England and Wales High Court (Administrative Court) Decisions

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

		Royal Courts of Justice Strand, London, WC2A 2LL
		30 January 2007

Mr Justice Munby :

1. This application for judicial review raises a short but important point relating to the powers of The Commissioners for Her Majesty's Revenue and Customs in relation to income tax.
2. The question is whether the Commissioners' exercise of their powers under sections 20(3) and 20B(3) of the Taxes Management Act 1970 when requiring the production of documents or information from a barrister, advocate or (as in the present case) a solicitor is subject to the same conditions and safeguards as when an inspector is exercising his powers under section 20(3) in relation to anyone other than a barrister, advocate or solicitor.
3. Mr Robin Mathew QC who appears on behalf of the claimant solicitor submits that the Commissioner's powers are so circumscribed. Ms Ingrid Simler QC on behalf of the Commissioners disputes this. In my judgment the Commissioners are correct.

The statutory framework

4. The provisions with which I am directly concerned form part of a comprehensive scheme which is set out in sections 20 to 20D of the Taxes Management Act 1970 (as amended). For present purposes the most directly relevant provisions are to be found in sections 20 and 20B.
5. So far as material for present purposes section 20 (which is headed "Power to call for documents of taxpayer and others") provides as follows:

"(1) Subject to this section, an inspector may by notice in writing require a person –

(a) to deliver to him such documents as are in the person's possession or power and as (in the inspector's reasonable opinion) contain, or may contain, information relevant to –

(i) any tax liability to which the person is or may be subject, or

(ii) the amount of any such liability, or

(b) to furnish to him such particulars as the inspector may reasonably require as being relevant to, or to the amount of, any such liability.

…

(3) Subject to this section, an inspector may, for the purpose of enquiring into the tax liability of any person ("the taxpayer"), by notice in writing require any other person to deliver to the inspector or, if the person to whom the notice is given so elects, to make available for inspection by a named officer of the Board, such documents as are in his possession or power and as (in the inspector's reasonable opinion) contain, or may contain, information relevant to any tax liability to which the taxpayer is or may be, or may have been, subject, or to the amount of any such liability …

…

(7) Notices under subsection (1) or (3) above are not to be given by an inspector unless he is authorised by the Board for its purposes; and –

(a) a notice is not to be given by him except with the consent of a General or Special Commissioner; and

(b) the Commissioner is to give his consent only on being satisfied that in all the circumstances the inspector is justified in proceeding under this section.

…

(8E) An inspector who gives a notice under subsection (1) or (3) above shall also give to –

(a) the person to whom the notice applies (in the case of a notice under subsection (1) above), or

(b) the taxpayer concerned (in the case of a notice under subsection (3) above),

a written summary of his reasons for applying for consent to the giving of the notice.

…

(9) To the extent specified in section 20B below, the above provisions are subject to the restrictions of that section."

6. Section 20B (which is headed "Restrictions on powers under ss 20 and 20A") provides in material part as follows:

"(1) Before a notice is given to a person by an inspector under section 20(1), (3) … , the person must have been given a reasonable opportunity to deliver (or, in the case of section 20(3), to deliver or make available) the documents in question, or to furnish the particulars in question; and the inspector must not apply for consent under section 20(7) … , until the person has been given that opportunity.

(1A) Subject to subsection (1B) below, where a notice is given to any person under section 20(3) the inspector shall give a copy of the notice to the taxpayer to whom it relates.

(1B) If, on an application by the inspector, a General or Special Commissioner so directs, a copy of a notice under section 20(3) need not be given to the taxpayer to whom it relates; but such a direction shall not be given unless the Commissioner is satisfied that the inspector has reasonable grounds for suspecting the taxpayer of fraud.

…

(3) An inspector cannot under section 20(1) or (3) … give notice to a barrister, advocate or solicitor, but the notice must in any such case be given (if at all) by the Board; and accordingly in relation to a barrister, advocate or solicitor for references in section 20(3) and (4) … to the inspector there are substituted references to the Board.

…

(5) A notice under section 20(3), does not oblige a person to deliver or make available any document the whole of which originates more than 6 years before the date of the notice.

(6) But subsection (5) does not apply where the notice is so expressed as to exclude the restrictions of that subsection; and it can only be so expressed where –

(a) the notice being given by an inspector with consent under section 20(7), the Commissioner giving consent has also given approval to the exclusion;

(b) the notice being given by the Board, they have applied to a General or Special Commissioner for, and obtained, that approval.

For this purpose the Commissioner gives approval only if satisfied, on the inspector's or the Board's application, that there is reasonable ground for believing that tax has, or may have been, lost to the Crown owing to the fraud of the taxpayer.

…

(8) A notice under section 20(3) … does not oblige a barrister, advocate or a solicitor to deliver or make available, without his client's consent, any document with respect to which a claim to professional privilege could be maintained."

(I note that the reference in section 20B(3) to section 20(4) is redundant, the latter provision having now been repealed.)

