity for a litigant to put forward his case and the evidence he relies on; trial is not, and should not be allowed to become, an iterative process.  That is not to say that there may not be circumstances where fresh evidence can be admitted after trial (and even after judgment has been handed down), but such applications are rare and not to be encouraged: see Charlesworth v Relay Roads [2000] 1 WLR 230.  
227.	Fifth, although the Court can in an appropriate case be invited to look again at a draft judgment, the Court is not obliged to hold a hearing.  If having looked at what it is invited to do and why, the Court sees no reason to alter the draft, it must be open to the Court to decline the invitation without more.  One of the facets of the overriding objective is that a case should be allotted, so far as is practicable, an appropriate share of the Court’s resources, while taking into account the need to allot resources to other cases.  In practical terms that means that it must be open to a judge to draw a line under the debate and finalise the judgment.  In the present case I have extensive written submissions from Mr Grodzinski.  I do not think it necessary in order to address the point he makes either to have further submissions or a further hearing.  
228.	Against that background I will now consider what the evidence that was before me at the hearing shows on the relevant point, which is whether it was correct to say what I did above, namely:
(1)	 	“No claim was made [by Veolia] for any internals” (paragraph 82).
(2)	 	“The evidence is that Veolia made no claim for repayment of internals.  Its only claim was for repayment of externals.” (paragraph 214).
(3)	 	“although … it [Veolia] has not received any repayment in respect of internals, it has not made any such claim…” (paragraph 215). 
As appears below, I remain of the view that these statements were accurate and justified by the evidence I had before me.  Now that the point has been the subject of detailed submissions, it can be seen that it could be more fully expressed by saying that Veolia made no claim for repayment of internals as such, and that its only claim was a claim that treated the whole claim as if it was for externals.  That does not in my view mean that the draft judgment as circulated contained in substance any factual error.  
229.	The detailed evidence is as follows: 
(1)	 	On 26 February 2010 Veolia made its initial fluff claim by letter.  That letter referred to Veolia acquiring material “from customers” (paragraph 76 above).
(2)	 	On 29 June 2010 Veolia extended the claim, and quantified the total amount (paragraph 77 above).  	
(3)	 	On 22 October 2010 Mr Hart had a meeting with Veolia at the Candles landfill site at which the fluff claim was discussed (paragraph 78 above).  Mr Macphail’s note of the meeting records as one of the key points that the claim was likely to be paid by HMRC as “commercially VES intention is to repay the customers (customers on whole local authority) and therefore no need to get into debate regarding unjust enrichment…  Main point to resolve would be HMRC want legal letter / understanding that any payment will be passed to customers in full…”  Mr Hart’s note of the same meeting refers to:
 “Unjust enrichment pass back
One stage pass back by site – what about when transfer stations and/or hauliers are the customer before we get to original waste producer ? 
Ask question Policy
Veolia need me to ask questions first – are you unjustly enriched or are you going to refund customers ?
Need for company audit trail
Then once Veolia reply, will need declaration signed and we will need a list of customers & tax linked to them.”
(4)	 	In an internal note to Ms Hughes for a meeting dated 3 November 2010, Mr Hart told her that Veolia was considering signing a declaration to refund all moneys to customers.  
(5)	 	On 24 November 2010 Mr Hart had a further meeting with Veolia 2010; his note of the meeting records against unjust enrichment “commercially decided to repay customers.”
(6)	 	On 24 June 2011 Mr Hart sent his letter accepting in principle that Veolia’s base and side fluff was not taxable, but raising a large number of queries on quantum, and suggesting that the issue of unjust enrichment be left until after quantum had been agreed, a suggestion which Mr Pickford accepted on 11 August 2011 (paragraph 79 above).
(7)	 	On 5 October 2011 Mr Hart had another meeting with Veolia.  His note records under unjust enrichment “Question needs to be asked once Question there indicating re imbursement to council customers – but probably not to transfer customers.”  A further note by Mr Hart dated 25 January 2012 records under unjust enrichment “need to ask question “are you to repay” – yes to most but not all.”  Reading these together, it appears that Mr Hart was telling Veolia that the first step in the resolution of the unjust enrichment process was for him to ask them whether they were going to repay their customers, and that at that stage they were indicating that they would repay most but not all of them.
(8)	 	On 12 July 2012 Ms Bell of KPMG e-mailed Ms Wagler with proposals for services that KPMG could provide Veolia, and confirming a conversation they had had the day before in which they had discussed Veolia’s desire to ensure maximum repayment with the ability to determine how it should be used.  KPMG were then engaged to prepare economic loss calculations.  In an internal e-mail dated 21 September 2012 Ms Wagler described the proposed economic loss paper to be submitted to HMRC as “illustrating that we are the party to have lost out in relation to waste deposited in the fluff layer.  Which should mean that we do not pass everything back to the clients.”
