England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		09/02/2006

MR. JUSTICE ETHERTON:

Introduction

1. This is an appeal by the taxpayer, Harvard Martin Sharkey, from the decision of the Special Commissioner, Mr. Theodore Wallace, on 26^th January 2005 ("the Decision") dismissing the Appellant's appeal against a fixed penalty of £50 under section 97AA(1)(a) of the Taxes Management Act 1970 ("TMA").
2. The penalty was imposed for failing to comply with a notice served under TMA s.19A requiring the Appellant to produce specified documents and information for the purposes of an enquiry into his 2001 tax return.
3. It was common ground before the Special Commissioner that the Appellant did not appeal against the notice and he did not comply with it.
4. It was also common ground that on 24^th March 2003 the Revenue appropriated £50 of a payment of £654.21 in satisfaction of the penalty.
5. Very broadly, the Appellant complains that the imposition of the penalty and matters connected with it have breached his rights under the European Convention on Human Rights, particularly Article 6.

Proceedings before the Special Commissioner

6. The Appellant's contentions before the Special Commissioner were that the enquiry, the imposition of the penalty under TMA s.97AA(1)(a) and the threat of further penalties of £150 daily under TMA s.97AA(2)(b) until compliance involved criminal charges within Article 6; but his inability to obtain Criminal Defence Service funding for professional representation, and the unilateral collection of the penalty, in the absence of a fair and public hearing within a reasonable time by an independent and impartial tribunal, were contrary to his rights under Article 6; further, the nature of the enquiry and the role of the Tax Inspector brought the activities of the Inspector within the Codes of Practice issued under the Police and Criminal Evidence Act 1984 ("PACE"), but there was a failure by the Inspector to comply with such Codes. In addition, the Appellant submitted that the imposition of the penalty for failure to provide information was in breach of Article 6.1 as a violation of the right not to incriminate oneself.
7. The Special Commissioner rejected all those complaints. He held that the fixed penalty of £50 under TMA s.97AA(1)(a) is not a criminal charge within Article 6. Accordingly, the inability of the Appellant to obtain Criminal Defence Service funding was irrelevant. The Special Commissioner found that there was no evidence that any prosecution was being considered or any penalties involving criminal proceedings within Article 6.1 were contemplated by the Revenue at the time of the enquiry and the imposition of the penalty, and, accordingly, there had been no infringement of any right to silence and not to incriminate oneself under Article 6.1.

The appeal

8. In the Appellant's skeleton argument and in the oral submissions made on his behalf, it was submitted very broadly that the Special Commissioner was wrong in law in his conclusions that: the £50 penalty on the Appellant under TMA s.97AA(1)(a) was not a criminal charge within Article 6; the inability of the Appellant to obtain funding assistance for the present proceedings was irrelevant; there had been no breach of his right to remain silent and not to incriminate himself under Article 6; and the provisions of PACE and the Codes issued under it were irrelevant.
9. In addition, the Appellant maintained that the Special Commissioner showed bias against the Appellant.
10. As was the case before the Special Commissioner, the Appellant appeared in person. He requested that he be represented, as he had been before the Special Commissioner, by his father, Terence John Sharkey ("Mr. Sharkey"). There was no objection to that application by the Respondents, Her Majesty's Revenue & Customs ("HMRC"). Although Mr. Sharkey has no legal qualifications or training, I granted permission for Mr. Sharkey to act as the Appellant's advocate in view of the exceptional circumstances that Mr. Sharkey acted in a similar capacity before the Special Commissioner, was responsible for drafting the Notice of Appeal and wrote the extensive skeleton argument for the Appellant on this appeal.
11. Mr. Tim Ward, counsel, appeared for HMRC.

Article 6

12. Article 6 is as follows:

"1. In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law. Judgment shall be pronounced publicly but the press and public may be excluded from all or part of the trial in the interest of morals, public order or national security in a democratic society, where the interests of juveniles or the protection of the private life of the parties so require, or to the extent strictly necessary in the opinion of the court in special circumstances where publicity would prejudice the interests of justice.

2. Everyone charged with a criminal offence shall be presumed innocent until proved guilty according to law.

3. Everyone charged with a criminal offence has the following minimum rights:

(a) to be informed promptly, in a language which he understands and in detail, of the nature and cause of the accusation against him;

(b) to have adequate time and facilities for the preparation of his defence;

(c) to defend himself in person or through legal assistance of his own choosing or, if he has not sufficient means to pay for legal assistance, to be given it free when the interests of justice so require;

(d) to examine or have examined witnesses against him and to obtain the attendance and examination of witnesses on his behalf under the same conditions as witnesses against him;

(e) to have the free assistance of an interpreter if he cannot understand or speak the language used in court."

