England and Wales High Court (Administrative Court) Decisions

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

		Royal Courts of Justice Strand London WC2
		25th October 2004

1. MR JUSTICE MOSES: This is a challenge by Mr Murat, who appears in person, against a determination of Special Commissioner Wallace dated 29th December 2003. In that determination the Special Commissioner dismissed appeals against four penalty notices issued pursuant to section 97(1)(a) and (b) of the Taxes Management Act 1970. The penalties were imposed for Mr Murat's failure to comply with a notice served under section 19A of the Taxes Management Act 1970 ("the TMA"). This is an appeal in law pursuant to section 56(6) of the TMA against that determination of Mr Wallace.
2. The matter has, unfortunately, a long history. The appellant taxpayer is a chartered accountant who has been in dispute for a number of years concerning the original section 19A notice. This, it is to be hoped, is the final lap in a long history. I say it is to be hoped because Mr Murat has furnished me with clear and cogent written arguments and has amplified those before me orally. It is clear to me that not only is he a courteous man but he is highly intelligent. He has presented his case as well as it could be presented. It is thus all the greater shame that he should become embroiled in a now historic dispute with the Revenue when I am confident he could use his talents in life to far greater effect and get far more enjoyment out of life as a result.
3. The section 19A notice required the appellant to produce certain documents by 5th January 2000. It was issued following a notice of enquiry served by the Revenue. That is not relevant to the instant appeal but it indicated that the Inspector intended to make enquiries into the 1996/97 tax return. Amongst the documents that the section 19A notice required the appellant to produce was a profit and loss account for the period 1st September 1994 to 31st August 1996, together with a balance sheet as at 31st August 1996. The appellant objected to the requirement that he should produce a balance sheet since he has said all along that he has not sufficient records, particularly of sales figures and drawings or cash in hand to enable a balance sheet to be produced.
4. Accordingly, he appealed previously against the section 19A notice in an appeal heard on 5th May 2000 by Special Commissioner Dr Brice. She gave a decision SpC00258 under the heading Accountant v Her Majesty's Inspector of Taxes. In that appeal she rejected the appellant's contentions in relation to the impossibility of producing a balance sheet in accordance with the requirement in the notice.
5. Before me, Mr Murat has repeated his contentions that it was not correct or lawful to require him to produce a balance sheet since he did not have the necessary figures available for the accounting period which ended on 31st August 1996. He has amplified those submissions by pointing out that it is an offence to make a false statement in a balance sheet under section 5 of the Perjury Act 1911. To force him to produce a balance sheet containing false figures would be to require him to incriminate himself in breach of his rights enshrined in Article 6 of the European Convention on Human Rights.
6. The first answer to that contention is that it is no longer open in challenging a penalty notice to the appellant to object to the contents of the section 19A notice. The source of that conclusion are the statutory provisions contained within section 19A of the TMA. Pursuant to section 19A(6), an appeal may be brought against any requirement imposed by notice under subsection (2) to produce a document or to furnish any accounts or particulars. By section 19A(11):

"The determination of the Commissioners of an appeal under subsection (6) above shall be final and conclusive (notwithstanding any provision having effect by virtue of section 56B of this Act)."

In those circumstances, having challenged the section 19A notice before Dr Brice in May 2000, it is not open to the appellant to question that notice in these proceedings nor was it open to him to question that notice before Mr Wallace. As Mr Wallace, the Special Commissioner, concluded, any argument in relation to that notice was subject to the determination of Dr Brice. That is also true for this court.

7. In those circumstances, it is not open to this appellant to challenge the notices by seeking to impugn the notice from which the penalties derive. In any event, there is no possible question of any breach of Article 6. The section 19A notice dated 19th November 1999 did not require Mr Murat to provide false material in the balance sheet. It merely required him to produce a balance sheet. If he did not have the necessary figures then it was open to him to make that clear in the balance sheet and to produce figures to the best of his judgment, so long as the balance sheet made that clear. It was no answer to say that he did not have the figures available. Moreover, there is no question of self-incrimination. The purpose of requiring him to produce the balance sheet is not for the purposes of any criminal prosecution at all. It is merely in pursuance of his obligation to provide figures as a taxpayer so that a correct assessment of his liability can be reached.
8. The next argument advanced by Mr Murat related to the time within which he was required to comply with the section 19A notice dated 19th November 1999. The appellant has been subjected to a number of penalties. On 1st August 2000 a fixed penalty of £50 was issued pursuant to Section 97AA(1(a) of the TMA. This was followed on 12th September 2000 by a penalty under Section 97AA(1)(b) of £1,260 being £30 a day for the 42 days from 2nd August to 12th September. Additional substantial penalties have followed. The penalty notice stated under their rubric:

"Penalty under the provisions of Section 97AA(1)(a) of the Taxes Management Act 1970 in respect of your failure to comply with the notice served upon you on 19th November 1999 under the provisions of section 19A(2) of that Act requiring you, on or before 8th July 2000 to produce such documents as were specified in that notice."

