England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		6th December 2002

Mr Justice Ferris:

1. This is an appeal by the Inspector of Taxes from a decision of the General Commissioners for Birmingham North allowing an appeal of the taxpayer, Vicky Construction Limited, ("Vicky") against the Inspector's decision to refuse to issue to the taxpayer a certificate under section 561 of the Taxes Act 1988.
2. Vicky is engaged in the construction industry. In the course of its business it does work in that field as a sub-contractor engaged by another company ("the contractor").
3. In the absence of the statutory provision with which this appeal is concerned Vicky would be entitled, like any other sub-contractor, to be paid the contract price in accordance with its contract with the contractor without any deduction in respect of its own tax liability. However it became notorious that many sub-contractors engaged in the construction industry "disappeared" without settling their tax liabilities, with a consequential loss of revenue to the exchequer.
4. In order to remedy this abuse Parliament has enacted legislation, which goes back to the early 1970's, under which a contractor is obliged, except in the case of a sub-contractor who holds a relevant certificate, to deduct and pay over to the Revenue a proportion of all payments made to the sub-contractor in respect of the labour content of any sub-contract, The amount so deducted and paid over is, in due course, allowed as a credit against the sub-contractor's liability to the Revenue.
5. The need to make and pay over such deductions can be an irritation to the contractor obliged to carry out this exercise. It also adversely affects the cash flow of the sub-contractor. Accordingly it is advantageous to a sub-contractor to have a statutory certificate rendering such a deduction unnecessary. The provision of such a certificate tends to make the sub-contractor holding the certificate a more attractive party for the contractor to deal with and, by enabling the sub-contractor to receive the contract price without deduction, improves the sub-contractor's cash flow.
6. The legislation which governs the relevant regime is contained in sections 559 to 567 of the Income and Corporation Taxes Act 1988, the material parts of which I now examine.
7. The basic requirement is imposed by section 559 the details of which do not matter for present purposes. It imposes the general requirement on a contractor to make deductions from payments made to the sub-contractor and to pay over to the Revenue the amounts deducted. The section also prescribes how such amounts are to be treated in the hands of the Revenue.
8. Section 561 provides an exception from the requirements of section 559 in the case of a payment made to a sub-contractor who holds a certificate under section 561 which is in force when the payment is made. The issuing of such a certificate is governed by the following provisions of section 561. Looking at the section only in its application to Vicky, it provides that if the Board is satisfied, on the application of Vicky, that Vicky satisfies the conditions set out in section 565 it must issue a certificate excepting Vicky from section 559.
9. References to "the Board" in section 561 and elsewhere in the provisions I shall mention are, of course, references to the Board of Inland Revenue. In practice the functions of the Board are performed in relation to any particular taxpayer by the Inspector of Taxes dealing with that taxpayer's affairs.
10. Section 565 sets out, in subsections (2) to (9), the conditions which must be satisfied by a company if it is to obtain a certificate under 561. As there is no dispute that Vicky satisfies many of these requirements I will not trouble with those which are satisfied. Those in respect of which there is an issue are contained in subsections (3), (4), (8), (8A) and (9), which provide as follows

"(3) The company must, subject to subsection (4) below, have complied with all obligations imposed on it by or under the Tax Acts or the Management Act in respect of periods ending within the qualifying period and with all requests to supply to an inspector accounts of, or other information about, the business of the company in respect of periods so ending.

(4) A company which has failed to comply with such an obligation or request as is referred to in subsection (3) above shall nevertheless be treated as satisfying this condition as regards that obligation or request if the Board are of the opinion that the failure is minor and technical and does not give reason to doubt that the conditions mentioned in subsection (8) below will be satisfied."

…

"(8) There must be reason to expect that the company will, in respect of periods ending after the end of the qualifying period, comply with all such obligations as are referred to in subsections (2) to (7) above and with such requests as are referred to in subsection (3) above.

(8A) Subject to subsection (4) above, a company shall not be taken for the purposes of this section to have complied with any such obligation or request as is referred to in subsections (3) to (7) above if there has been a contravention of a requirement as to the time at which, or the period within which, the obligation or request was to be complied with.

(9) In this section "qualifying period" means the period of three years ending with the date of the company's application for a certificate under section 561."