(9)	 	On 19 December 2012, Ms Wagler wrote to Mr Hart.  She said that he had agreed that once quantum was agreed he would provide further information regarding the unjust enrichment position, and asked if he could disclose guidance regarding the processes they should now be following in the identification of internal disposals.  On 16 January 2013 she followed that up with an e-mail copied to Mr Hart, again asking for guidance on what constituted internals. 
(10)	 	On 17 January 2013 Mr Hart e-mailed Ms Wagler acknowledging that one of the outstanding issues he needed to respond to her on was the definition of internals; and in his letter of 1 February 2013 formally agreeing quantum (paragraph 81 above) he gave detailed guidance on internal transactions.  This distinguished between two situations, in each of which Veolia group company A was the site operator and received waste from Veolia group company B.  In the first, company B was a recycling company that accepted waste from third parties at a certain rate per tonne in the hope of recycling it but accepting that some would have to go to landfill.  In such a case the risk was borne by company B and HMRC would accept that Veolia had borne the tax.  As such there was no unjust enrichment and HMRC would repay it.  In the second, company B simply collected waste from customers and delivered it to landfill, the customers being charged the tax under a contract which said something like “we will charge you a gate fee + LFT + VAT”.  HMRC would not see this as an internal transaction, and would not accept that Veolia had borne the tax without detailed investigation.  He added:
“If you consider any of the transactions within this claim fall to be considered as internals under the HMRC view expressed above, please provide details in the following format – customer, site, cell, tax period, tax.  HMRC will then consider the evidence and repay landfill tax if appropriate.” 
(11)	 	On 13 February 2013 Ms Annette Hughes e-mailed Ms Wagler and told her that they would like to take the question of unjust enrichment forward.  Mr Ray Hughes was co-ordinating the unjust enrichment review so they could be sure consistent principles were applied.  
(12)		On 26 March 2013 at a meeting at KPMG’s offices Mr Hughes agreed that the unjust enrichment model used previously by KPMG could be used for Veolia’s claim.
(13)	 	On 4 April 2013 Mr Neil Smith of KPMG e-mailed Ms Wagler asking for revised internals tonnage to prepare the draft claim.  On 5 April Mr James Buckland, a tax assistant at Veolia, sent Mr Smith the latest set of draft numbers with revised internals; and on 8 April a breakdown of the associated landfill tax relating to the internals.  Although the e-mails are in evidence, neither set of figures is.  
(14)	 	The next document in evidence is an e-mail dated 12 April 2013 from Ms Wagler to Mr Smith which reads:
“I have checked with James this morning and there are no objections to go with option 1, showing no internals for now.  Please send me a copy of what you are going to send to Ray.”
(15)	 	Mr Smith replied with a draft e-mail to go to Mr Hughes, which she approved, and he then sent it that afternoon.  This is the e-mail of 12 April 2013 which enclosed KPMG’s calculation of Veolia’s economic loss, and which included the statement quoted at paragraph 82 above, which I repeat here for convenience:
“Veolia ES Landfill Limited has not identified any waste that could have been suitable for the fluff layer which has come from a Veolia ES Landfill Limited transfer station.  It has not therefore been necessary to review internals as part of the economic loss calculation.” 
230.	That concludes the documentary evidence that was before the Court, up to the date when Veolia’s economic loss calculation was submitted.  There was some further correspondence concerning the details of the calculation of economic loss, but no further claim was made by Veolia.  There is one later internal e-mail from Ms Wagler dated 29 May 2013 which refers to the other operators receiving payment of their internals (paragraph 82 above) and adds, somewhat cryptically:
“You may remember, we chose the different methodology to receive our internals on KPMG’s recommendations.”
231.	It can be seen that the initial indications at the meeting of 22 October 2010 were that Veolia was intending to repay its customers, being on the whole local authorities.  However a query was raised about the case where Veolia did not receive the waste direct from the original waste producer but via transfer stations or hauliers.  A transfer station, as explained in Mr Grodzinski’s submissions, is a facility where waste is deposited temporarily before being delivered to its final destination.  Some waste collection vehicles take their waste direct to landfill sites, but others take them to transfer stations where it is loaded onto larger vehicles for onward transportation.  Veolia operated a number of transfer stations (although through different group companies from the landfill site operators which were reclaiming the tax).  At the meeting on 22 October Mr Hart said that he would ask Policy about this query.  As far as the evidence reveals, he did not give an answer until his letter of 1 February 2013.  The answer he gave was that HMRC did not regard the transaction as an internal one simply because the site operator received waste from another group company.  HMRC only regarded the transaction as internal where the risk was really borne by the Veolia group not their customers.  This is significant as it shows that in HMRC’s view the mere fact that waste was received by the Veolia site operator from a transfer station operated by another Veolia group company, or from a Veolia haulier, was not enough to classify the transaction as internal.  Having given this explanation, Mr Hart invited Veolia to make a claim if Veolia considered that any of its transactions were internal under the HMRC view and gave details of how to do so.  It can be seen that despite this invitation Veolia did not do so.  
