United Kingdom Special Commissioners of Income Tax Decisions

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URL: http://www.bailii.org/uk/cases/UKSPC/2007/SPC00613.html
Cite as: [2007] UKSPC SPC613, [2007] UKSPC SPC00613

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Michael Peter Forbes v The Director of the Assets Recovery Agency [2007] UKSPC SPC00613 (16 May 2007)

Spc00613

PROCEEDS OF CRIME – Review of Tribunal's decision – Appellant failed to attend hearing – Decision given in his absence – Appellant applied for review of decision – Whether Appellant had good and sufficient reason for failing to appear – No – Application dismissed – Special Commissioner (Jurisdiction and Procedure) Regulations, reg 19(1)(b)

PROCEEDS OF CRIME – Order for costs – Appellant requested application hearing and failed to attend – Whether behaviour wholly unreasonable in connection with application hearing – Before Commissioners (Jurisdiction and Procedure) Regs, RD1 – Costs awarded against Appellant

THE SPECIAL COMMISSIONERS

MICHAEL PETER FORBES Appellant

and –

THE DIRECTOR OF THE ASSETS RECOVERY AGENCY Respondents

(Post-Decision Applications)

Special Commissioner: SIR STEPHEN OLIVER QC

Sitting in public in London on 11 May 2007

No appearance for the Appellant

Ben Carter for the Respondents

© CROWN COPYRIGHT 2006

DECISION

The Appellant (Michael Forbes) was assessed to tax for the nine years from 1995/96 until 2003/04 inclusive. The assessments were raised by the Director of the Assets Recovery Agency in pursuance of the powers given by section 317(3) of Proceeds of Crime Act 2002. Mr Forbes' appeal was partly unsuccessful. He asked for a review pursuant to regulation 19(1)(b) of the Special Commissioners Regulations on the grounds that he had been absent when the appeal was heard. This Decision is concerned with the issue of whether he had "good and sufficient reason" for not attending the appeal hearing.

Mr Forbes' appeal was lodged with the Special Commissioners on 1 April 2005. At the time Agency had notified the Special Commissioners of its intention to ask the Special Commissioners to issue notices under regulation 10 of the Special Commissioners (Jurisdiction and Procedures) Regulations requiring delivery of specified documents and particulars. A preliminary hearing to deal with that matter and to issue directions (in preparation for the substantive hearing) was fixed for 13 January 2006.

A phone call between the Clerk to the Special Commissioners and Mr D Martin of Whitmarsh Sterland, accountants, took place on 12 January 2006. Mr Martin (according to the Clerk's file note of the telephone call) stated that no one would be appearing on behalf of Mr Forbes and that he consented to whatever direction might be issued. On that basis the preliminary hearing was vacated. The Agency's application under regulation 10 was withdrawn.

A letter from the Special Commissioners to Mr D Martin of Whitmarsh Sterland dated 24 January 2006 notified Mr Forbes, through Mr Martin, as follows:

"I refer to the preliminary hearing listed on 13 January 2006.

Following confirmation of your client's non-attendance at that hearing it was duly vacated and the application made by the Assets Recovery Agency under regulation 10 was withdrawn to be replaced by an application to proceed to the determination of your client's appeal."

The hearing of the appeal (to take place on 10 April 2006) was then notified by letter of 20 February. Mr Martin (on 27 February) asked for it to be adjourned "pending Mr Forbes being fit enough to attend and pending a reply to our letter to the Agency". The Tribunal asked for a medical certificate. On 30 March the hearing was postponed.

On 7 July 2006 Mr Martin e-mailed the Special Commissioners asking for the appeal to be set down for hearing in Cambridge. That application was not accepted. Then on 11 July a hearing of the appeal was relisted and the date (7 September 2007) was notified to both parties. Mr Martin wrote to the Special Commissioners on 15 August 2006 stating that Mr Forbes would not be represented at the hearing and explaining that he (Mr Forbes) was still in Spain and was not in sufficiently good health to attend personally and did not have sufficient funds to pay for "meaningful professional representation". The letter went on to make a number of representations and deal with queries arising from the regulation 10 notice. The Special Commissioners acknowledged that letter on 24 August stating – "I am therefore assuming that no one will be attending on behalf of Mr Forbes".

