Taylor (for Sosnowski) v Inland Revenue [2003] UKSC SPC00363 (12 March 2003)

INHERITANCE TAX – whether appeal within a reasonable time within article 6 of Human Rights Convention – article 6 not applicable – what deductions should be made – whether agricultural relief applicable

THE SPECIAL COMMISSIONERS

	MICHAEL TAYLOR
AS PERSONAL REPRESENTATIVE OF WIKTOR SOSNOWSKI	Appellant

	- and -

	THE COMMISSIONERS OF INLAND REVINUE	Respondent

		Special Commissioner:	DR JOHN F AVERY JONES CBE

Sitting in public in London on 7 March 2003

the Appellant in person

Peter Twiddy, Assistant Director, Capital Taxes Office, for the Respondents

© CROWN COPYRIGHT 2003

DECISION

1.	Michael Taylor appeals against a Notice of Determination to inheritance tax dated 16 July 1999 in relation to the estate of Wiktor Sosnowski who died on 28 July 1993.  the Appellant appeared in person; Mr Peter Twiddy appeared for the Revenue.
2.	At a preliminary hearing on 10 May 2001 four issues for determination were listed as follows:
(1)	Whether a tax appeal of this sort amounts to the determination of civil rights and obligations within the meaning of Article 6.1 of the Convention in Schedule 1 of the Human Rights act 19988;
(2)	If so, whether the hearing of this appeal is “within a reasonable time” within the meaning of Article 6.1;
(3)	Whether the amount of the deductions allowed by the Respondents to be made from the gross estate of Wiktor Sosnowski deceased is correct, and, if not, what should be that amount;
(4)	Whether agricultural property relief and/or business property relief is available in respect of the land at the rear of the deceased’s house.
Human Rights
3.	On the first two points, Mr Taylor contended first that the Special Commissioners had no jurisdiction:
“In this case the respondents are the Commissioners of Inland Revenue while at the same time the tribunal hearing the appeal are the Special Commissioners of Inland Revenue—in other words the same people”
4.	He submitted that the appeal was a determination of his civil rights and obligations within article 6 of the Human Rights Convention, and that the appeal was not within a reasonable time of the death of the deceased in 1993.
5.	Mr Twiddy contended that, in the light of the decision of the European Court of Human Rights in Ferrazzini v Italy [2001] STC 1314, direct tax matters were not within the term “civil rights and obligations” but that even if that were wrong that there had been no unreasonable delay because the time ran from the equivalent of the time of a criminal charge (see Dyer v Watson [2002] 4 All ER 1) which in this case was the Determination.
6.	Section 2(1) of the Human Rights Act 1998 provides that “A court or tribunal determining a question which has arisen in connection with a Convention right must take into account any—(a) judgment, decision, declaration or advisory opinion of the European Court of Human Rights….”  I agree with Mr Twiddy that in accordance with Ferrazzini the determination of the amount of inheritance tax is not within the term “civil rights and obligations”.  Accordingly, the issue of whether the appeal is within a reasonable time does not arise and I say nothing about Mr Twiddy’s contentions on this.
7.	Mr Taylor’s first point might have had some force in the past but the Special Commissioners (the Commissioners for the special purposes of the Income Tax Acts, not the Special Commissioners of Inland Revenue) have been part of the Lord Chancellor’s Department since 1 January 1985 and cannot be considered as the same body as the Commissioners of Inland Revenue.
Deductions
8.	It is not necessary for the purposes of this decision to go into the background of why the tax is still in dispute so long after the death of the deceased except to say that Mr Taylor was imprisoned on a charge of evading inheritance tax then estimated at £50,000 in relation to this estate.  Various documents have been in the hands of the police or the Revenue, which cannot now be found.  This has made it extremely difficult for Mr Taylor to provide accurate evidence of the deductions but since the preliminary hearing Mr Taylor had produced a list of deductions, all of which Mr Twiddy agreed (subject to some arithmetical adjustments) except for two, one of which he conceded at the hearing after hearing Mr Taylor’s evidence.  The other relates to Mr Taylor’s claim for professional fees for the period 1991 to the date of death at £25 per hour for an estimate of 3.5 hours a week in the first year and 18 hours a week in the second.  He claimed £25,000 while Mr Twiddy contended that £10,000 would be sufficient.  
9.	There is very little material on which to base a decision on this.  Clearly Mr Taylor did a great deal for the deceased but he was not acting in a professional capacity in relation to all of them.  Making an allowance for this by reducing the amount claimed by 40 per cent I allow £15,000.
Agricultural relief
10.	This relates to a paddock adjoining the deceased’s house.  In a letter dated 30 November 1993 written to the purchaser’s solicitors Mr Taylor said: “The plot of land forming the paddock is uncultivated garden land.”  At the hearing he gave some evidence of agricultural use of the land and possibly of some agricultural buildings.  Mr Twiddy conceded the relief in relation to the agricultural value for which the District Valuer had in 1999 given an opinion of  £750, compared to the market value of £15,000.  Mr Taylor contended for the full £15,000 as agricultural value.
11.	The District Valuer’s opinion is the best evidence of agricultural value that I have and so I shall adopt it.  He was clearly addressing his mind to the difference between agricultural value and market value.  I understand that later the land did receive planning permission for building a house, and so the difference between the two values may be accounted for by the hope value.  Accordingly I accept £750 as the agricultural value.
12.	My calculation of the effect of this decision on the figures in the Notice of Determination is that the gross estate was £256,104, less debts of £38,002 equals £218,102, on which the inheritance tax, taking the agricultural relief into account is £26,940.80.  Mr Twiddy waived any interest on the tax from 26 June 1995 to 6 July 2001 on account of the Revenue holding on to papers.  Subject to this, interest is payable on the tax which I leave Mr Twiddy to calculate and give liberty to apply if the calculation cannot be agreed.
13.	Accordingly I allow the appeal to the extent set out above and determine the figures as set out in the previous paragraph.

J F AVERY JONES

SPECIAL COMMISSIONER

SC 3095/00

Authorities referred to in skeletons and not referred to in the decision:
R (on the application of Alconbury Developments Ltd) v Secretary of State [2001] 2 All ER 929
King v Walden [2001] STC 822
Allen v Sir Alfred McAlpine & Sons Ltd [1968] 2 QB 229