Criminal Charge?

13. At the core of the appeal is the Appellant's contention that the Special Commissioner erred in law in holding that the £50 penalty under TMA s.97AA(1)(a) is not a criminal charge within Article 6.
14. It is convenient to refer, first, to TMA s.19A which, so far as relevant, is as follows:

"19A Power to call for documents for purposes of certain enquiries

(1) This section applies where an officer of the Board gives notice of enquiry under section 9A(1) or 12AC(1) of this Act to a person ('the taxpayer').

(2) For the purpose of the enquiry, the officer may at the same or any subsequent time by notice in writing require the taxpayer, within such time (which 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 and as the officer may reasonably require for the purpose of determining whether and, if so, the extent to which --

(i) the return is incorrect or incomplete, or

(ii) in the case of an enquiry which is limited under section 9A(5) or 12AC(5) of this Act, the amendment to which the enquiry relates is incorrect, and

(b) to furnish the officer with such accounts or particulars as he may reasonably require for that purpose."

15. TMA, s.97AA is, so far as relevant, as follows:

"97AA Failure to produce documents under section 19A"

(1) Where a person fails to comply with a notice or requirement under section 19A(2) …. of this Act .…, he shall be liable, subject to subsection (4) below –

(a) to a penalty which shall be £50, and

(b) if the failure continues after a penalty is imposed under paragraph (a) above, to a further penalty or penalties not exceeding the relevant amount for each day on which the failure continues after the day on which the penalty under that paragraph was imposed (but excluding any day for which a penalty under this paragraph has already been imposed)

(2) in subsection (1)(b) above 'the relevant amount' means –

(a) in the case of a determination of a penalty by an officer of the Board under section 100 of this Act, £30;

(b) in the case of a determination of a penalty by the Commissioners under section 100C of this Act, £150.

(3) An officer of the Board authorised by the Board for the purposes of section 100C of this Act may commence proceedings under that section for any penalty under subsection (1)(b) above, notwithstanding that it is not a penalty to which subsection (1) of section 100 of this Act does not apply by virtue of subsection (2) of that section.

(4) No penalty shall be imposed under subsection (1) above in respect of a failure within that subsection at any time after the failure has been remedied."

16. TMA s.100 is, so far as relevant, as follows:

"100 Determination of penalties by officer of Board"

(1) Subject to subsection (2) below and except where proceedings for a penalty have been instituted under section 100D below an officer of the Board authorised by the Board for the purposes of this section may make a determination imposing a penalty under any provision of the Taxes Acts and setting it at such amount as, in his opinion, is correct or appropriate.

….

(3) Notice of a determination of a penalty under this section shall be served on the person liable to the penalty and shall state the date on which it is issued and the time within which an appeal against the determination may be made.

(4) After the notice of a determination under this section has been served the determination shall not be altered except in accordance with this section or on appeal.

(5) If it is discovered by an officer of the Board authorised by the Board for the purposes of this section that the amount of a penalty determined under this section is or has become insufficient the officer may make a determination in a further amount so that the penalty is set at the amount which, in his opinion, is correct or appropriate."