11. Finally, in reviewing the relevant legislation I must refer to section 561(9) which provides a right of appeal in the following terms

"(9) A person aggrieved by the refusal of an application for a certificate under this section or the cancellation of such a certificate may by notice given to the Board within 30 days after the refusal or, as the case may be, cancellation, appeal to the General Commissioners or, if he so elects in the notice, to the Special Commissioners; and the jurisdiction of the Commissioners on such an appeal shall include jurisdiction to review any relevant decision taken by the Board in the exercise of their functions under this section."

12. Figures which were before the Commissioners indicate that in the period between April

1997 and April 2001 Vicky had an expanding turnover which increased from about

£92,000 per annum to about £740,000 per annum.

13. Unhappily, during at least the latter part of that period, Vicky has had a poor record in respect of the due payment of PAYE tax deducted by it from the remuneration of its employees. No information about the position before May 2000 was before the Commissioners but the position in respect of a 16 months period between then and August 2001 was as follows:

Vicky Construction Limited

PAYE Summary

Year 2000/2001

Month	Amount	Due date	Date paid	Days late
1	£6,251.55	19/05/00	07/06/00	15
2	£4,079.91	19/06/00	23/06/00	4
3	£3,190.55	19/07/00	08/09/00	20
4	£5,089.26	19/08/00	08/09/00	20
5	£7,095.98	19/09/00	08/10/00	19
6	£9,391.26	19/10/00	03/11/00	14
7	£14,327.24	19/11/00	12/01/01	54
8	£21,054.29	19/12/00	26/01/01	38
9	£12,881.24	19/01/01	09/03/01	49
10	£6,964.49	19/02/01	21/03/01	30
11	£14,368.10	19/03/01	17/04/01	59
12	£20,800.63	19/04/01	25/04/01	6

Year 2001/2002

1	£16,977.55	19/05/01	22/06/01	34
2	£23,449.00	19/06/01	29/06/01	10
3	£29,542.60	19/07/01	25/07/01	6
4	£26,754.24	19/08/01	08/08/01	early

14. The dates and figures in the first four columns of this table were before the Commissioners and were found by them to be correct. The last column in the table has been added by me. It is a matter of calculation from the dates in the two preceding columns.
15. At some time before July 2000 Vicky applied to the relevant Inspector of Taxes for a certificate under section 561. (It may well have held a certificate before that time but there was no evidence about this and any earlier certificate had clearly expired or was about to expire). The result of this application was stated in a letter from the Inspector addressed to the company secretary of Vicky dated 24th July 2000. The letter reads as follows:

"Dear Sir

APPLICATION FOR SUBCONTRACTORS TAX CERTIFICATE

You have applied for a certificate under S 561 ICTA 1988.

One of the conditions for getting a certificate in the new scheme is "timely compliance". This requires you to have paid all tax, NIC and deductions on behalf of your employees and subcontractors, and to have made all returns and supplied all accounts or information as required by the Inspector, when due, over the three years leading up to your application. It is not enough to bring your affairs up to date at the last minute.

I have considered your application and I find that you have not met the timely compliance obligation as your Corporation Tax Return was filed late for the period to 30th April 1998.

Strictly, as you have failed the compliance test, you do not qualify for a certificate. However, in view of the fact that this is a new rule in the scheme, and you may not have been fully aware of the rule throughout the three-year period, I am prepared to issue you with a certificate.

But please note that any failure to comply on time over the lifetime of this certificate could put your tax certificate application at risk.

A copy of this letter will be kept for use in considering any renewal application."

16. The reference in the letter to "the new rule" is, I think, a reference to subsection (8A) of section 565. This subsection was introduced by the Finance Act 1995 and applies to any application for the issue or renewal of a certificate for any period beginning on or after 1st August 1999. The effect of the subsection, which I have set out above, is to treat a failure to perform a tax obligation in due time as a non-compliance for the purposes of section 565(3), subject to the possibility of relief in respect of minor and technical failures afforded by section 565(4).
17. I note that the non-compliance referred to in the letter of 24th July 2000 was a failure in respect of the timely filing of a corporation tax return, not a failure in respect of timely payment of PAYE tax.
18. The certificate issued in July 2000 was, it seems, a certificate for 12 months. In or before July 2001 Vicky applied for it to be renewed. On 24th July 2001 the Inspector issued a formal notice of his decision to refuse this application.
19. The notice of refusal was accompanied by a letter in the following terms

"You have applied for a certificate under S 561 ICTA 1988

In order for you to be granted a certificate under the new scheme you must have complied with all your obligations. This requires you to have paid all tax NIC and deductions on behalf of your employees and subcontractors and to have made all returns and supplied all accounts or information as required by the Inspector when due over the three years leading up to your application. It is not enough to bring your affairs up to date at the last minute.