9. Mr Murat argues that the notice of the penalty determination is unlawful because it refers to the date of 8th July 2000. He says that it should refer to a date later than that date to allow for the time when he received the determination of Dr Brice dismissing his appeal. The basis of that submission can be identified in the statutory provisions to which I turn.
10. By section 19A(2):

"For the purposes of [the enquiry] the officer may at the same or any subsequent time by notice in writing require the taxpayer, within such time (which a shall not be less than 30 days) as may be specified in the notice --

(a) to produce to the officer such documents as are in the taxpayer's possession or power . . . "

By subsection (5):

"A notice [under subsection (2) or (2A)] above does not oblige the taxpayer to produce documents or furnish accounts or particulars relating to the conduct of --

(a) any pending appeal by him ..."

By subsection (6):

"An appeal may be brought against any requirement imposed by a notice under subsection (2) above to produce any document or to furnish any accounts or particulars."

By subsection (10):

"Where, on an appeal under subsection (6) above, the Commissioners confirm the notice under [subsection (2) or (2A)] above so far as relating to any requirement, the notice shall have effect in relation to that requirement as if it had specified 30 days beginning with the determination of the appeal."

11. Mr Murat accordingly argues that by virtue of section 7 of the Interpretation Act 1978 and Regulation 18 of the Special Commissioners (Jurisdiction and Procedure) Regulations 1994, the date of 8th July was incorrect. The determination was only released on 8th June. It cannot therefore, so he argues, have reached him on that date but must have reached him some days later, he cannot recall precisely when. Therefore the penalty notice should at least have had a date 30 days from the date when he received the determination.
12. He makes that submission firstly on the basis of section 7 of the Interpretation Act 1978. This provides:

"Where an Act authorises or requires any document to be served by post (whether the expression 'serve' or the expression 'give' or 'send or any other expression is used) then, unless the contrary intention appears, the service is deemed to be effected by properly addressing, pre-paying and posting a letter containing the document and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post."

By Regulation 18(8) of the Special Commissioners (Jurisdiction and Procedure) Regulations 1994:

"The Clerk shall send a copy of the document recording a decision in principle, and a copy of the document recording the final determination, to each party."

By Regulation 18(9):

"Except where the final determination is given at the end of the hearing, it shall be treated as having been made on the date on which a copy of the document recording it is sent to the parties under paragraph (8) above."