17. It is common ground between the parties that the term "criminal charge" has an autonomous meaning under the Convention. In Engel v. The Netherlands (No. 1) (1976) 1 EHRR 647, at 678 to 679, para. 82, the European Court of Human Rights ("the European Court") established three criteria for determining whether proceedings are "criminal" within the meaning of the Convention, namely, (a) the classification of the offence under national law, (b) the nature of the offence, and (c) the severity of the penalty that the person concerned risked incurring: see also Han v. Customs & Excise Commissioners [2001] 1 WLR 253 at para. [61] citing AP, MP and TP v. Switzerland (1997) 26 EHRR 541, at page 558 para. 39.
18. As to the first of those criteria, the s.97AA(1)(a) £50 fixed penalty is part of the civil law as a matter of domestic classification.
19. The Appellant contends, however, that the application of the second and third Engel criteria lead to the conclusion that the £50 fixed penalty imposed on the Appellant was a criminal charge within Article 6. In that connection the Appellant emphasises the following features.
20. He emphasises the factual background to the imposition of the penalty, and maintains that it is apparent that the information which the Inspector, Ms. Sarah Dalton, sought from him was not a random enquiry but one which was specifically targeted at him as a consequence of an earlier interview with another taxpayer, his fiancée, Ms. J. Bardsley. In short, he maintains that he had become the subject of a Revenue enquiry possibly before, but certainly following, the interview of another taxpayer.
21. In this connection he relied upon the following facts. On 16^th April 2002 an interview took place between Ms. Bardsley and Ms. Dalton. The meeting was an enquiry into Ms. Bardsley's tax affairs. It appears, from written minutes of the meeting prepared by the Revenue that, during the course of the interview, there was a discussion about the purchase of a property by Ms. Bardsley with the Appellant. There was a reference by Ms. Bardsley to occasional financial help by the Appellant and to the Appellant's contribution towards a mortgage on the property. There was also reference to the address at which the Appellant was living during the relevant period.
22. Following that interview, on 30^th September 2002 Ms. Dalton issued a notice of enquiry into the Appellant's tax return and requested documents and information for the purposes of her enquiry.
23. The Appellant maintains that correspondence from the Revenue, in particular a letter from Ms. Dalton of 26^th August 2003, indicated that, whilst the Revenue was not claiming that the enquiry was random, nor was it resisting an interpretation that its enquiry was specifically targeted at him.
24. Mr. Sharkey submitted that even small penalties have been found to be criminal for Article 6 purposes: see Lauko v. Slovakia 4/1998/907/1119 2^nd September 1998.
25. Further, and in any event, the Appellant submits that the penalty, viewed in the context of further daily fines of up to £150 per day under TMA s.97AA(2) for non-compliance, is a substantial and punitive penalty intended to punish and deter.
26. Mr. Sharkey referred me to the terms of a letter of 20^th December 2002 sent by Ms. Dalton to the Appellant referring to the failure to comply with the s.19A notice, and especially the following part of that letter:

"The time limit has now passed and you have failed to produce the information. A copy of the notice is attached. Please produce all the required information within the next 14 days. If you cannot do this, please contact me now to explain your difficulty.

The law allows penalties to be charged for a failure to comply with this notice. This letter is a final warning. If I do not receive the information within the next 14 days, I will issue a formal notice to you charging an initial fixed penalty of £50. If the failure continues after that, you can be charged further penalties of up to £150 a day for each day on which the failure to comply with the notice continues".

27. Mr. Sharkey referred me to, and relied particularly upon, the decision and judgment of the Court of Appeal in Han (Potter and Mance LJJ, Sir Martin North dissenting). That was a case in which taxpayers brought appeals against the imposition by the Commissioners of Customs & Excise of civil penalties for dishonest evasion of VAT under s 60(1) of the Value Added Tax Act 1994 and under s 8(1) of the Finance Act 1994. The Court of Appeal, dismissing the appeal from the VAT and Duties Tribunal on a preliminary issue, held that the penalties were criminal charges within Article 6 and, accordingly, the taxpayers were entitled to the minimum rights specified in Article 6.3.
28. Mr. Sharkey referred particularly to the following passage in AP, MP & TP v. Switzerland, cited in paragraph [61] of the judgment of Potter LJ (with whom Mance LJ agreed) in Han:

"41. As regards the nature of the offence, it is noted that tax legislation lays down certain requirements to which it attaches penalties in the event of non-compliance. The penalties, which in the present case take the form of fines, are not intended as pecuniary compensation for damage but are essentially punitive and deterrent in nature."