I have considered your application and I find that you have not met your compliance obligations as despite my letter of 24th July 2000 your monthly PAYE remittances have been consistently late and are currently a month in arrears.

Consequently I must refuse your application for a certificate and a formal notice of my decision is attached."

20. Vicky appealed to the Commissioners on the ground that its admitted non-compliance with its obligations in respect of the timely payment of PAYE tax was of a minor and technical nature and that all relevant payments were now up to date.
21. The appeal was heard by the Commissioners on 13th September 2001. The decision of the Commissioners is set out in paragraph 8 of the case stated as follows

"We the Commissioners found that although on occasions late payments had been made we considered that lateness to be of a minor and technical nature within Section 565(4). Our interpretation of the exercise of discretion and common sense on this instance are that there are no grounds to question the general tax reliability [of] the business and therefore will allow the appeal and suggest that a certificate be issued for 12 months."

22. From this decision the Inspector of Taxes now appeals to the court. In the notice of appeal the grounds of appeal are the following

"1. The General Commissioners erred in law as follows:

2. First the term "minor and technical nature" in s.565(4) Income and Corporation Taxes Act 1998 ("ICTA 1988") should be given its natural meaning using the meanings of the ordinary English words that it is comprised of.

3. This being so, they reached a wrong conclusion of law to categorise the Respondent's consistent history of late, sometimes seriously late, payments of PAYE as "minor and technical".

4. In addition, or in the alternative, the General Commissioners' findings of fact represent an error in law in the terms explained in Edwards -v- Bairstow [1956] AC 14.

5. Second, their conclusion that the Respondent's consistent history of late payment of tax provides no grounds upon which to question the Respondent's general tax liability is not the answer to the question posed by s.565(8) ICTA 1988 and is both, of itself, an error of law and is additionally, or in the further alternative, an error of law on the basis of Edwards -v- Bairstow."

23. Vicky's appeal to the Commissioners was made under section 56 1(9), particularly that part of it which provides that

"the jurisdiction of the Commissioners ... shall include jurisdiction to review any relevant decision taken by the board in the exercise of their functions under this section."

In substance the appeal was against the decision of the Board under section 565(4), that is to say its decision that it was of the opinion that Vicky's non-compliance was minor and technical and did not give reason to doubt future compliance in accordance with section 565(8).