7. I should also refer to certain provisions in section 20C:

"(1) If the appropriate judicial authority is satisfied on information on oath given by an officer of the Board that –

(a) there is reasonable ground for suspecting that an offence involving serious fraud in connection with, or in relation to, tax is being, has been or is about to be committed and that evidence of it is to be found on premises specified in the information; and

(b) in applying under this section, the officer acts with the approval of the Board given in relation to the particular case,

the authority may issue a warrant in writing authorising an officer of the Board to enter the premises, if necessary by force, at any time within 14 days from the time of issue of the warrant, and search them.

…

(2) Section 4A of the Inland Revenue Regulation Act 1890 (Board's functions to be exercisable by an officer acting under their authority) does not apply to the giving of Board approval under this section.

(3) An officer who enters the premises under the authority of a warrant under this section may –

(a) take with him such other persons as appear to him to be necessary;

(b) seize and remove any things whatsoever found there which he has reasonable cause to believe may be required as evidence for the purposes of proceedings in respect of such an offence as is mentioned in subsection (1) above; and

(c) search or cause to be searched any person found on the premises whom he has reasonable cause to believe to be in possession of any such things;

but no person shall be searched except by a person of the same sex.

…

(4) Nothing in subsection (3) above authorises the seizure and removal of items subject to legal privilege."

8. Section 20D defines "the appropriate judicial authority" as being, in England and Wales, a Circuit Judge or a District Judge (Magistrates' Courts).
9. In accordance with the Commissioners for Revenue and Customs Act 2005, the Commissioners for Her Majesty's Revenue and Customs exercise all the functions previously vested in the Commissioners of Inland Revenue. Section 50 of that Act provides that references in previous enactments to the Commissioners of Inland Revenue (however expressed) are to be taken as references to the Commissioners for Her Majesty's Revenue and Customs. The effect of this is that statutory references to the Board (that is, the Board of Inland Revenue) are now to be taken as references to the Commissioners for Her Majesty's Revenue and Customs. Section 2(1) of the same Act provides that staff appointed by the Commissioners are to be known as "officers of Revenue and Customs." Inspectors are therefore now, for statutory purposes, "officers."
10. Section 12 of the 2005 Act makes provision for the conduct of the Commissioners' proceedings. Section 12(2)(b)(i) provides that arrangements, made in accordance with sections 12(1) and 12(3) with the agreement of more than half of the Commissioners holding office at the time, may provide that a function of the Commissioners may be exercised by two Commissioners.
11. Prior to the coming into force of the 2005 Act the Commissioners of Inland Revenue had a general statutory power under section 4A of the Inland Revenue Regulation Act 1890 to delegate the performance of any of the Board's functions to "any officer of the Commissioners acting under their authority". The 1890 Act was repealed by section 52 of and schedule 5 to the 2005 Act. The corresponding provisions are now to be found in sections 13(1) and 14(1)(c) of the 2005 Act, respectively providing that "an officer of Revenue and Customs may exercise any function of the Commissioners" and enabling the Commissioners "to delegate a function of the Commissioners … to any other person." Not surprisingly, these sweeping powers do not apply to certain "non-delegable functions" identified in sections 13(3) and 14(2). For present purposes the only relevant non-delegable function (see sections 13(3)(b) and 14(2)(b)) is approving an application for a search warrant under section 20C of the 1970 Act.
12. It follows that there is nothing on the face of the legislation which expressly prevents the delegation to any "officer of Customs and Excise", indeed to "any person" of the Commissioners' powers under sections 20(3) and 20B(3) of the 1970 Act.
13. In fact, the Commissioners' powers under sections 20(3) and 20B(3) have been delegated, by an instrument dated 9 October 2000 and signed by two of the then Commissioners of Inland Revenue, to a very small number of very senior officials: the Director of Cross-Cutting Policy, any Assistant Director of Cross-Cutting Policy or the Director of Special Compliance Office. In the present case, as we shall see, the powers were exercised by Mr Keith Thomas Moore, who has been Assistant Director of Cross-Cutting Policy (though the post is now called Assistant Director, Central Policy) since July 2003.

The issue

14. I am concerned in the present case with a notice purportedly issued by the Board under section 20(3) pursuant to the provisions of section 20B(3).
15. It will be seen that whether a section 20(3) notice is given by an inspector or by the Board, it must be based upon "reasonable opinion." But in cases (not involving a barrister, advocate or solicitor) where an inspector issues a notice under section 20(3) there are various other conditions that have to be met:

i) the inspector must have served a precursor notice: section 20B(1);

ii) the inspector (who must be authorised by the Board) must have obtained the consent of a General or Special Commissioner: section 20(7);

iii) the inspector must give a copy of the notice to the taxpayer: section 20B(1A); and

iv) the inspector must also give a written summary of his reasons to the taxpayer: section 20(8E)(b).

16. The question in the present case is whether those conditions have also to be satisfied where a section 20(3) notice is given by the Board to a barrister, advocate or solicitor. That is the only matter in issue. No challenge to the notice is mounted by reference to the circumstances in which or the reasons for which it was issued.