29. Mr. Sharkey also relied upon certain features of the penalties in Han which were conceded by counsel for the Commissioners, and which were features which the European Court has held to militate in favour of a finding that a penal measure is criminal in nature: namely, that the s.60 provisions should be regarded as applying in principle to all citizens as taxpayers and not to a restricted group; and the function of the penalties was not to compensate Customs & Excise but to punish and deter.
30. He also relied upon the statement of Potter LJ in paragraph [98] of Han that in the area of tax evasion, at least, the weight of authority of the European Court is that for the purposes of a "criminal" charge it is not necessary to demonstrate that the penalty to which the taxpayer is subject involves or may involve imprisonment. It is sufficient that it is substantial and its purpose is punitive and deterrent. The majority of the Court of Appeal considered that those requirements were made out by the taxpayers in that case.
31. Mr. Sharkey also emphasised that the Revenue reserves its right to use information acquired pursuant to a notice under TMA s.19A in subsequent criminal proceedings.
32. Attractively as Mr. Sharkey presented this aspect of the appeal, I have no hesitation in rejecting it.
33. I agree with Mr. Sharkey that, as the authorities clearly show, the first Engel criterion, namely the classification of the allegation in domestic law, is no more than a starting point and is not decisive of the criminal or civil nature of the allegation for the purposes of Article 6.
34. If, as in the present case, the allegation, claim or penalty is classified as civil under domestic law, the court determines whether it is, none the less, criminal in character for the purposes of Article 6 by proceeding to the second and third Engel criteria, namely the nature of the offence and the severity of the penalty which it invokes.
35. The penalties under s.97AA for failure to produce documents under s.19A do not depend upon some dishonest or criminal conduct on the part of the taxpayer, or even a belief or mere suspicion by the Revenue of any such dishonest or criminal conduct. They are wholly independent of any prosecution, or intended prosecution or enquiry into dishonest or criminal conduct.
36. In the present case, the Special Commissioner concluded, on the facts, that there was no evidence that any prosecution was being considered or that any penalties involving criminal proceedings within Article 6.1 were contemplated. That finding cannot be challenged on the appeal before me: cf.  JB v. Switzerland 3^rd May 2001; Funke v. France (1993) 16 EHRR 297.
37. Further, I accept the submission of Mr. Ward that the function of the £50 fixed penalty under TMA s.97AA is not merely punishment and deterrence. He accepts that there is an element of punishment, but he submits, and I agree, that the primary objective of the £50 fixed penalty is to procure the production of the documents requested by the Revenue: cf. Lauko v. Slovakia, Han, and Szott-Medynska v. Poland 9^th October 2003. Mr. Ward points out, for example, that TMA s.97AA(4) expressly provides that no penalty shall be imposed under s.97AA(1), in respect of a failure within that subsection, at any time after the failure has been remedied.
38. I also accept Mr. Ward's submission that the fixed £50 penalty under s.97AA(1) is to be treated, for the purpose of the analysis which I am presently conducting in respect of Article 6.1, as quite separate from the daily penalty which can be imposed under TMA s.97AA(1)(b) and (2) and s.100 if the taxpayer continues to fail to provide the requisite documents. Whether that additional daily penalty is imposed by an officer of the Board under s.97AA(2)(a) or by the Commissioners under 97AA(2)(b), the decision to impose the further penalty rests upon a new and independent exercise of the Revenue's powers in the light of the particular circumstances then existing. The mere fact of continuation of failure to comply will not lead, inevitably, to the imposition of the further daily penalty. In the present case, for example, no such additional daily penalty has been imposed on the Appellant, notwithstanding his failure to comply with the s.19A notice.
39. Accordingly, the penalty under consideration in the present case is a very modest one (cf. WS v. Poland 15^th June 1999), which may be imposed in circumstances in which, as the Special Commissioner found in the present case, there is no enquiry into any criminal conduct on the part of the taxpayer but, rather, is imposed as the administrative means of securing the production of documents in connection with the taxpayer's tax return. In this respect, it is to be distinguished on the facts from the various cases relied upon by the Appellant.
40. I agree with Mr. Ward that a closer parallel to the present case than the authorities relied upon by the Appellant is the decision in Smith v. United Kingdom 29^th November 1995, which the Special Commissioner mentions in paragraph 14 of his decision. In that case the European Commission considered a 10 per cent surcharge imposed automatically where an application for a summary warrant was made following non-payment of the community charge. The Commission concluded that the surcharge did not give rise to a criminal charge within Article 6. The Commission said that:

"The surcharge was not imposed for anything which is assimilable to the concept of 'wilful refusal or culpable neglect' …. or to the concept of 'displaying bad faith'. "

41. While it is correct, as Mr. Sharkey observed, that the European Court has held that in appropriate circumstances even a very modest penalty may constitute a criminal charge within Article 6.1, those were all cases in which some additional feature, such as a criminal enquiry or prosecution or the sanction of imprisonment if the penalty was not paid, coloured the nature of the penalty. None of those particular features arises in the present case.
42. For the sake of completeness, it should be noted that it is not a ground of appeal that the imposition of the £50 fixed penalty on the Appellant involved "the determination of his civil rights" within Article 6.1.
43. In Ferrazzini v. Italy 12^th July 2001, the Grand Chamber of the European Court, reviewing its longstanding case law to the effect that tax disputes fall outside the scope of "civil rights and obligations" for the purposes of Article 6.1, concluded that its existing approach should be upheld: see para. 29 of the decision. Notwithstanding the dissenting opinion of six of the judges and academic debate about the decision, the proper course would be for me to follow the decision of the majority: see R (Ullah) v. Secretary of State [2004] UKHL 26, [2004] 2 AC 323 at para. [20] (Lord Bingham of Cornhill).