24. At an early stage of the argument on the present appeal I raised a question concerning the proper scope of the jurisdiction of the Commissioners. In particular I was concerned with the fact that under section 565 the relevant opinion, which must be equated to a decision, is that of the Board and that the jurisdiction of the Commissioners under section 561(9) is a jurisdiction to "review" the decision of the Board. It seemed to me to be arguable that, the appointed decision-maker being the Board and the power of the Commissioners being limited to a review of its decision, the Commissioners were not entitled to substitute their own views on the issue raised by section 565(4) for the view of the Board unless they concluded that no reasonable Board could, on the facts, have reached the conclusion which the Board, through the Inspector, did reach in this case.
25. This line of argument was clearly not within the scope of the grounds of appeal set out in the appellant's notice. Not surprisingly in the light of the views I had expressed Mr McKay indicated that he would wish to pursue this line of argument. I invited him to formulate an appropriate amendment to the appellant's notice, which he did after a short adjournment. He then applied for permission to amend. However after hearing argument from both parties I reached the conclusion that it would not be just to allow such an extensive amendment (in substance rather that in length) at this late stage. I also considered that there might be dangers in attempting to consider this argument, for which neither party had come prepared, without there being an adjournment for a significant period, which would be unfair to Vicky. I therefore refused permission to amend. No rejection of the argument on its merits is implicit in this refusal.
26. This appeal has therefore proceeded on the basis that the Commissioners were entitled to substitute their own view for the Board's view on the question raised by section 565(4) if, as they clearly did, they considered that the Board's view was wrong. Further, the decision that Vicky's non-compliance is of a minor and technical nature is one which, if not wholly a finding of fact, has a large factual content. The court is therefore bound to approach this appeal in accordance with the principles stated in Edwards -v- Bairstow [1956] AC 14.
27. The argument in support of the appeal was a concise one. First it was said that the non-compliance in this case, consisting as it did of repeated late payments, sometimes seriously late, of significant sums for an unbroken period of sixteen months does not fall within the natural and ordinary meaning of the words "minor and technical nature". When this non-compliance is viewed in its context, continuing as it did throughout the twelve months which followed the receipt of the warning contained in the letter of 24th July 2000 and ending only after the receipt of the refusal of a new licence, this conclusion becomes inevitable.
28. Secondly Mr McKay pointed out that section 565(4) imposes a double requirement. The non-compliance must not only be minor and technical but it must also give no reason to doubt the conditions mentioned in subsection (8) will be satisfied in the future. The reading together of the latter part of subsection (4) and the requirements of subsection (8) is not altogether easy as a matter of language, but the meaning is, I think, quite clear. The past non-compliance must not be such as to give rise to doubt concerning future compliance with tax obligations, both in respect of substance and in respect of time. Mr McKay argued that in finding that "there are no grounds to question the general tax reliability of the business" the Commissioners had not addressed the issue which they were required to address by subsection (8) and the concluding words of subsection (4).
29. Each of these arguments, Mr McKay contended, leads to the conclusion that either the Commissioners have made an error of law in their interpretation of what section 565(4) requires. Alternatively their determination is one which cannot stand in the light of the principles stated in Edwards -v- Bairstow. Their conclusion represents "a view of the facts which could not reasonably be maintained" (see Edwards -v- Bairstow [1956] AC 14 at page 29 per Viscount Simonds). Equally "the facts found are such that no person acting judicially and properly instructed as to the relevant law could have come to the determination under appeal" (see Edwards -v- Bairstow at page 36 per Lord Radcliffe).
30. On behalf of Vicky Mr Cousins argued on two levels. The first approached the matter in accordance with what may be described as coventional principles of construction. The second prayed in aid considerations arising from the Human Rights Act 1998, section 3 of which provides that

"So far as it is possible to do so, primary legislation and subordinate legislation must be read and given effect in a way which is compatible with the convention rights."

Section 3(2) makes it clear, that this applies to legislation enacted before the 1998 Act came into effect.

31. So far as conventional principles of construction are concerned, Mr Cousins argued that, in interpreting the statutory provisions, a balance needs to be struck between the need to avoid what he described as "the notorious practice of sub-contractors being paid gross and those never accounting for their tax liabilities" and the need for "honest and reputable businesses to be able to manage their cash flow in such a way that they can survive and compete fairly with other businesses". These considerations required the court to interpret the statutory provisions in a way which treats the compliance conditions imposed by section 565(3) and its ancillary provisions in a proportionate manner. In the absence of any suggestion that other tax liabilities of Vicky have not been settled timeously or that Vicky has otherwise fallen short in respect of its compliance obligations, the admitted failures in respect of the due payment of PAYE tax should be regarded as falling within the words "minor and technical" and as giving rise to no doubts in respect of future compliance.
32. Mr Cousins relied also upon the fact that, since the time that the certificate was refused, Vicky has duly complied with all its tax obligations. He said that this is something which the court could take into account on this appeal, citing in support of this proposition Charles -v- Hugh James Jones & Jenkins [2000] 1 WLR 1278. I was not persuaded by this submission. The authority referred to is far removed from the present case. The question which has to be considered in this appeal is whether, at the time that the Inspector made his decision, he was right to take the view that the requirements of section 565(4) were not satisfied. That can only be done on the basis of the facts which existed when the Inspector made his decision.
33. Mr Cousins also sought to draw what he accepted to be "a somewhat remote analogy" between the present case and Decro-Wall International SA -v- Practitioners in Marketing Ltd [1971] 1 WLR 361. In that case the issue was whether the defendants, who had been consistently late in meeting bills of exchange payable for the plaintiffs' goods, had thereby repudiated a contract. The Court of Appeal held that they had not. What Mr Cousins relied upon was the suggestion of Salmon LJ (at page 369) that the position would have been quite different if the defendants' breaches had been such as "reasonably to shatter the plaintiffs' confidence in the defendants' ability to pay". Mr Cousins suggested that non-compliance should be regarded as falling within section 565(4) unless it was such as to shatter confidence in the likelihood of future compliance.
34. Reference was made to a leaflet (IR 40 (CLS)) published by the Inland Revenue and describing the operation of the scheme relating to subcontractors' tax certificates. This leaflet was before the Commissioners and was referred to in their decision. Appendix 2 to the leaflet deals with minor and technical failures. The purpose of this appendix is to indicate the types of compliance failures that the Revenue would be likely to accept as minor and technical and those it would not.
35. In a passage headed "Payments" which refers to the requirement for PAYE and other deductions to be paid over on a monthly basis it is stated