232.	In Ms Wagler’s witness statement for these proceedings she said: 
“In Veolia’s claim, the internals had not been separated out so that an amount of landfill tax relating to internals was included in the unjust enrichment proportion.  It was intended that this amount would be paid to the internal Veolia ‘customers’ under the reimbursement arrangements.  Approximately £[      ] of the unjust enrichment amount related to internals and would be repaid to Veolia customers.”     
That has to be read with two other parts of her witness statement.  One explains that “internals” are “generally understood to be waste that is sent for disposal between group companies”.  This seems to me a more expansive usage than set out in Mr Hart’s letter of 1 February 2013, which as I have said makes clear that the criterion from HMRC’s view was not just whether the transaction was between group companies but where the risk of tax ultimately fell.  The other passage contains her explanation that it was Veolia’s intention, once it had received repayment from HMRC of any unjust enrichment amount, to pay those amounts on to their customers, because that repayment would be subject to reimbursement arrangements.  
233.	Reading the relevant passages together, Ms Wagler’s statement confirms that Veolia did not make any claim for internals as such.  Instead it intended to repay them under the reimbursement arrangements once it had received the unjust enrichment amount from HMRC.  In other words, it made a single claim which treated all the customers (whether in fact internal or not) in the same way as if they were external customers, that is as subject to the unjust enrichment and reimbursement arrangements. 
234.	So far as the evidence before me at the hearing was concerned, therefore, I do not think that it demonstrates that the statements in the draft judgment to the effect that Veolia did not make any claim for internals were factually incorrect.
235.	In his submissions Mr Grodzinski gives more background detail, and seeks to rely on further evidence, namely an e-mail from Mr Smith of KPMG to Ms Wagler and Mr Buckland of 10 April 2013, that is between Mr Buckland sending Mr Smith revised figures including the internals (paragraph 229(13) above) and Mr Smith sending the claim, without specifying any amount for internals, to Mr Hughes (paragraph 229(15) above).  I am not at all sure that it is appropriate to allow this further evidence to be adduced at this stage, but I have looked at it on a provisional basis to see what it shows.    
236.	In order to understand this, it is necessary to appreciate the way in which a repayment claim by a landfill site operator could be divided up.  In effect, it could be divided into three.  The first part (A) is the internals.  If the operator made a claim for internals, and HMRC agreed it, HMRC would accept that it was not subject to the unjust enrichment defence and so would pay it.  The balance – that is any part where no claim for internals had been made (or if made had not been accepted by HMRC) – would be prima facie subject to the unjust enrichment defence.  But part of this (B) could be claimed to represent the economic loss which the operator suffered as a result of charging tax it should not have done.  Again, if HMRC accepted this, HMRC would accept that it was not subject to the unjust enrichment defence and would repay it.  The remaining part (C) would be subject to the unjust enrichment defence, and HMRC would only repay it if satisfied with the operator’s reimbursement arrangements.  The operator would keep (A) and (B) for its own benefit, but have to pass on (C) to its customers.
237.	Against this background, one can understand Mr Smith’s e-mail.  In it he provides two sets of draft calculations.  In one of them the internals are separated out – that is a figure for (A) is identified.    The balance is then split into (B) and (C), with Mr Smith advising that Veolia could claim that 55.22% of this represented the economic loss element (B), so that Veolia could claim (A) and (B).  Mr Smith says that there are benefits in separating the internals element in this way in having it paid more quickly if HMRC agree it.  He continues:
“However, at our meeting we also discussed the subsequent reimbursement arrangements and potential third party action that might arise as a result of the fluff claim and you wished us also to draft a draft calculation on the basis that internals could be dealt with subsequent to the unjust enrichment phase as part of the reimbursement arrangements.”     
	The second set of draft calculations therefore did not separate out the internals.  Instead the whole of the repayment claim was treated as prima facie subject to unjust enrichment, and apportioned into the (B) and (C) elements (this time using a proportion of 55.12%).  Veolia would claim the (B) amount.  Subsequently to this however Veolia would enter into reimbursement arrangements in relation to the (C) amount, including a proportion payable to other Veolia group companies.  This is the source of the figure given in Ms Wagler’s witness statement.  The two calculations produce very similar figures for the overall repayment that could be claimed by Veolia, the second calculation being some £10,000 less, which is no doubt attributable to the marginally lower percentage used in the economic loss calculations.  Mr Grodzinski demonstrates as a matter of simple arithmetic that if one assumes that the relevant proportions are constant, then the overall repayment should be the same.  