Self-incrimination

44. The imposition of the £50 fixed penalty on the Appellant not being a criminal charge within Article 6.1, there is no scope for any complaint by the Appellant that his privilege to remain silent and not to incriminate himself was infringed in the present case.
45. In Shannon v. United Kingdom 4^th October 2005, the European Court explained that there are two types of case in which it has been found that the right to silence and the privilege against self-incrimination has been violated.

"42. First, there are cases relating to the use of compulsion for the purpose of obtaining information which might incriminate the person concerned in pending or anticipated criminal proceedings against him, or -- in other words -- in respect of an offence with which that person has been 'charged' within the autonomous meaning of Article 6.1 ….

43. Second, there are cases concerning the use of incriminating information compulsorily obtained outside the context of criminal proceedings in a subsequent criminal prosecution ….".

46. As the European Court emphasised in that case, and as was further explained by the European Court in Allen v. United Kingdom 10^th September 2005, the privilege against self-incrimination does not, in itself, prohibit the use of compulsory powers to obtain information outside the context of criminal proceedings. In Shannon, the following paragraphs of the decision in Weh v. Austria, no. 38544/97 8 April 2004 were quoted:

"44. However, it also follows from the Court's case law that the privilege against self-incrimination does not per se prohibit the use of compulsory powers to obtain information outside the context of criminal proceedings against the person concerned.

45. For instance, it has not been suggested in Saunders that the procedure whereby the applicant was requested to answer questions on his company and financial affairs, with a possible penalty of up to two years' imprisonment, in itself raised an issue under Article 6.1. (Saunders, ibid; see also IJL and Others …. para. 100). Moreover, in a recent case the Court found that a requirement to make a declaration of assets to the tax authorities did not disclose any issue under Article 6.1, although a penalty was attached to a failure to comply and the applicant was actually fined for making a false declaration. The Court noted that there were no pending or anticipated criminal proceedings against the applicant and the fact that he may have lied in order to prevent the revenue authorities from uncovering conduct which might possibly lead to a prosecution did not suffice to bring the privilege against self-incrimination into play (see Allen v. The United Kingdom ….) Indeed, obligations to inform the authorities are a common feature of the Contracting States' legal orders and may concern a wide range of issues (see for instance, as to the obligation to reveal one's identity to the police in certain situations, Vasileva v. Denmark, no. 52792/99, para. 34, 25^th September 2003). "

47. In Allen v. United Kingdom the European Court said:

"The right not to incriminate oneself is primarily concerned …. with respecting the will of an accused person to remain silent in the context of criminal proceedings and the use made of compulsorily obtained information in criminal prosecutions. It does not per se prohibit the use of compulsory powers to require persons to provide information about their financial or company affairs (see the above mentioned Saunders judgment, where the procedure whereby the applicant was required to answer the questions of the Department of Trade Inspectors was not in issue). In the present case, therefore, the Court finds that the requirement on the applicant to make a declaration of his assets to the Inland Revenue does not disclose any issue under Article 6.1 even though a penalty was attached to a failure to do so. The obligation to make a disclosure of income and capital for the purposes of the calculation and assessment of tax is, indeed, a common feature of the taxation systems of contracting States and it would be difficult to envisage them functioning effectively without it.

The Court notes that in this case the applicant does not complain that the information about his assets which he gave the Inland Revenue was used against him in the sense that it incriminated him in the commission of an offence due to acts or omissions in which he had been involved prior to that moment. His situation may therefore be distinguished from that of the applicant in Saunders (judgment cited above). Nor was he prosecuted for failing to provide information which might incriminate him in pending or anticipated proceedings as in the cases of Funke, Heaney and McGuinness and JB ….".