"Generally we would regard a late payment of these deductions made within seven days of the due date as a minor and technical matter."

Later, as an example of the sort of failure which would not be minor and technical, there is cited the instance where

"PAYE or subcontractors' deductions (other than trivial amounts) are paid more than 14 days late three or more times."

36. The part of leaflet IR 40 which was particularly relied upon by Mr Cousins was Appendix 4 which sets out a statement made in 1975 by the Board of Inland Revenue about their policy on the issue, renewal and withdrawal of subcontractors' tax certificates. Mr Cousins referred me to paragraph 4 of this statement which reads

"4. The circumstances in which the issue or renewal of a certificate will be jeopardised are where the non-compliance has been so substantial, or of such seriousness, that it gives rise to reasonable doubt about the reliability of the business in relation to the way it handles its tax affairs, and therefore to the way in which it is likely to operate the subcontractors' deduction Scheme. Apart from irregularities in connection with the deduction Scheme itself, examples of non-compliance of this order include failure to account for PAYE tax deducted, continued failure to pay the business's own tax once the amount payable has been agreed, deliberate or reckless failure to meet normal obligations (including the submitting of accounts) or to answer enquiries; or the evasion of his or her own tax liability by a person holding a key position in the business such that it gives rise to reasonable expectations that any business in which he or she holds such a position is unlikely to comply with its tax obligations. Before reaching a decision on the issue or renewal of a certificate in these cases, the Inland Revenue will, of course, take into account all the relevant factors, including the degree of involvement of the directors or proprietors as a whole and any extenuating circumstances."

37. Mr Cousins argued that this shows that the Board's own interpretation of the legislation is such that a non-compliance will be regarded as minor and technical unless it is so substantial and serious as to give rise to doubt about the reliability of the business in relation to the way in which it handles its tax affairs.
38. While it is no doubt helpful for the Board to issue a statement as to its practice the Board cannot go against the language of the statute and give the expression "minor and technical" an unnaturally narrow meaning. I do not myself regard the Board as having done this, for the statement reproduced in Appendix 4 to IR 40 must now be read as part of IR 40 as a whole, including the other passages which I have quoted and which indicate that non-compliance in the form of payments which are made more than 14 days late on three or more occasions is not likely to be regarded as minor and technical. It is fair also to observe that the 1975 statement reproduced in Appendix 4 was made well before section 565(8A), emphasising that late payment is non-compliance, was introduced into the legislation. Had there been evidence before the Commissioners that the management of Vicky had read and relied upon Appendix 4 of IR 40 without noticing the earlier statements as to late payment this might have been put forward as some kind of mitigation. But there was no evidence that anyone at Vicky had looked at IR 40 at all.
39. Leaving aside for the moment Mr Cousins' arguments based upon the Human Rights Act I have no doubt that putting myself in the position of the Inspector in July 2001, I would not regard non-compliance on the scale and of the duration of Vicky's non-compliance as "minor and technical". Moreover this non-compliance had begun some months before the serious warning contained in the Inspector's letter of 21st July 2000 was given and had continued ever since with the extent of the lateness increasing rather than diminishing. If the decision which had to be made in July 2001 had been mine I would have considered that this degree of non-compliance gave rise to real doubt whether there would be due compliance in the future. I would therefore have emphatically endorsed the Inspector's decision.
40. I turn therefore to the Human Rights Act arguments. As I have mentioned, Mr Cousins drew my attention to section 3(1) of the Human Rights Act 1998 which requires legislation to be read, so far as possible, in a way which is compatible with convention rights. The result, according to Mr Cousins, is that after 1st October 2000 sections 565(3) and (4) must be read in a manner which results in proportionality between the seriousness of the non-compliance on the one hand and the adverse consequences of refusing a certificate on the other. In the circumstances of this case, he submitted, this would require that Vicky's certificate should be renewed.
41. This argument is dependent upon it being shown that to read the legislation as the Inspector has read it would involve some infringement of Vicky's convention rights. Two such rights were identified by Mr Cousins, the first being that conferred by Article 1 of the First Protocol to the Convention and the second being Article 14 of the Convention.
42. Article 1 of the First Protocol provides

