Ali
| Jurisdiction | UK Non-devolved |
| Judgment Date | 14 September 2015 |
| Neutral Citation | [2015] UKFTT 464 (TC) |
| Date | 14 September 2015 |
| Court | First Tier Tribunal (Tax Chamber) |
Judge Richard Thomas, Simon Bird
Mr O Mahmood of TAS Accountants appeared for the Appellant
Mr A J O'Grady, Presenting Officer, appeared for the Respondents
Procedure – Bankruptcy of appellant – Standing to bring proceedings for permission to notify appeals late under the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (SI 2009/273), r. 8(2)(a) – To argue the appeals if permission given – Held no standing in absence of authority from trustee in bankruptcy – Application for permission struck out for want of jurisdiction.
The First-tier Tribunal (FTT) struck out a taxpayer's application to notify late appeals against discovery assessments, amendments to returns and a determination and assessment of penalties. The FTT found that as the taxpayer was an undischarged bankrupt and did not have authority from his trustee in bankruptcy to carry on the proceedings he had no standing to bring his appeals against assessments or penalties nor to apply to notify appeals late.
Mr Ali (the appellant) applied for permission to notify appeals against discovery assessments, amendments to returns, and a determination and assessment of penalties to the FTT late following a statutory review.
The FTT established that the appellant was an undischarged bankrupt and that he had no authority from his trustee in bankruptcy to carry on the proceedings before the FTT.
The FTT decided that in the light of the cases on bankrupts taking legal proceeding, and in particular the Court of Appeal case of Soul v IR Commrs; Soul v Caillebotte (HMIT) TAX(1966) 43 TC 662, the Upper Tribunal case of McNulty v R & C Commrs TAX[2012] BTC 1,631 and the Special Commissioner's decision in Ahajot v Waller (HMIT) SCD(2003) Sp C 395, the appellant, as an undischarged bankrupt, had no standing to bring his appeals against assessments to the FTT. In the light of McNulty the FTT also held that he did not have standing to bring appeals against penalties to the FTT. As to the application to notify the FTT late, the FTT found that the Upper Tribunal case of R (on the application of Singh) v R & C Commrs TAX[2010] BTC 1,548 suggested strongly that, since an application to bring judicial review proceedings is not one for which an undischarged bankrupt has standing, an application to notify appeals late should be treated in an identical way.
The FTT decided to strike out the application to notify late under the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (SI 2009/273), r. 8(2)(a), causing the appeals to automatically fall.
The FTT also noted that having heard all the evidence, that had it been required to decide the matters before it, it would have given permission to notify the appeals late, but it would then have upheld all of HMRC's decisions embodied in its assessments, amendments and determinations, as varied by the reviewing officer in the case but no further. However, contrary to HMRC's statement of case, its giving permission to notify late would have undone the TMA 1970, s. 54 agreement that was deemed to have been reached by TMA 1970, s. 49F(2) following the review, so what it would have had before it were appeals against the assessments as raised, including those which the reviewing officer had decided should be cancelled. The reviewing officer's decisions have no force in law in the absence of a deemed TMA 1970, s. 54 agreement.
The facts in this case were very similar to those in the case of Ahajot v Waller (HMIT)SCD(2003) Sp C 395, and although that decision was from a co-ordinate jurisdiction and therefore not binding on the FTT, it found it highly persuasive, whilst also referring to various more senior court decisions.
[1] This case was listed for hearing an application for permission to notify appeals to the Tribunal after the time limit given in s 49G Taxes Management Act 1970 (TMA), and (on the assumption that that application was successful) for hearing appeals against a number of discovery assessments (under s 29 TMA), amendments to returns (under s 28A TMA), a determination of penalties under s 95 TMA and an assessment to a penalty under Schedule 24 Finance Act (FA) 2007, between them covering the tax years 2002–03 to 2009–10.
[2] Before the hearing the Tribunal had noted from the papers that the appellant appeared to have been made bankrupt in 2013, and that although there were indications that in 2014 he was seeking to have the bankruptcy annulled, there were no indications that he had succeeded.
[3] Accordingly when the hearing started the tribunal asked the appellant whether he was an undischarged bankrupt and he confirmed that he was. We also asked him if he had the authority of his trustee in bankruptcy to proceed in this matter in his own name. He did not think he had, although Mr Hafeez, also of TAS Accountants who was present, said that there had been discussions with the trustee about the hearing.
[4] In view of the uncertainty about the position we said that the Tribunal would issue directions requiring the appellant to produce to us written authority from the trustee allowing the appellant to pursue the application and appeals, and if no such authority was produced within 30 days of the directions we would consider the authorities on the issue and take whatever steps seemed appropriate, steps which might well result in our striking out the application to notify late, with all the necessary consequential effects of that. The Directions were issued on 18 August 2015.
[5] But we decided that since the parties had come to the hearing ready and willing to argue the issues, it could lead to unnecessary expense and delay simply to adjourn. We continued on the understanding that the proceedings might turn out to be futile.
[6] On 26 August the Tribunal received an email from TAS Accountants to which was attached a letter from Mr Richard Hicken, the trustee in bankruptcy of the appellant. That letter, after describing the contacts between the trustee and Mr Hafeez of TAS Accountants about the appeal (as mentioned in paragraph 3 of this decision), stated:
I note that although I was informed of your intention to make the application to appeal the claim from HMRC, you did not request my consent prior to making this application. However, as requested in your letter, I can confirm I am willing to accept the decision which is made by the Tribunal in due course
[7] It is clear therefore that the appellant had no authority from the trustee to carry on the proceedings before the Tribunal. The rest of this decision considers the case law on bankrupts taking legal proceedings, especially on tax appeals and applications, and their application to the facts of this case.
[8] In Soul v IR Commrs TAX(1966) 43 TC 662 (the Soul cases), Mr Soul was told by Harman LJ:
These are two applications by the Crown to dismiss or strike out two appeals. The appeals were originated by Mr. Soul, one against the Commissioners of Inland Revenue, and the other against one of H.M. Inspectors of Taxes. One concerns surtax and the other...
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...from such debts (Heath v Tang [1993] 1 WLR 1421 applied). This case was followed by the First-Tier Tribunal (Tax Chamber) in Ali [2015] TC 04632. [34] None of the authorities referred to in paragraphs 31–33 above that post-date Heath and Artsrunik were cited by the parties at the hearing. T......