On 31 August the Agency wrote to Mr Martin informing him that the regulation 10 application had been withdrawn in January 2006 and pointing out that an application to proceed to a hearing for determination of the appeal had been granted by the Special Commissioners. The same day Mr Martin wrote to the Special Commissioners stating that he knew that the Agency had withdrawn their regulation 10 application at the previous hearing but that he had assumed that the Agency had reinstated it. (The reason for putting the point that way was that the heading to the letters from the Special Commissioners was written this way – "Appeal under section 31 TMA 1970 (intention to seek Regulation 10 Notices).") Mr Martin's letter went on to request an adjournment.

The matter was then referred to a Special Commissioner who rejected the application for an adjournment and on 1 September the Clerk to the Special Commissioners wrote as follows:

"The Special Commissioner rejects your argument for the case not to go ahead, as your client has been given adequate notice of the hearing date, notwithstanding the reference to regulation 10 notices mistakenly included in the hearing notice."

Mr Martin then asked (by letter of 4 September) for a reconsideration of their application. The Special Commissioner confirmed that the appeal would go ahead on 7 September.

The Agency lodged a skeleton argument with the Tribunal on 6 September and sent a copy to Mr Martin. Mr Martin put in a response to the skeleton argument on the same day. His letter concluded with a request for a further adjournment. The Clerk to the Special Commissioners responded with the information that the Presiding Special Commissioner had declined to postpone the hearing but was prepared to hear the application for an adjournment "if you wished to renew it in person at the start of tomorrow's hearing."

Prior to starting the hearing on 7 September 2006 the Clerk to the Special Commissioners made several attempts to contact Mr Martin on the telephone to determine whether he intended to pursue his application for an adjournment. Whitmarsh Sterland answered, but Mr Martin was not, apparently, available to talk. The Tribunal decided to go ahead. Its decision was given and explained in separate written Directions issued before the main hearing commenced.

The hearing took place. The evidence summarised in the decision was considered. The decision was released on 18 October 2006. The decision dismissed Mr Forbes' appeal so far as it related to the years 1995/96 and 1996/97. It allowed his appeal in relation to all the subsequent years.

On 12 December 2006 Whitmarsh Sterland (Mr Martin) wrote to the Special Commissioners stating that they were instructed to appeal against the decision so far as it related to the assessments for 1995/96 and 1996/97. The letter explains that the basis for the appeal is – "That the notice of the hearing stated it was for the purposes of hearing an appeal under s.31 TMA 1970 (intention to seek Regulation 10 Notices)". The letter went on to explain that Mr Forbes' health had been poor and that he had made a decision not to attend the hearing based upon the advertised subject matter of the hearing. The letter states - "Although ill, he may nevertheless have attended the hearing given adequate notice of the actual subject matter."

The Special Commissioners construed that letter as an application for a review under regulation 19. The hearing of the application was listed for 11 May 2007.

The Clerk to the Special Commissioners tried unsuccessfully to talk to Mr Martin on 10 May. Prior to the hearing on 11 May the Clerk had been able to get through to and talk to Mr Martin on the telephone. Mr Martin said it was not his intention to come and that he had not expected a hearing to take place anyway.

I decided to go ahead and hear Mr Forbes' application in his absence.

Normally the release of a decision terminates the authority of the Special Commissioners. An appeal lies, if at all, to the High Court. Occasions when the Special Commissioners' authority is preserved include applications for a review under regulation 19 and applications for costs. I deal first with the application for a review. Regulation 19 of the Special Commissioners (Jurisdiction and Procedure) Regulations 1994 reads as follows:

"(1) If, on the application of a party or of its own motion, a tribunal is satisfied that

…

(b) a party, who was entitled to be heard at a hearing but failed to appear or be represented, had good and sufficient reason for failing to appear or to be represented,

…

the tribunal may review and set aside or vary the decision in principle or final determination (or both the decision in principle and the final determination).

That raises the question whether Mr Forbes (or his representative) had a good and sufficient reason for failing to appear at the hearing on 7 September 2006.