"Article 1

Protection of Property

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 for by law and by the general principles of international 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."

43. The first step in applying this Article must be to identify the "possession" of which Vicky would be deprived by the Inspector's decision. Mr Cousins put forward two candidates, namely (i) the certificate and (ii) the money which, in the absence of a certificate, will be paid by the contractor to the Revenue instead of to Vicky.
44. Mr Cousins cited in support of the proposition that a certificate under section 461 is a "possession" the case of Tre Traktorer Actiebolag -v- Sweden [1989] 13 EHRR 309. This related to the revocation of a licence to serve alcoholic drinks in a restaurant. The European Court of Human Rights held that economic interests connected with the running of the restaurant were possessions. In accordance with this decision I would accept that a subsisting certificate under section 561 is a possession.
45. The present case, however, concerns not the revocation of a subsisting certificate but the refusal to grant a fresh certificate on the expiration of a previous certificate. I find it difficult to see how this involves interference with the peaceful enjoyment of a possession. Mr Cousins argued that it does, because Vicky had a legitimate expectation of being granted a new certificate. Even if this were so I would have difficulty in accepting that such a legitimate expectation is a possession, notwithstanding the inclusion of "a legitimate expectation that a certain state of affairs will apply" among the instances of economic interests protected by Article 1 set out in Lester & Pannick Human Rights Law and Practice, 1st edition, at paragraph 4.19.2. But in my judgment it is not so. Vicky, like any other applicant for a certificate, had no legitimate expectation of anything except that the application would be dealt with justly and in accordance with the law. I do not think that subjective or individual features come into the matter, but if they did Vicky could hardly expect its non-compliance to be overlooked, having regard to the terms of the letter dated 24th July

2001.

46. There are also factors to be taken into account under the third sentence of the Article. I will come back to these.
47. As to the argument based upon the fact that, absent a certificate, the contractor will pay money to the Revenue which otherwise it would pay to Vicky deprives Vicky of a "possession", I would accept that this is the case. Under the general law of contract Vicky would be entitled to receive from the contractor the full contract price at the time and in the manner provided by the contract without any deduction being made by the contractor in respect of the tax for which Vicky is accountable. Vicky's contractual right to receive such payment, and the money paid when received, are Vicky's property and thus "possessions". When there is no section 561 certificate the effect of section 559(4) is to interfere with this.
48. However Article 1 does not prohibit everything which deprives a person of his possessions. In particular the third sentence shows that the earlier possessions do not impair the right of a state to enforce such laws as it deems necessary (inter alia) to secure the payment of taxes. It cannot, I think, be disputed that the whole purpose of chapter IV of part XIII of the Taxes Act 1988 is to secure the payment of taxes by sub contractors in the construction industry and their employees.
49. This is not necessarily the end of the matter since an interference with property, even for securing the payment of taxes, is justified only if it strikes a proper balance between the demands of the general interest of the community and the requirements of the protection of the individual's fundamental rights (see National & Provincial Building Society -v- United Kingdom, 25 EHRR at page 127; Aston Cantlow PCC -v- Wallbank [2002] Ch 51, para 44; Lester & Pannick para 4.19.15). It is clear, however, that in a matter of this kind each state enjoys a wide margin of appreciation. It cannot, in my judgment, be said that the provisions of section 565 (3), (4), (8) and (8A) are arbitrary or excessive having regard to the fact that their purpose is, in Mr Cousin's words,

"to avoid the notorious practice of sub-contractors being paid gross and then never accounting for their tax liabilities."

