United Kingdom Special Commissioners of Income Tax Decisions

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URL: http://www.bailii.org/uk/cases/UKSPC/2008/SPC00705.html
Cite as: [2008] UKSPC SPC705, [2008] STC (SCD) 1168, [2008] UKSPC SPC00705

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Peter Eley Partnership v Revenue & Customs [2008] UKSPC SPC00705 (05 August 2008)

SPC00705

COSTS – Appellant did not appear – Appellant given opportunity to make representations why an order for costs should not be made

THE SPECIAL COMMISSIONERS

PETER ELEY PARTNERSHIP Appellant

- and -

THE COMMISSIONERS FOR HER MAJESTY'S

REVENUE AND CUSTOMS Respondents

Special Commissioner: DR JOHN F. AVERY JONES CBE

Sitting in public in London on 28 July 2008

The Appellant did not appear and was not represented

Mike Faulkner, HMRC Appeals Unit, Local Compliance South, for the Respondents

DECISION

Mr Peter Eley appeals on behalf of The Peter Eley Partnership against partnership amendments for 2001-02 and 2002-03. The Appellant did not appear and was not represented; the Respondents ("the Revenue") were represented by Mr Mike Faulkner.

Although the Appellant had informed the Tribunal last week that he was proposing to withdraw his appeal he did not do so, but neither did he appear. Mr Faulkner and I waited for half and hour in case he was delayed.

Mr Faulkner asked me to dismiss the appeal on the basis that there was no evidence to support the Appellant's contention that his grandchildren, aged 10, 9, and two of 7 at 6 April 2001, were partners in the Peter Eley Partnership.

Mr Faulkner contends that there is no evidence that the grandchildren were partners. There is not partnership agreement, no minutes, the grandchildren's names are not on letters etc, and any work that they did was the sort of thing that any child of a person in business might do. No notification of their being partners was given to any outside parties.

I have seen nothing in the papers to support the Appellant's contention. Their names are not on the partnership notepaper which lists the adults only, the partnership bankers were not aware that they were partners (although the Appellant says in his statement of case that they were informed on the telephone), nor were any of the partnership creditors (although the Appellant says in his statement of case that the amount owed to creditors was small, which does not accord with the accounts at 31 March 2002 and 2003), there is no partnership agreement and there is no evidence that the grandchildren acted as partners (although the Appellant says in notes of a meeting that he has not agreed that the two older children worked for 1 to 4 hours per week, which could have been in a capacity other than that of partner). Only the accounts and tax returns show them as partners. This falls far short of evidence that that they are partners.

Accordingly I dismiss the appeal.

Mr Faulkner contended that I should consider penalties for breach of the directions issued on 28 December 2007 that the Appellant never provided any witness statements or skeleton arguments, or that I should award costs (although I understand that the status of the Appeals Unit for costs purposes is unclear and it may preclude their charging anything other than out of pocket expenses). I had previously directed that, in view of the Appellant failing to provide witness statements, no witness evidence would be permitted without leave of the tribunal. I consider that in the circumstances I should not award any penalty which would be mainly for failure to provide skeleton arguments.

My jurisdiction to award costs is contained in Regulation 21 of the Special Commissioners (Jurisdiction and Procedure) Regulations 1994 which provides:

"(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.

(3) An order under paragraph (1) above may require the party against whom it is made to pay to the other party or parties the whole or part of the costs incurred by the other party or parties of, or incidental to, the hearing of the proceedings, such costs to be taxed if not otherwise agreed.

(4) Any costs required to be taxed pursuant to an order under this regulation shall be taxed in the county court according to such of the scales prescribed by rules of court for proceedings in the county court as may be directed by the order or, in the absence of any such direction, by the county court…."

As was pointed out by Park J in Gamble v Rowe [1998] STC 1247 at 1257:

"It will be a very rare case where a tribunal can say that a party had acted wholly unreasonably. It is not enough to be able to say that from time to time there has been unreasonableness. The party must act wholly unreasonably—a very exacting standard."

Taking this into account I should say that I am minded to award costs of the whole proceedings and, unless the Appellant provides me with an explanation of why he neither withdrew his appeal nor appeared at the hearing, to find that he has behaved wholly unreasonably in connection with the hearing. I suspect that the Appellant having provided his statement of case never intended to take any further action. His statement of case ends, after referring to various complaints that he had made, by saying: "Frankly, it is impossible to conduct a serious, professional and proper appeal in these circumstances." While there is no connection with any complaints and his ability to deal with the substance of his appeal, if that is what the Appellant thought, however, misguidedly, he should have withdrawn his appeal. As it is, Mr Faulkner has prepared the case including a file of documents of 111 pages, a bundle of authorities and a skeleton argument, and the Appellant's failure to attend meant that Mr Faulkner has had to make a wholly unnecessary journey from Bournemouth. The failure to attend was also disruptive to the Tribunal. I had arranged to hear another case (and had read the papers for it) on hearing that the Appellant was proposing to withdraw, and when he did not do so on the Friday before the hearing the Tribunal staff had to take me off the other case.

I give the Appellant liberty within seven days of the date of release of this decision to make written representations against the making of a costs order in favour of the Revenue, following which I shall make a decision on the award of costs.

JOHN F. AVERY JONES

SPECIAL COMMISSIONER

RELEASE DATE: 5 August 2008

SC 3201/07