Gladders v HM Inspector of Taxes  UKSC SPC00361 (27 February 2003)
PENALTY AND SURCHARGE – late filing of returns and payment of tax – taxpayer objecting to taxation on grounds that it was spent on war – whether reasonable excuse – no – whether any Human Rights Act defence applies – no
THE SPECIAL COMMISSIONERS
STEPHEN R. A. GLADDERS Appellant
- and -
RAYMOND J PRIOR
(HM INSPECTOR OF TAXES) Respondent
Special Commissioner: DR JOHN F AVERY JONES CBE
Sitting in public in London on 14 February 2003
The Appellant did not appeal and was not represented
Mrs K. M. O'Neill, HM Inspector of Taxes for the Respondent
© CROWN COPYRIGHT 2003
"(1) This section applies in relation to any income tax or capital gains tax which has become payable by a person (the taxpayer) in accordance with section 55 or 59B of this Act.
(2) Where any of the tax remains unpaid on the day following the expiry of 28 days from the due date, the taxpayer shall be liable to a surcharge equal to 5 per cent of the unpaid tax.
(3) Where any of the tax remains unpaid on the day following the expiry of 6 months from the due date, the taxpayer shall be liable to a further surcharge equal to 5 per cent of the unpaid tax.
(5) An officer of the Board may impose a surcharge under subsection (2) or (3) above;…
(7) An appeal may be brought against the imposition of a surcharge under subsection (2) or (3) above within the period of 30 days beginning with the date on which the surcharge is imposed.
(8) Subject to subsection (9) below, the provisions of this Act relating to appeals shall have effect in relation to an appeal under subsection (7) above as they have effect in relation to an appeal against an assessment to tax.
(9) On an appeal under subsection (7) above section 50(6) to (8) of this Act shall not apply but the Commissioners may—
(a) if it appears to them that, throughout the period of default, the taxpayer had a reasonable excuse for not paying the tax, set aside the imposition of the surcharge; or
(b) if it does not so appear to them, confirm the imposition of the surcharge.
(10) Inability to pay the tax shall not be regarded as a reasonable excuse for the purposes of subsection (9) above.
(11) the Board may in their discretion—
(a) mitigate any surcharge under subsection (2) or (3) above; or
(b) stay or compound any proceedings for the recovery of any such surcharge,
and may also, after judgment, further mitigate or entirely remit the surcharge.
(12) In this section—
'the due date', in relation to any tax, means the date on which the tax becomes due and payable;
'the period of default', in relation to any tax which remained unpaid after the due date, means the period beginning with that date and ending with the day before that on which the tax was paid."
"(1) This section applies where—
(a) any person (the taxpayer) has been required by a notice served under or for the purposes of section 8 or 8A of this Act (or either of those sections as extended by section 12 of this Act) to deliver any return, and
(b) he fails to comply with the notice.
(2) The taxpayer shall be liable to a penalty which shall be £100.
(8) On an appeal against the determination under section 100 of this Act of a penalty under subsection (2) or (4) above, neither section 50(6) to (8) of this Act nor section 100B(2) of this Act shall apply but the Commissioners may—
(c) if it appears to them that, throughout the period of default, the taxpayer had a reasonable excuse for not delivering the return, set the determination aside; or
if it does not so appear to them, confirm the determination."
"From my own perspective, I am not a non believer in taxation per se. I am specifically a non believer in direct taxation for many reasons, the majority of which I will not impose upon this tribunal. The two basic reasons why I cannot believe in it are because I personally feel it is directly opposed to an individual's freedom and has been used by successive Governments to suppress its populace and force tyranny upon it. Moreover it was unilaterally introduced (i.e. it was made law without prior consultation with the electors, or being part of any manifesto, nor has it been ever since) as a direct method of raising monies for the propagation of war. The introduction of direct taxation heralded a fundamental sea change in the Government's relationship with its electorate. It was the turning point at which the very nature of democracy changed and Government became the tyrannical master of its electorate rather than the electorates' servant. We have been slaves ever since."
He goes on to make a number of points about the Human Rights Convention.
"…as a result of Ferrazzini v Italy (Application No.44759/98)  STC 1314 tax and normal interest on tax is not a matter within the taxpayer's "civil rights and obligations" so as to be protected by article 6. It is common ground that the penalty in this case is not sufficiently serious to constitute a criminal charge within article 6(2). Is there a category of non-criminal penalties that relate to paying tax late that are within "civil rights and obligations" even though the tax itself is not? The parties did not put forward anything to support the existence of such a category and nor have I been able to find anything myself. I notice that in Ferrazzini itself there was a penalty (paragraph 12 of the judgment) but the judgment makes no distinction between the tax and the penalty. Most of the cases listed in Philip Baker's article Taxation and the European Convention on Human Rights  BTR 211 also concern both taxation and the penalty. However, in WS v Poland (Application No.37607/97) where a small penalty for wrong accounting entries in relation to tax (but not the tax) was in issue the court found that the proceedings were inadmissible on the ground that the penalty was not a criminal one. I consider therefore that proceedings about the surcharge in this case which is closely related to the tax itself, being an automatic surcharge on the amount of the tax imposed for late payment of the tax, do not relate to the Appellants' civil rights and obligations and so are not protected by article 6.
"Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided by law…
The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties."
J F AVERY JONES