The facts

17. The claimant is a solicitor who acted as such from 1991 to 2001 for a client, Mr Potiriadis, who is for present purposes the taxpayer whose tax liability is in issue. On 21 September 2005 a notice dated 25 August 2005 and expressed to be given under sections 20(3) and 20B(3) was given to the claimant requiring him to deliver, or make available for inspection, by 30 November 2005 certain documents specified in the schedule to the notice. The notice was signed by Mr K T Moore, Assistant Director, Central Policy, "For and on behalf of The Commissioners for HM Revenue & Customs." The notice was counter-signed by a General Commissioner who on 20 September 2005 had given his approval under section 20B(6) to the exclusion from the notice of section 20B(5). In a covering letter also dated 25 August 2005 Mr Moore said that he was authorised by the Commissioners to give the notice. He asserted that section 20B(1) did not apply.
18. On 17 November 2005 the claimant wrote to the Commissioners taking the point that no written summary of reasons had been given to Mr Potiriadis as required (so it was said) by section 20(8E). On 22 November 2005 the Commissioners replied, asserting that since the notice had been given by the Commissioners in accordance with section 20B(3), and not by an inspector, section 20(8E) did not apply. On 29 November 2005 the claimant responded, enclosing an opinion by leading counsel (Mr Mathew) and asserting that the notice was bad for failure to comply with section 20(8E). On 9 December 2005 the Commissioners replied in a long letter explaining why, in their view, section 20(8E) did not apply and why the notice was good: "there is nothing in your correspondence to suggest a legal basis for denying the validity of the notice." The letter observed that the claimant had three choices: to comply with the notice, to issue proceedings for judicial review or to wait for penalty proceedings. The letter concluded with a warning that, should the claimant neither comply with the notice nor commence judicial review proceedings within two weeks, the inspector would commence penalty proceedings.
19. On 19 December 2005 the claimant filed his Form N461. On 5 January 2006 the Commissioners filed an acknowledgement of service disputing the claim. On 2 March 2006 Underhill J granted permission. The substantive hearing before me began on 15 January 2007 and finished the following morning when I reserved judgment.

The construction of section 20B(3)

20. It is convenient to start by recognising that the conditions which have to be satisfied where a notice under section 20(1) or 20(3) is given by an inspector, and in particular the requirement in such a case for consent by a General or Special Commissioner, have been described on high judicial authority as (see per Moses J in R v Inland Revenue Commissioners ex p Davis Frankel & Mead (a firm) [2000] STC 595 at para [27]; see also at paras [35], [38] and [49]) "important statutory safeguards against oppression or the unnecessary use" of what has been called on even higher authority (see per Lord Lowry in R v Inland Revenue Commissioners ex p T C Coombs & Co [1991] 2 AC 283 at page 301) "an intrusive and potentially oppressive (but presumably necessary) power."
21. In the latter case, Lord Mackay of Clashfern LC commented at page 289 that:

"In enacting these provisions Parliament obviously placed great weight on the position of the independent commissioner and the need for the commissioner's consent."

Referring to what Lord Lowry had said in the same case at pages 301-302, Moses J went on in R v Inland Revenue Commissioners ex p Davis Frankel & Mead (a firm) [2000] STC 595 to observe at para [50] (citations omitted) that:

"In R v IRC ex p T C Coombs & Co … Lord Lowry pointed out that the independent commissioner was the real and intended safeguard, that his consent was of paramount importance and that his consent provided an effective supervision curing any injustice."

22. Understandably Mr Mathew seeks to derive support from these powerful observations for his fundamental submission that, on a proper reading of the legislation, the same statutory safeguards apply whether the notice under section 20(3) is given by an inspector or, in accordance with section 20B(3), by the Board.
23. Mr Mathew puts his argument in various ways, which I shall address in due course, but whichever way it is put his argument, in my judgment, fails and must be rejected.
24. With all respect to Mr Mathew's sustained argument to the contrary, on any sensible reading of the legislation the meaning and effect of section 20B(3) is quite clear.
25. Section 20B(3) does three things:

i) First ("An inspector cannot under section 20(1) or (3) … give notice to a barrister, advocate or solicitor") it disqualifies an inspector from giving any notice under section 20(1) or 20(3) to a barrister, advocate or solicitor.

ii) Secondly ("but the notice must in any such case be given (if at all) by the Board") it provides that such a notice can be given only by the Board. (I note in passing that the first and second limbs of section 20B(3) quite plainly constitute "restrictions on powers" under section 20 as those words are used in the heading to section 20B.)

iii) Thirdly ("and accordingly in relation to a barrister, advocate or solicitor for references in section 20(3) and (4) … to the inspector there are substituted references to the Board") it provides how certain provisions in the legislation are to be applied where, in accordance with the immediately preceding words, a notice under section 20(3) is given by the Board rather than by an inspector.