48. That approach was followed by Moses J in R (Murat) v. Inland Revenue Commissoners [2004] EWHC 3123, [2005] STC 184 in which the applicant appealed against the imposition of penalties under TMA s.97AA(1)(a) and (1)(b) for refusing to provide information pursuant to a s.19A notice. Moses J rejected an argument that the requirement to provide the information breached the privilege against self-incrimination. He said, at para. [7]:

"… there is no question of self-incrimination. The purpose of requiring him to produce the balance sheet is not for the purpose 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 liability can be reached."

49. The present case does not fall within either of the two types of case specified in paragraphs 42 and 43 of Shannon; at the time of the s.19A notice and of the imposition of the £50 fixed penalty on the Appellant, no criminal proceedings were pending or anticipated and none have been brought by the Revenue. The imposition of the £50 fixed penalty in the present case is, as the European Court indicated in Allen and as was found by Moses J in Murat, merely a proportionate and legitimate measure by the State to achieve the calculation and assessment of the Appellant's tax.

PACE

50. S 66(1)(b) of PACE provides for the issue of Codes of Practice in connection with "the detention, treatment, questioning and identification of persons by Police Officers".
51. S 67(9) of PACE provides that:

" Persons other than police officers who are charged with the duty of investigating offences or charging offenders shall in the discharge of that duty have regard to any relevant provision of …. a code."

52. The Appellant says that the Inspector, Ms. Dalton, was a person within s 67(9) of PACE, but she failed to comply with the provisions of Code C issued under PACE. That Code is a "Code of Practice for the detention, treatment and questioning of persons by police officers." At paragraph 10.1 of that Code, there is provision for a caution to be given to the suspect.
53. The Appellant claims that, in view of the nature of, and background to, Ms. Dalton's enquiry, she was a person "charged with the duty of investigating offences or charging offenders" within s 67(9) and that the failure to caution the Appellant was a breach of paragraph 10 of Code C.
54. This claim of the Appellant cannot succeed in the light of the findings of the Special Commissioner that there was no evidence that prosecution or evasion penalties were under consideration or that the Revenue was in possession of information indicating that the Appellant's tax return was incorrect: paragraphs [31] and [36] of the Decision; and cf. R. v. Gill [2003] EWCA 2256.

Absence of Funding

55. The Appellant contended before the Special Commissioner that his inability to obtain Criminal Defence Service funding for professional representation was a breach of his rights under Article 6. Having found that neither the fixed penalty under s.97AA(1)(a) nor the possible penalties under s.97AA(1)(b) were criminal charges within Article 6, the Special Commissioner concluded, in paragraph [23] of his Decision, that "the matter of non-availability of Defence Service funding does not arise even if within the tribunal's jurisdiction, which it is not. "
56. In his skeleton argument for the appeal from the Special Commissioner, the Appellant submitted that the Special Commissioner had acted incorrectly in failing to appreciate that civil funding might have been available (as indeed is the case) and that the Appellant, as a litigant in person, was unaware of the availability of civil funding.
57. In his oral submissions, Mr. Sharkey sought to elaborate on the circumstances in which the Appellant had made enquiries for obtaining legal aid. At least some of the factual matters to which he referred had not been placed before the Special Commissioner. Furthermore, the Appellant's Notice of Appeal in this case contains no reference to any ground of appeal based upon the issue of the availability of legal aid.
58. In all the circumstances, the Appellant is not permitted to raise at this stage a new ground of appeal on that issue. Apart from other considerations, it would be unfair to HMRC to permit him to do so without, first, the further evidence being set out clearly in writing and, second, giving HMRC an opportunity to make enquiries in relation to that further evidence and to procure evidence in rebuttal.

Bias

59. In his grounds of appeal in his Notice of Appeal the Appellant says that "the Commissioner's question to the Appellant 'But they would not be able to collect taxes, would they?' erred in that it showed a pre-disposition and was not relevant to the proceedings".
60. This ground of appeal is quite hopeless. The observation or question of the Special Commissioner was perfectly legitimate. It was no more than a reflection of, and an invitation for the Appellant to comment upon, the same concern or train of reasoning as was mentioned by the European Court in Allen in the passage which I have quoted earlier in this judgment.