50. I do not, therefore, accept that the interference with a sub-contractor's contractual rights which results from Chapter IV of Part XIII is arbitrary or disproportionate. If, contrary to this view I have expressed earlier, the refusal to issue or renew a certificate by reason of the failure to satisfy the requirements of section 565(3) is an interference with property or possessions, I would take the same view of that interference.
51. I turn to the alternative human rights argument based upon Article 14. Mr Cousins correctly recognised on behalf of Vicky that Article 14 gives a right to enjoyment of convention rights without discrimination, not a general right to non-discrimination. The requisite convention right is to be found, he submitted, in Article 1 of the First Protocol. For present purposes I assume that this is the case, although the factors I have already mentioned qualify that view so far as the certificate is relied upon as the relevant "possession".
52. Where the argument under Article 14 breaks down, in my view, is that no relevant discrimination is established. Mr Cousins submitted that without a certificate Vicky would be at a significant disadvantage vis-à-vis its competitors. I do not doubt that this is the case. But the comparison which needs to be made in order to establish whether or not there has been discrimination is not a comparison between Vicky and its competitors generally but a comparison between Vicky and those of its competitors who have been guilty of a similar degree of non-compliance. There was no evidence of any difference in the treatment of such parties in respect of the issue on renewal of certificates.
53. Accordingly I see no need to read the provisions of Chapter IV of Part XIII in a modified sense in order to avoid an infringement of the convention rights of a sub-contractor such as Vicky.
54. I am left, therefore, with the fact that the General Commissioners have found that Vicky's non-compliance was minor and technical when, on the same primary facts, the Inspector took the opposite view and I myself would do so too if that course is open to me. The question is whether, the matter not being exclusively a matter of law, I am at liberty to substitute my own view for that of the Commissioners, having regard to the principles stated in Edwards -v- Bairstow.
55. While this is not an easy matter I have come to the conclusion that I can and should do so. In the passage from his speech in Edwards -v- Bairstow which has become so well known, Lord Radcliffe said ([1956] AC at page 36):

"If the case contains anything ex facie which is bad law and which bears upon the determination, it is, obviously, erroneous in point of law. But, without any such misconception appearing ex facie, it may be that the facts found are such that no person acting judicially and properly instructed as to the relevant law could have come to the determination under appeal. In those circumstances, too, the court must intervene. It has no option but to assume that there has been some misconception of the law and that this has been responsible for the determination. So there, too, there has been error in point of law. I do not think that it much matters whether the state of affairs is described as one in which there is no evidence to support the determination or as one in which the evidence is inconsistent with and contradictory of the determination, or as one in which the true and only reasonable conclusion contradicts the determination. Rightly understood, each phrase propounds the same test."

In my judgment this is a case in which the true and only reasonable conclusion from facts which are not themselves in dispute is one which contradicts the determination made by the General Commissioners.

56. This conclusion, based upon the words in section 565(4) which refer to the failure being minor and technical, is sufficient to determine this appeal in favour of the Revenue. I would, if it were necessary, reach a similar conclusion in respect of the absence of doubt that the conditions mentioned in section 565(8) will be satisfied. These conditions, particularly read in conjunction with section 565(8A), are stringent. I consider that in finding that "there are no grounds to question the general tax reliability" of Vicky the Commissioners did not really address the point raised by the last part of section 565(4). I think that this failure constitutes an error of law which entitles me to give effect to my own view. If this is going too far, then I find that the true and only reasonable conclusion on this point is one which contradicts the view of the General assume the reliability of the General Commissioners that (looking at the matter as at 21st July 2001, as I assume the Commissioners did) there were no grounds to question the general tax reliability of Vicky.
57. I therefore allow this appeal and set aside the determination of the General Commissioners. I apprehend that this decision does not affect the certificate which Vicky now holds. Any claim that this certificate should be revoked would raise new and separate issues on which I express no view.