26. For present purposes it is the last few words of section 20B(3) which are critical. The draftsman has there adopted a well-known technique of referential drafting. Rather than repeating the whole of section 20(3) with the slight modifications called for when the notice is given by the Board rather than by an inspector, the draftsman has simply indicated that when the notice is given to a barrister, advocate or solicitor (ie, when the notice is given by the Board rather than an inspector) section 20(3) is to be read with references to the Board substituted for references to an inspector. In other words, when the notice is given by the Board section 20(3) has to be read as if the words "an inspector" or "the inspector" were struck out and replaced by the words "the Board." That, as it seems to me, is the plain and obvious meaning of the third limb of section 20B(3).
27. Now what is important, indeed determinative, for present purposes is not only what section 20B(3) says but, equally important, what it does not say. The substitution of references to the Board for references to the inspector is stated as applying to section 20(3); it is not stated as applying to section 20(7) or to section 20(8E) or to section 20B(1) or to section 20B(1A). Those sections, in other words, remain unaffected as to their language by anything in section 20B(3). And since each of those sections is, as a matter of its unaltered language, applicable only to notices given by "an inspector", they have no application in any case where the relevant notice is given not by an inspector but, by virtue of section 20B(3), by the Board.
28. So, says Ms Simler, and this is really the kernel of her argument, as a matter of simple language, none of sections 20(7), 20(8E), 20B(1) and 20B(1A) applies where, as in the present case, a notice under section 20(3) is served not by an inspector but by the Board. As a matter of simple language, in my judgment, that must be right.
29. Mr Mathew submits that I should adopt a purposive construction of section 20B(3). He submits that section 20B(3) must be construed so that it sits comfortably with the policy underlying, and with the whole scheme of, the statutory code which is to be found in sections 20 to 20D of the Act. He says that section 20B(3), insofar as it requires action by the Board rather than an inspector, is a supplementary safeguard, that is, a safeguard additional to and not in substitution for those which apply when notice is given under section 20(3) by an inspector. He suggests that the inclusion in section 20B(3) of the parenthetical words " … (if at all) … " demonstrates Parliament's recognition of what he calls the exceptional nature of the step being taken when a section 20(3) notice is served on a barrister, advocate or solicitor – something quite inconsistent with the removal, if the Commissioners are correct, of all the safeguards otherwise imposed by the legislative scheme and inconsistent also, he submits, with the description in the heading to section 20B of the section as containing "restrictions" on the powers set out in, inter alia, section 20(3).
30. Ms Simler submits in response, that, properly construed, section 20B(3) does not require the Board to meet the same pre-conditions as an inspector; that section 20B(3) is properly described as and plainly operates as a "restriction" inasmuch as it prevents a notice, where it is to be given to a barrister, advocate or solicitor, from being given by an inspector; that the legislation, in the case of notices given to lawyers, deliberately replaces the requirement of what she calls low-level administrative decision (with General or Special Commissioner level supervision) with a requirement of what she calls high-level administrative decision; and that the scheme of the Act allows lawyers what she calls an effective opportunity to vindicate their rights under either judicial review proceedings or during enforcement (penalty) proceedings.
31. She further submits that the Commissioners have in no case been granted any unfettered discretion to invade privacy, confidentiality or privilege. What she accepts are intrusive powers are, she points out, subject to statutory safeguards of various kinds, those safeguards being graduated and increasing proportionately, she submits, so that the more intrusive the power the greater the statutory safeguards. Different levels of administrative decision-making, supervised by different levels of judicial authority and subject to different procedures, are required for the exercise of different powers. She helpfully summarised for me in a most useful table what she accurately referred to as the somewhat complex statutory structure created by sections 20 to 20D of the Act. I need not for present purposes follow Ms Simler on her journey through the whole of that analysis, illuminating though it was. As an example of this graduated scheme, and as Ms Simler points out, at the top end of the scale, I can take section 20C which, as we have seen, confers powers of entry and search, if necessary by force. Here the statute requires both a decision by the Board itself (the power, as we have seen, is non-delegable) and prior judicial authorisation.
32. Broadly speaking I accept Ms Simler's submissions. The meaning of section 20B(3) is, in my judgment, quite clear. Construed as Ms Simler would have me read it, and as I agree it must be read, section 20B(3) fits in quite comfortably, in my judgment, with the overall scheme of the legislation. And a purposive construction does not lead to any different conclusion.
33. Although there is no previous decision directly in point, Ms Simler prays in aid powerful dicta in support of this reading of sections 20 and 20B.
34. In the first place there is Moses J's careful analysis of the legislation in R v Inland Revenue Commissioners ex p Davis Frankel & Mead (a firm) [2000] STC 595.
35. In that case a notice had been given, purportedly on behalf of the Board under sections 20(3) and 20B(3), by a Mr Brannigan who was, at the material time, the Director of Special Compliance Office. It was argued that Mr Brannigan lacked power to give the notice. The argument proceeded on two fronts. The wider and more general submission was that the Board alone could give a notice under section 20B(3), and that that power could not be delegated at all. The narrower submission was that the Board could not in any event delegate this particular power to an inspector, and Mr Brannigan, despite the high office he held, was in fact an inspector.
36. The importance of the case for present purposes is that the foundation of both arguments was the assertion that, where a section 20(3) notice is given by the Board, none of the safeguards applying where the notice is given by an inspector operate – hence, so it was said, Parliament could not have intended the Board's power to be delegable.
37. Moses J clearly accepted the premise upon which the argument proceeded, though of course it went unchallenged because the Inland Revenue had no interest in arguing the contrary. Thus Moses J commented (see at paras [27] and [49]) that:

"It is important to observe that where a notice has been given by the Board to a solicitor certain important statutory safeguards against oppression or the unnecessary use of the power are not available … where there is power to give notice to a barrister, advocate or solicitor, and that power is restricted to the Board by virtue of s 20B(3) there is no other safeguard against the abuse of power other than the supervision of the Board itself."