Other Matters

61. In the Appellant's skeleton argument on this appeal he refers to the complaint made by the Appellant to the Special Commissioner that:

"the difference in procedure between enquiries by the Special Compliance Office and by local tax offices was discriminatory in that it applied different investigation procedures, (with markedly different protections for those interviewed and called-upon to co-operate). This notwithstanding the fact that all taxpayers were potentially liable to the same penalties and all the investigations had potentially the same sanctions. The Revenue would decide at what stage in its enquiry it would adopt each method. One method is considered by HMRC to be a civil procedure, the other is deemed a criminal procedure and persons undergoing it are accorded rights under PACE."

62. This point was not pursued before me as a separate line of complaint. I understand it is merely part of the Appellant's contention that the £50 fixed penalty was a criminal charge against the Appellant. I have already dealt with that aspect of the appeal.

Decision

63. For all those reasons, I dismiss this appeal.

MR. WARD: My Lord, the Revenue seeks its costs or at least a portion of them. I hand up a summary assessment which will, at least, explain to your Lordship what it is that is being sought. (Same handed)

MR. JUSTICE ETHERTON: This is unusual. You want a summary assessment, notwithstanding it was an appeal which lasted a day. Is that right? I know it was only estimated for half a day. It actually went on for a day.

MR. WARD: Yes. We are seeking summary assessment, nevertheless.

MR. JUSTICE ETHERTON: Right.

MR. WARD: Whilst the sum sought is, I understand, sufficient for this relatively modest form, it will be much more efficient and preferable if your Lordship would make an order, if your Lordship thought it appropriate, today.

MR. JUSTICE ETHERTON: Yes.

MR. WARD: May I just take your Lordship briefly through it?

MR. JUSTICE ETHERTON: Yes.

MR. WARD: And explain, as much as anything, what is not on this schedule of costs.

MR. JUSTICE ETHERTON: Can I ask, first of all, has this schedule been given to the Appellant?

MR. JUSTICE ETHERTON: How long ago was it given?

MR. WARD: On the 6^th.

MR. JUSTICE ETHERTON: Thank you.

MR. WARD: Again, your Lordship will see the total over the page.

MR. JUSTICE ETHERTON: Yes.

MR. WARD: And, if I may, I will explain what it does not include. It does not include any hearing costs except for the estimated costs of the half-day hearing; so not today and not yesterday. My solicitors have also substantially reduced the hours in two respects. If your Lordship looks at the front page and to the third paragraph which is "Attendances on opponents" there is an item "2 hours work at £200 an hour" which was for reviewing the Appellant's skeleton and the like. Apparently the time spent was in fact four hours.

MR. JUSTICE ETHERTON: Yes.

MR. WARD: There is then an item for attendances on counsel which shows six hours at £200. In fact, the correct amount of time recorded was 22 hours.

MR. JUSTICE ETHERTON: Goodness!

MR. WARD: Which, of course, sounds a very great deal. The reason for that is that very good, detailed instructions on the law were handed to me. So it was not a case where the papers came with "Herewith. Please advise and represent as counsel thinks fit". My solicitors were good enough to provide a very, very extensive analysis of the authorities that your Lordship has seen, which undoubtedly saved me a great deal of time. Nevertheless, that amount has been reduced to six hours.

The other item for which no charge has been included is preparing the bundles of authorities. There was co-operation with Mr. Sharkey but, recognising he was unrepresented, my solicitors in fact shouldered the burden of putting that bundle together for the court and for the parties.

MR. JUSTICE ETHERTON: Yes. Thank you very much.

MR. WARD: Unless I can assist further, that is the submission.

MR. JUSTICE ETHERTON: Mr. Sharkey, you are still representing, as I understand it, your son. Is that right?

MR. SHARKEY: Yes, my Lord.

MR. JUSTICE ETHERTON: There we are. What do you have to say about this bill? First of all, in principle, the appeal has been lost and, in principle, the Revenue claim their costs. Can you oppose that in principle?

MR. SHARKEY: I understand that, my Lord. This was shown to me two days ago. I have just a brief note, if I may look at it.

MR. JUSTICE ETHERTON: Of course.

MR. SHARKEY: (Pause) The Appellant, who apologises that he is not here, at the time was ----

MR. JUSTICE ETHERTON: Yes, I am sorry you did not get very much notice.

MR. SHARKEY: The Appellant respectfully wishes to observe that, as the law stands, he is aware that, as a litigant in person, any costs that he might claim, had the judgment been different, would be insignificant, my Lord. Of necessity, his costs were very contained indeed. The professional opponents had no such constraints. I hear what is said about the length of the proceedings, which was unexpected. I had understood it was two hours which was why I carefully timed my address to your Lordship to about half of that. That seemed equal.