13. Thus, Mr Murat argues that, by virtue of Regulation 18, the reference to the document being sent must be read as interpreted with the aid of section 7 and the sending will not have been effected until either it reached him or at least at the time in which it would have been delivered in the ordinary course of post. That must have been after 8th June, and therefore the reference to 8th July was plainly incorrect.
14. I do not agree. Perhaps Mr Murat's arguments may be correct in relation to the time within which the section 19(2)(a) notice must be complied. In other words, the time is not less than 30 days from which the notice would have been delivered. But I do not, and need not, recite that although I know the Special Commissioners have decided that in the past. What is important is to consider the words of subsection (10). That, in my judgment, must be viewed in the context of that section as a whole. It is plain it is referring to a time after the notice not only has been sent but has been received, otherwise the taxpayer would have nothing to appeal against. Once he has appealed and once the appeal has been determined then the operation of subsection (10) is triggered. That merely provides for the substitution of the date originally within the notice for a different date, namely 30 days beginning with the determination of the appeal. Subsection (10) contains its own self-contained code and one needs look no further to find the date within which a taxpayer is required to comply with the original section 19(2) or subsection (2)(a) notice.
15. In the instant case, Dr Brice made it clear at the end of her determination that the date of release was 8th June 2000. That was the date when, in accordance with Regulation 18 of the 1994 Regulations, the Clerk was required to send a copy of the determination. But so far as the making of the determination, one looks not to Regulation 18(8) but Regulation 18(9). Regulation 18(9) of the 1994 Regulations makes it clear that the final determination is treated as having been made on the date on which a copy of the document recording it is sent. In other words, in the instant case, 8th June 2000. That is the date when the determination was made.
16. The focus of the enquiry for the purposes of section 19A(10) is not on when the taxpayer receives the determination, or when it is delivered, but on when it is made. It is the date when it is made that triggers the 30 day period within which the taxpayer must comply. In the instant case, the determination was made on 8th June. Thus, by virtue of section 19A(10), the section 19A notice has effect 30 days after the making of the determination. That is 8th July.
17. I should add that there is no difficulty for any taxpayer, let alone this particular taxpayer. There is no difficulty because he has already long since had the original notice requiring him to do certain things. He therefore has a certain number of days after the determination is made. He will have already had plenty of time to marshal his information, and indeed consider the notice for the purposes of deciding whether to advance an appeal or not, as this appellant did. The time within which he had to face penalty amounts did not in fact begin until 1st August so he was, in any event, not disadvantaged.
18. In those circumstances, I reject his contentions for the same reasons as Mr Wallace gave in his decision. There was nothing unlawful in the penalty notice. I do not decide, because I do not need to decide, whether the penalty notice needed to have specified any date at all. Still less do I decide, because I do not need to decide, whether even if it did, an inaccuracy in the date that it gave would vitiate the effect of the penalty notice. Those matters, if they ever need deciding, can wait for another date. I merely decide that these penalty notices did specify the correct date and were accordingly lawful.
19. The final submissions made by Mr Murat focussed on the European Convention on Human Rights. Firstly Mr Murat contended that to require him to fill out a balance sheet infringed his rights under Article 3, prohibiting torture or inhuman or degrading treatment or punishment. I am most concerned to learn that Mr Murat has suffered as a result of stress and lost clients, indeed proposes to sell his business. This is all most unfortunate and, for the reasons I gave at the outset of my judgment, I would hope he would use his skills and undoubted talents to better effect. But this is miles away from Article 3. Those who genuinely do suffer from torture or inhuman or degrading treatment or punishment will be horrified to see such an important protection diminished in this way. I am sure Mr Murat would agree.
20. The next submission was the requirement to make him fill in the balance sheet violated Article 4, prohibition of slavery and enforced labour. Leaving aside as I do for the purpose of this argument whether it is even open to him to advance such an argument following the decision of Dr Brice, again there can be no question of any enforced or compulsory labour. It is true that in Van Der Musselle v Belgium [1983] 6 EHRR 163, the court regarded the expression "forced or compulsory labour" as including all work or service exacted from any person under the menace of any penalty and for which the said person has not offered himself voluntarily. But Article 4 does not apply to any work which a citizen is required to perform in pursuance of his civic obligations.
21. For example, the requirement that employers calculate and withhold certain taxes and Social Security contributions from wages of employees does not amount to compulsory labour: see Four Companies v Austria 7 DR 148, a decision of the Commission in which they found a challenge to such a requirement pursuant to Article 4 as being manifestly inadmissible. Again, it is plain that the preparation of a balance sheet has nothing to do with the sort of forced or compulsory labour to which Article 4 refers.
22. Finally, it was contended that there was discrimination contrary to Article 14, read with Article 4, in that an ordinary taxpayer would not be compelled to produce a balance sheet where as the Revenue had targeted this appellant because he was a chartered accountant; indeed a registered auditor. There is nothing, again, in this argument. Even allowing for the possibility of any challenge to the original notice, at this distance of time, there can be no question but that the Revenue are treating this appellant in just the same way as anyone else. It is nothing to do with the fact that he is an accountant. Anybody might be required to produce a profit and loss and balance sheet in their business. In order properly to assess, the Revenue could look at the movement of capital and general money movement in any event. In those circumstances the arguments pursuant to the Convention also fail.
23. For the reasons I have given, there is nothing in any of the arguments that have been advanced against these penalty notices and the appeal is dismissed.
24. MR WARD: My Lord, I ask for costs on behalf of the Revenue.
25. MR JUSTICE MOSES: Are you asking for them to be assessed today?
26. MR WARD: My Lord, we do have a summary assessment.
27. MR JUSTICE MOSES: Where is that? (Handed). Has Mr Murat seen it?
28. MR WARD: Yes, he has. I should say immediately that we would accept a reduction in the estimates given in respect of today's hearing because it has obviously taken less time.
29. MR JUSTICE MOSES: Yes. Mr Murat, two things. First of all, what do you say about the claim for costs and what do you say about the amount of those costs?
30. MR MURAT: I had seen them only about an hour ago. I have not had time to examine them.
31. MR JUSTICE MOSES: Well, let us examine them now. You have had since I rose. You had three quarters of an hour. I think £700 for skeleton and £700 for preparation of a hearing is a bit much. I may only give one lot of £700 as I only give 2 hours for the hearing. It will knock it down a bit. I had in mind something in the region of £3,000. I used to stand up and ask for £300. Anyway, do you want to say anything about those figures? I am prepared to go down to £3,000, not much lower than that.
32. MR MURAT: No, my Lord. It is your decision.
33. MR JUSTICE MOSES: Thank you very much. You will have to pay the costs of today and I assess them in the sum of £3,000.