38. He continued at paras [51]-[52]:

"[51] In the context of the power to be exercised by the Board under s 20B(3), the only safeguard is the requirement that the Board itself should decide upon the propriety of the notice. It cannot, it is argued, be supposed that that sole protection can be weakened by a power to delegate, particularly when delegation is to the very head of the office undertaking the investigation. The director of the SCO cannot, at the very least, present the appearance of distance and detachment from the vortex of the investigation, the opportunity for which is available to the Board itself.

[52] I agree that the safeguards available, when action is taken by an inspector, are absent and that it is to be inferred that Parliament intended that the requirement that the Board itself exercise powers under s 20(3) is intended to provide some substitute for those statutory safeguards which it may be assumed would otherwise be in place. But I do not agree that it follows that there is no power to delegate to the director of the SCO. He is required to stand back and reach a fresh view, scrutinising with care the reports from the investigators who seek inspection, but he does so as the Board. For the reasons I have advanced earlier there is no prohibition on delegation and no prohibition on delegation to Mr Brannigan who acts as the Board and not as an inspector."

39. Now, as Mr Mathew correctly observes, Moses J was not directly concerned with the point which is currently before me. Nonetheless, the arguments which Moses J had to address required the careful analysis of the legislation which is so apparent from his judgment. The observations by Moses J upon which Ms Simler relies were carefully considered. They were far indeed from being some casual or throwaway line. In my judgment, they lend very powerful support to Ms Simler's argument.
40. Secondly, Ms Simler points to what Lord Hoffmann said in R (Morgan Grenfell & Co Ltd) v Special Commisioner of Income Tax [2002] UKHL 21, [2003] 1 AC 563, at para [11] when referring to the statutory safeguards:

"The first form of safeguard is some form of judicial or administrative control, graduated according to the intrusiveness of the power. Thus the inspector's power to require delivery of documents under section 20(1) or (3) requires the consent of a general or special commissioner: subsection (7). Consent is not needed only if the Board of Inland Revenue itself makes the request under section 20(2). Likewise, only the Board may give a notice under section 20(1) or (3) to a barrister, advocate or solicitor: section 20B(3). Notices to tax accountants under section 20A(1) (see section 20A(3)) and searches under section 20C(1) require the consent or warrant (as the case may be) of "the appropriate judicial authority", which in England means a circuit judge: section 20D(1)(a)."

Now the question in that case was whether, despite the language of section 20B(8), referring only to a notice given under section 20(3), legal professional privilege also applies where the notice is given under section 20(1). (The House held that it does.) So the question before the House was very different from that with which I am concerned, and Lord Hoffmann, when he used the words relied upon by Ms Simler, was doubtless speaking generally and not focussing as precisely as I have had to focus upon the precise meaning and effect of section 20B(3). Obiter dicta they may have been but, as Sir Robert Megarry once observed, there are dicta and dicta. Lord Hoffmann's observations, as it seems to me, provide further powerful support for Ms Simler's reading of the legislation.