It is, of course, in your Lordship's hands, and I would ask your Lordship to consider that.

My final point, again pleading an unawareness and lack of procedure here, would the Appellant be allowed a couple of days to get some sort of legal advice on these costs or is that not an option?

MR. JUSTICE ETHERTON: No, not now. You have been given notice of it and I am afraid if you wanted to seek advice you should have sought it before today.

I take the view that the total amount of the costs here is not disproportionate to the matters which have been argued before me and, having heard Mr. Ward on instructions as to certain reductions in what would otherwise have been costed time in relation to this matter, I take the view that the proper assessment for costs is, indeed, to assess them at the figure of £4,488.91.

How long do you want to pay that? Normally, it is 14 days.

MR. SHARKEY: My Lord, I understand the 14 days. I have no instruction from the Appellant in this matter. I will relate it to him, my Lord. I am sorry, I cannot say more than that. Clearly, it is an order from the court and he will have to pay it. Am I being too vague, my Lord?

MR. JUSTICE ETHERTON: No, not at all. It seems to me, in the circumstances, that we should allow a little bit longer.

MR. WARD: Yes, my Lord. I was about to say ----

MR. JUSTICE ETHERTON: Twenty-eight days?

MR. WARD: ---- 28 days.

MR. JUSTICE ETHERTON: Normally it is 14 days. We will allow 28 days.

MR. SHARKEY: Thank you, my Lord.

MR. JUSTICE ETHERTON: Just one moment. I ought to make it clear that, notwithstanding what has been said on behalf of the Appellant by Mr. Sharkey, I take the view that costs should follow the event in the usual way in this case. The respondent has had to incur costs and expense in fighting the appeal and I see no reason why, in the particular circumstances of this case, notwithstanding, as in so many of the cases before us, the Appellant is a litigant in person, those costs should go without repayment.

I, therefore, do award costs against the Appellant, summarily assessed in the sum of £4,488.91 to be paid within 28 days.

Did you want to say anything further?

MR. SHARKEY: No, my Lord. If that is your Lordship's decision, there is not, I feel, much purpose in saying anything about the Appellant's circumstances.

MR. JUSTICE ETHERTON: You can say whatever you wish. I do not want to stop you saying anything that you feel is appropriate.

MR. SHARKEY: My Lord, I will be very brief – a few lines. The Appellant's income is low, and the Revenue will know this from his tax return. It is about £5,000 a year. As a consultant, his business is crumbling. He is recently divorced and has two twin boys whom he looks after daily.

My Lord has been patient and that is all I wanted to say.

MR. JUSTICE ETHERTON: I hear all that. As a matter of principle, the costs must be paid. As I said, we can make some allowance for time. We have made the allowance of time, the 28 days. Any further extension which is sought will have to be sought, it seems to me, from the Revenue direct. Doubtless, they will take into account all the circumstances. I am afraid it is not often appreciated that appealing to this court does involve a degree of risk as to costs. I am afraid that is part of the process. Very well.

MR. SHARKEY: Thank you, my Lord.

MR. JUSTICE ETHERTON: For better or worse, I have given the judgment quite speedily after the submissions here. It seemed to me appropriate to do so in all the circumstances, having formed a clear view and so that everybody knows where they stand.

I have to ask you whether, in the circumstances, there were any obvious errors of fact for the purpose of the transcript.

MR. WARD: Not that we observed, my Lord.

MR. JUSTICE ETHERTON: Very well. I would like to thank you both very much for your submissions. I would like to thank you, Mr. Sharkey, for the way in which you conducted your submissions on behalf of the Appellant. Obviously, I understand that the result is very disappointing. I appreciate that. But I also appreciate the amount of time and effort which has been put into the appeal by yourself on behalf of your son.

I would like to thank you very much, too, Mr. Ward, for all the assistance that you have given me. Thank you.

MR. SHARKEY: If I may (I am not sure if it is proper for me to do so and you can stop me), I would like to say, on behalf of the Appellant who said it to me last night, that, as a baptism, your Lordship assisted greatly, and, indeed, I am obliged to learned counsel because I have a feeling I overstepped certain things.

MR. JUSTICE ETHERTON: Not at all.

MR. SHARKEY: I am grateful, my Lord.

MR. JUSTICE ETHERTON: Thank you so much.

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