The letter of 12 December 2006 bases the appeal on the fact that the notice of the hearing was headed – "Appeal under section 31 TMA 1970 (intention to seek Regulation 10 Notices)".

Mr Ben Carter for the Agency pointed out in response that the regulation10 application had been withdrawn in January 2006 and that Mr Martin had been duly informed by letter of 25 January. That letter and the Special Commissioners' letter of 20 February (although the headings still included the words – "intention to seek Regulation 10 Notices") deal with matters that are relevant to the full hearing, then fixed for 10 April. Then on 7 July 2006 Mr Martin e-mailed the Special Commissioners asking for the hearing to take place in Cambridge. Then on 15 August Mr Martin wrote a detailed letter to the Special Commissioners in connection with the hearing of the appeal. Then on 31 August 2006 Mr Martin was told by letter by the Agency that the application under regulation 10 had been withdrawn back in January 2006. Then on 31 August Mr Martin had made a further application to the Special Commissioners for an adjournment.

In my view any prudent adviser who had any doubts about the significance of the phrase – "Intention to seek Regulation 10 Notices" appended to the hearing notice would have called the Tribunal or the Agency and asked why it was there. He would not simply have assumed that the full hearing was not going to take place. But more to the point all the actual correspondence (and much of it is referred to above) makes it clear that the hearing would be the full hearing of the appeal. Mr Martin's application for the hearing to be in Cambridge clearly indicates that he was expecting a full hearing. The irresistible inference is that Mr Martin knew this and decided not to attend, whatever the hearing was to be about.

Mr Forbes' poor health was no bar to Mr Martin's attendance at the hearing as his representative. I note that Mr Martin had, over the course of correspondence with the Agency, provided material relevant to the assessment and had addressed himself to the issues. The arguments for Mr Forbes succeeded for seven out of the nine periods under assessment on the strength of information provided by Mr Martin. Had Mr Forbes wanted Mr Martin to provide fuller information about the first two periods (for which the appeal was unsuccessful), that information could have been provided at any time in the sixteen months or so following the issue of the assessment.

For those reasons I do not think that Mr Forbes had a good and sufficient reason for failing to appear or be represented at the hearing on 7 September. I therefore dismiss his application for a review under regulation 19(1).

Costs

The Agency asked for their costs of today's hearing.

Regulation 21 of the Special Commissioners Regulations provides as follows:

(1) Subject to paragraph (2) below, a tribunal may make an order awarding the costs of, or incidental to, the hearing of any proceedings by it against any party to those proceedings (including a party who has withdrawn his appeal or application) if it is of the opinion that the party has acted wholly unreasonably in connection with the hearing in question.

(2) No order shall be made under paragraph (1) above against a party without first giving that party an opportunity of making representations against the making of the order.

I note that Whitmarsh Sterland applied for the hearing and that a date was fixed to suit their convenience. Whitmarsh Sterland gave no indication to anyone that they would not be attending, even when the Tribunal telephoned the day before the hearing. Consequently the Agency spent a day preparing for the present application. It was only when the hearing clerk called Mr Martin a few minutes before the hearing started that any message about his non-attendance was given.

In my view Mr Forbes, through Mr Martin, acted wholly unreasonably in connection with the present hearing. The Tribunal and the Agency should have been notified of Mr Forbes' non-appearance and non-representation well before 11 May. I am therefore provisionally minded to award the Agency their costs of £800 being their costs in relation to the hearing on 11 May. However, before actually making the order I give Mr Forbes (through Mr Martin) the opportunity of making representations against the making of the costs order. I therefore give Mr Forbes 14 days from the release of this Decision to make such representations. They should be made in writing and lodged with the Special Commissioners.

Final Point

In connection with the application to have the Tribunal's decision reviewed, it will be noted that such an application must be made not later than 14 days after the release of the decision or by such later time as the Tribunal may allow: see regulation 19(2). For the record, I formally extend the time limit for making a regulation 19 application until 12 December 2006.

SIR STEPHEN OLIVER QC

SPECIAL COMMISSIONER

RELEASED: 16 May 2007

SC 3051/2005