41. Mr Mathew submits that section 20B(3) operates as a deeming provision. He submits that section 20B(3) is a pre-condition to the exercise of the section 20(3) where the notice is intended to be given to a barrister, advocate or solicitor and that there is no indication at all that the draftsman sought to limit the other safeguards or conditions for the exercise of that power. He submits that the draftsman did this efficiently by putting the responsibility for the decision on the Board and then by substituting "the Board" for "the inspector" in section 20(3) so that – and this is the key submission – the other obligations inherent, on an exercise of the power by an inspector, were retained. By "substituting" one person for another, and I quote Mr Mathew, the draftsman "deemed the latter to be the former for all the purposes of section 20(3)." Mr Mathew in his oral submissions put the same point in slightly different words when he said that under section 20B(3) the Board has subsumed the inspector's powers and duties and so has to comply with all the limitations and pre-conditions which apply when the power under section 20(3) is being exercised by an inspector.
42. In support of his arguments on this point Mr Mathew referred me to the well-known passage in the judgment of Nourse J in Commissioners of Inland Revenue v Metrolands (Property Finance) Ltd (1980) 54 TC 679 at page 697 and the equally well-known passage in the judgment of Peter Gibson J in Marshall (HM Inspector of Taxes) v Kerr (1993) 67 TC 56 at page 79. He also took me to various passages in the speeches of their Lordships both in the latter case and also in R v Dimsey [2001] UKHL 46, [2002] 1 AC 509. I have to say, with respect, that none of this was of the slightest assistance.
43. In the first place, those cases were concerned with a very different type of statutory provision. In both Commissioners of Inland Revenue v Metrolands (Property Finance) Ltd (1980) 54 TC 679 (a decision on section 181(2) of the Town and Country Planning Act 1971) and R v Dimsey [2001] UKHL 46, [2002] 1 AC 509 (a decision on section 739(2) of the Income and Corporations Taxes Act 1988) the relevant statutory provision provided in terms that something was to be "deemed." In Marshall (HM Inspector of Taxes) v Kerr (1993) 67 TC 56 (a decision on section 24(11) of the Finance Act 1965) the relevant statutory provision was to the effect that something done by A was to be treated for certain purposes "as if" done by B. Section 20B(3) is not a deeming provision. It does not, at least in so many words, deem the Board, when exercising its powers under section 20B(3) to be an inspector. Indeed, it would be very odd to read the third limb of section 20B(3) in this way when the first limb has just spelt out that an inspector cannot do what the second limb has gone on to spell out that only the Board can do. Nor does section 20B(3) say that the Board is to exercise its powers "as if" those powers were being exercised by an inspector. Section 20B(3) is a very different type of provision. It is, as I have said, simply an example of the well-known technique of referential drafting.
44. More generally, as both Nourse J and Peter Gibson J recognised, a deeming provision, in the sense in which that expression is used in the authorities to which Mr Mathew took me, is a provision which creates what they both referred to a "statutory fiction." That is, it is a provision which requires one to treat as real that which is only deemed to be so, and where the essential task for the court – and often the difficulty which is presented to the court – is to ascertain the extent to which, and for what purposes and between what persons, that "statutory fiction" is to be resorted to. But section 20B(3) creates no statutory fiction.
45. Ms Simler submits, succinctly and in my judgment correctly, that section 20B(3) is not a deeming provision; it is merely a provision that substitutes "the Board" for "the inspector" in certain provisions but not in others – specifically, and expressly, in section 20(3) but not, for example, in section 20(7).

The Convention

46. Mr Mathew seeks support for his case by relying upon Article 8 of the European Convention for the Protection of Human Rights and Fundamental Freedoms. He does not assert that section 20B(3) is incompatible with the Convention. What he does assert, however, is that section 20B(3) has to be, and can be, read in a manner compatible with the Convention and with the Strasbourg jurisprudence; that Ms Simler's reading of section 20B(3) is not compatible with the Convention and the jurisprudence; and that if section 20B(3) is to be read in a manner which is compatible with the Convention and the jurisprudence it must be read as Mr Mathew would have me read it – in other words reading into the statute when a section 20(3) notice is given by the Board the same safeguards as apply when such a notice is given by an inspector.
47. I cannot agree with any of this. Section 20B(3) read as Ms Simler would have me read it is fully Convention-compliant. There is nothing in the Convention or in the Strasbourg jurisprudence requiring it to be read as Mr Mathew would have me read it.
48. Article 8 provides as follows:

"(1) Everyone has the right to respect for his private and family life, his home and his correspondence.

(2) There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well-being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others."

49. Ms Simler accepts that Article 8 is engaged, both as regards the taxpayer, Mr Potiridias, and also (see Tamosius v United Kingdom [2002] STC 1307 at page 1315 referring to Niemietz v Germany (1993) 16 EHRR 97) as regards his solicitor, the claimant. She also accepts that in respect of both of them the giving by the Board of the notice under sections 20(3) and 20B(3) amounted to an interference with the right to respect for private life protected by Article 8. Those concessions, in my judgment, were properly made.
50. Mr Mathew for his part accepted that, at least in principle, this interference had the aim, legitimate under Article 8(2), of furthering "the economic well-being of the country": see X v Belgium (1982) 31 DR 231. This concession also, as it seems to me, was properly made.
51. The argument accordingly focussed on the questions whether section 20B(3), if construed as the Commissioners would have me construe it, meets the two requirements that the interference was "in accordance with the law" and was "necessary in a democratic society."
52. So far as concerns the latter requirement, the question of whether the interference was "necessary" in the particular case is something to be determined in the light of all the facts of the particular case. In the present case, as I have said, no challenge to the notice is mounted by reference to the circumstances in which or the reasons for which it was issued. The only challenge is in relation to the meaning and effect of section 20B(3).
53. That, in principle, the provisions of section 20(3) and 20B(3) satisfy the test of necessity cannot sensibly be controverted and Mr Mathew did not suggest the contrary: compare, for example, Funke v France (1993) 16 EHRR 297 at para [56] (recognising that house searches and seizures may be "necessary" to prevent or prosecute tax evasion). Indeed, as we have seen, Lord Lowry accepted in R v Inland Revenue Commissioners ex p T C Coombs & Co [1991] 2 AC 283 at page 301 that the power under section 20(3) although intrusive and potentially oppressive was necessary. The real argument before me was founded on the requirement that any interference with rights protected by Article 8 must be "in accordance with the law."
54. The Strasbourg jurisprudence shows that an interference will not be "in accordance with the law" unless it has some basis in domestic law, unless it is "accessible" to those concerned and unless it is stated with sufficient precision for its meaning and nature to be "foreseeable": see, for example, Chappell v United Kingdom (1989) 12 EHRR 1 at paras [52] and [56] and Huvig v France (1990) 12 EHRR 528 at paras [26] and [29]. There is no doubt but that those requirements are met in the case of the legislation with which I am here concerned.
55. But the Strasbourg jurisprudence goes further. As the Strasbourg court said in Olsson v Sweden (1989) 11 EHRR 259 at para [61]:

"The phrase 'in accordance with the law' does not merely refer back to domestic law but also relates to the quality of the law, requiring it to be compatible with the rule of law; it thus implies that there must be a measure of protection in domestic law against arbitrary interferences by public authorities with the rights safeguarded by, inter alia, para 1 of Article 8."

Following on from this the Strasbourg court has repeatedly indicated, as it was put in Funke v France (1993) 16 EHRR 297 at para [56], that "the relevant legislation and practice must afford adequate and effective safeguards against abuse" (see also Chappell v United Kingdom (1989) 12 EHRR 1 at para [57]) or, as it was put in Tamosius v United Kingdom [2002] STC 1307 at page 1315, that there are "sufficient procedural safeguards attaching to the procedure to prevent any abuse or arbitrariness."

56. Now it is apparent from the Strasbourg jurisprudence that in the case of Anton Piller orders (see Chappell v United Kingdom (1989) 12 EHRR 1) and searches or seizure of property (see Funke v France (1993) 16 EHRR 297 and Tamosius v United Kingdom [2002] STC 1307) there are unlikely to be sufficient procedural safeguards to meet the requirements of Article 8 in the absence of some mechanism of prior judicial authorisation. But there is nothing in the Strasbourg jurisprudence to suggest that prior judicial approval is necessarily required in the case of less intrusive interferences with the rights protected by Article 8 such as the particular form of interference with which I am here concerned. So the Strasbourg jurisprudence does not, in my judgment, assist Mr Mathew.
57. There are, as it seems to me, two obvious and important differences between a notice given under section 20(3) and a search conducted under section 20C. In the first place, a search under section 20C is more intrusive, very much more intrusive, than a notice under section 20(3). Secondly, and in the nature of things, there is not the same ability for the victim of the Commissioners' attentions under section 20C to seek a pre-emptive judicial remedy as there is in the case of the recipient of a section 20(3) notice. In practical terms it will be difficult if not impossible for someone presented with a search warrant to apply to a judge before the warrant is executed. In contrast, and as the present case illustrates, there is no difficulty in the recipient of a notice applying to a judge for relief and, if the relief sought is judicial review, doing so before the stipulated time for compliance. (For this reason I am less impressed with the argument that the ability to defend subsequent enforcement proceedings provides an adequate safeguard.)
58. These considerations amply demonstrate why section 20C, conformably with the Strasbourg jurisprudence, requires prior judicial approval. But equally they demonstrate, and in my judgment again conformably with the Strasbourg jurisprudence, that a section 20(3) notice if given by the Board in accordance with section 20B(3) does not require prior judicial sanction. Any need for judicial scrutiny in such a case is, in my judgment, adequately met by the availability of judicial review.
59. In my judgment the Convention as expounded in the Strasbourg jurisprudence does not require prior judicial sanction when a section 20(3) notice is given by the Board. Nor does the Convention require the importation of the other safeguards that would apply if the notice was being given by an inspector. The combination of what Ms Simler calls high-level administrative decision-making and the ability to apply for judicial review before complying with the notice in my judgment comfortably meets the requirements of the Strasbourg jurisprudence.