238.	It is now possible to understand both what Ms Wagler meant in her e-mail of 29 May 2013 that they chose a different methodology to receive their internals, and what she meant in her e-mail of 12 April 2013 in which she said that there were no objections to option 1, showing no internals.  In the light of Mr Smith’s e-mail, this can be understood as a decision to opt for the second set of calculations in which no claim was made for internals at that stage.  Instead the plan was to persuade HMRC to agree an economic loss calculation based on 55.12% of the whole repayment claim.  Quite why it was thought preferable to do it that way does not emerge clearly even with the benefit of Mr Smith’s e-mail, but there must have been some perceived advantage as the overall repayment amount was marginally less, and Mr Smith advised that repayment on internals was likely to be quicker if HMRC agreed the internals claim.  It may have been a concern that HMRC might not readily accept that the internals claim would satisfy the requirements of Mr Hart’s letter; or it might have been, as Mr Smith’s e-mail perhaps suggests, a concern over claims from third parties; or there may have been some other reason.
239.	But whatever the reason, what this e-mail confirms is that Veolia on advice did not make a claim for internals as such.  Instead it rolled its internals into the unjust enrichment calculations and put forward an economic loss claim based on a percentage of its overall repayment claim without distinction between internals and externals, treating the whole claim as if it were subject to unjust enrichment, that is as if it were external.  It is not at all obvious that Veolia made it clear to HMRC that this is what they were doing, as Mr Smith’s e-mail of 12 April 2013 rather obscurely referred to Veolia ES Landfill Ltd as not having identified any waste as having come from a Veolia ES Landfill Ltd transfer station (which appears to have been true as that company did not operate any transfer stations, but without saying that some waste had come from transfer stations operated by other group companies); and to it not therefore being necessary to review internals “as part of the economic loss calculations” (the precise import of which is unclear, but which was perhaps intended to leave the way open to bringing the internals in when dealing with reimbursement arrangements at a later stage).  Overall it is doubtful if Mr Smith’s e-mail can be said to have made it clear that what was actually being done was to claim the economic loss proportion not just on external transactions but on internal transactions.  Since the theory behind the economic loss argument was that Veolia would have increased its market share had the charges to its customers been lower (paragraph 192 above) it is not immediately apparent whether HMRC would regard this argument as equally applicable to internal transactions.  It is however unnecessary to go into these matters further. 
240.	I have dealt with the matter in detail because of the extensive submissions by Mr Grodzinski.  But in the end the point remains a simple one.  Even looking at the new material that Mr Grodzinski wished to put before me, I remain of the view that the draft judgment did not contain the factual error that Mr Grodzinski suggested it did.  If admitted, this new material makes rather clearer what Veolia did; but it remains true to say that Veolia did not make any claim for its internals, or, to be more precise, it did not make any claim for its internals as such.  Rather, it hoped to achieve much the same result by a different route.   
241.	I therefore do not consider that the draft judgment contains a factual error, and I do not think it necessary, or appropriate, to change the draft judgment on this point.  
242.	I have also reconsidered whether the material deployed by Mr Grodzinski should affect my overall conclusion.  I do not think it should.  Veolia’s pleaded case on comparative unfairness was simply that it had received nothing while many other landfill site operators had.  But in the course of argument, reference was made in particular to its competitors, there being six major players or large operators.  In paragraphs 214 and 215 of my judgment the point I was trying to make is that although at first blush it might seem unfair that Veolia alone of that group of six had received nothing, it was not as simple as that as, with the exception of Viridor, the only repayments that the others had received were in respect of internals and Veolia had not made a claim for internals.  This was not to suggest that HMRC had relied on this as a point of distinction – there is no reason indeed to think this was part of the Commissioners’ reasoning – but that in considering whether the impact on Veolia of the Commissioners’ decision was conspicuously unfair, it is not enough just to point to others receiving some payment.  I remain of that view.  
243.	The matters that Mr Grodzinski now refers to were not raised at the hearing.  No doubt it might have been possible for Veolia to plead and run a case that it was unfair for the other major operators to receive their internals and for Veolia not to have done, on the basis that even though they did not make a claim for internals as such, they sought to recover them in a different way.  If they had done that, then HMRC would no doubt have wished to consider how to meet it, and these matters could have been argued out.  But this was not the way in which Veolia presented its case, and in accordance with the principles I have referred to, I do not think Veolia should be permitted in effect to bring that case forward now, adducing further evidence for that purpose, only after it has seen the draft judgment.      
244.	In these circumstances I have not altered the conclusions to which I came in my draft judgment, and for the reasons I have sought to express will dismiss Veolia’s application.