Two important qualifications

60. I do not want there to be any misunderstanding. In particular I would not wish the Commissioners to read too much into this judgment. There are two important points to be made by way of qualification of what I have said.
61. The first relates to the Commissioners' power to delegate their functions under section 20B(3). I agree entirely with everything Moses J said on this point in R v Inland Revenue Commissioners ex p Davis Frankel & Mead (a firm) [2000] STC 595. But there is, as it seems to me, a rather uneasy 'fit' between Ms Simler's characterisation of what happens under section 20B(3) as high-level administrative decision-making and the fact, as I have pointed out, that there is nothing on the face of the 2005 Act to prevent the Commissioners delegating their powers under section 20B(3) to any officer, indeed to "any person" they choose. In practice, of course, as we have seen, the delegation of this particular power is limited to a small number of very senior officials. And it is to be noted that Moses J was careful in R v Inland Revenue Commissioners ex p Davis Frankel & Mead (a firm) [2000] STC 595 to limit his decision (see para [50]) to the case of delegation to the director of Special Compliance Office.
62. Just how far the Commissioners can lawfully go in delegating their functions under section 20B(3) is something, if the matter arises, for another day. But nothing in this judgment is to be taken as indicating that the outcome would necessarily have been the same had the delegation of their powers in relation to section 20B(3) in fact been to a wider class of lower level officials. On the contrary, and as I suggested during the course of argument, there may come a point where a purported delegation extends so far and to such a wide class of officials as to exceed the proper bounds of the Commissioners' power. To take an extreme example, if the Commissioners were to purport to exercise their power of delegation so as to authorise every inspector to exercise the Board's powers under section 20B(3), it is not at all obvious that such an authorisation would withstand attack. One can envisage powerful arguments that such an exercise of the statutory power to delegate would be unlawful, as an abuse of the power or as an exercise of the power for the collateral and unlawful purpose of enabling inspectors to evade the requirements to which sections 20 and 20B would otherwise subject them, just as one can envisage powerful arguments to similar effect based upon Article 8.
63. The other matter relates to the availability of judicial review. If it is to be the important safeguard which, as it seems to me, is needed in circumstances where, because the notice under section 20(3) is being given by the Board rather than by an inspector, there is lacking the safeguard of prior judicial approval by a General or Special Commissioner, then judicial review has to be an effective remedy. And it is unlikely to be an effective remedy, and unlikely to be a remedy meeting the standards mandated by Article 8, unless there is proper scope for an appropriate degree of judicial examination and evaluation of the reasons why the Commissioners have decided to exercise their powers in the particular case. The function of the judge on a judicial review is, of course, one of review, but the intensity of the review will vary with the context and the circumstances. Where the Convention is engaged, context is everything.
64. This is a topic which was considered – long before the Convention became part of our domestic law – in R v Inland Revenue Commissioners ex p T C Coombs & Co [1991] 2 AC 283. But care must be taken not to read too much into what the House of Lords said, certainly if their Lordships' speeches are to be relied upon as limiting the ambit of the material which the Commissioners must place before the court if a judicial review claim is brought against them in relation to their giving of a section 20(3) notice.
65. It is important to appreciate that the notice in R v Inland Revenue Commissioners ex p T C Coombs & Co [1991] 2 AC 283 had been given by an inspector, and not by the Board, so all the statutory safeguards were in place, in particular the need for prior judicial consent by a General or Special Commissioner. The House of Lords was at pains to point out that, because of the duty of the General or Special Commissioner asked to give his consent under section 20(7) to have regard to "all the circumstances", there was a corresponding duty on the Inland Revenue to place before the Commissioner all the material available to it which was relevant to the application (see, for example, Lord Mackay of Clashfern LC at pages 288-289, Lord Jauncey of Tullichettle at page 289 and Lord Lowry at page 305).
66. In those circumstances, as Lord Lowry pointed out at page 300:

"The case for the validity of … any section 20(3) notice… is supported by the presumption of regularity, which is strong in relation to the function of the commissioner under section 20(7). He is an independent person entrusted by Parliament with the duty of supervising the exercise of the intrusive power conferred by section 20(3) and "in the absence of any proof to the contrary, credit ought to be given to public officers, who have acted prima facie within the limits of their authority, for having done so with honesty and discretion:" Earl of Derby v Bury Improvement Commissioners (1869) LR 4 Exch 222, 226. The commissioner must be taken to be satisfied that the inspector was justified in proceeding under section 20 and hence that the inspector held, and reasonably held, the opinion required by section 20(3). The presumption that that opinion was reasonable and that the commissioner was right to be satisfied can be displaced only by evidence showing that at the time of giving the … notice the inspector could not reasonably have held that opinion. In order to decide whether the applicants succeed in this task, the court must consider all the evidence on both sides and all the available facts, one of which is that the commissioner, having heard an application, consented to the giving of the notice."

But where, as in the case of a notice given not by an inspector but by the Board, there is no scrutiny by a General or Special Commissioner, it seems to me that the presumption of regularity is much weaker and that correspondingly the Commissioners may face a stiffer evidential burden in seeking to ward off an application for judicial review.

67. The starting point, as it seems to me, is what Lord Jauncey of Tullichettle said at page 289:

"The revenue have a heavy responsibility when seeking to exercise their powers under section 20 of the Act of 1970 and they must only hide behind a cloak of confidence when this is absolutely necessary and not as a matter of course. If a person to whom a request for documents has been made asks reasonable questions or raises reasonable objections the revenue should deal with these matters unless there are compelling reasons for adopting a wall of silence."

68. Accordingly, where the Commissioners give a section 20(3) notice under section 20B(3) they may find themselves in difficulties if they are too reticent when resisting reasonable and proper requests for information as to why they have decided to give the notice. And the mere fact that section 20(8E) does not apply to such a notice does not necessarily mean, as it seems to me, that the Commissioners can simply refuse to give any reasons for their decision. After all, public authorities sued in judicial review proceedings are under certain obligations. I have in mind, for example, cases such as R v Lancashire County Council ex p Huddlestone [1986] 2 All ER 941 at page 945 and R (Quark Fishing Ltd) v Secretary of State for Foreign and Commonwealth Affairs [2002] EWCA Civ 1409, [2002] All ER (D) 450 (Oct), at paras [50] and [55], with their references to the high standards of candour expected of public authorities in judicial review proceedings and to the obligation of public authorities involved in such proceedings to make full and fair disclosure and provide full and accurate explanations.

Conclusion

69. The application fails and must be dismissed with costs.