Amis v Colls (HM Inspector of Taxes)
| Jurisdiction | England & Wales |
| Judgment Date | 18 July 1960 |
| Date | 18 July 1960 |
| Court | Chancery Division |
HIGH COURT OF JUSTICE (CHANCERY DIVISION) -
Income Tax, Schedule D - Additional assessment - Fraud or wilful default - Income Tax Act, 1952 (15 & 16 Geo. VI & 1 Eliz. II, c. 10), Section 47 (1).
The Appellant carried on a jeweller's business and was in receipt of interest not taxed by deduction. Following an investigation into her affairs by the Inspector of Taxes certain assessments were made upon her for the years 1940-41 to 1955-56, against which appeals were lodged. These included additional assessments on business profits for the years 1940-41 to 1944-45 made more than six years after the end of those years on the footing that fraud or wilful default had been committed by the Appellant within the terms of the proviso to Section 47 (1), Income Tax Act, 1952.
Before the General Commissioners the Inspector produced evidence, inter alia, of the growth of the Appellant's resources and of understatements in her Income Tax returns of interest from bank deposits. The Commissioners decided that for the years 1940-41 to 1944-45 the Appellant had committed fraud or wilful default in connection with the preparation of her Income Tax returns or failure to render returns. They determined assessments for all years substantially in accordance with the figures put forward by the Inspector.
Held, that there was evidence on which the Commissioners could reach their decision.
Stated under the Income Tax Act, 1952, Section 64, by the Commissioners for the General Purposes of the Income Tax for the Division of Great Yarmouth in the County of Norfolk for the opinion of the High Court of Justice.
1. At a meeting of the said Commissioners held on 27th November, 1957, at the Council Chamber, Town Hall, Great Yarmouth, Monica Ellen Amis, trading as Regent Jewellers at 13, Regent Street, Great Yarmouth (hereinafter called "the Appellant"), appealed against assessments to Income Tax made upon her under Case I of Schedule D of the Income Tax Act, 1918, or 1952, as the case may be, for the years ended 5th April, 1941, to 5th April, 1956, inclusive, in respect of her profits as a Watchmaker and Jeweller and under Case III in respect of untaxed interest, as follows:
| £ | ||
| 1940-41 | Watchmaker and Jeweller | 1100 |
| 1941-42 | ditto | 1300 |
| 1942-43 | ditto | 1000 |
| 1943-44 | ditto | 1300 |
| 1944-45 | ditto | 1900 |
| 1945-46 | ditto | 1500 |
| 1945-46 | Untaxed interest | 150 |
| 1946-47 | Watchmaker and Jeweller | 1500 |
| 1946-47 | Untaxed interest | 150 |
| 1947-48 | Watchmaker and Jeweller | 1500 |
| 1947-48 | Untaxed interest | 150 |
| £ | ||
| 1948-49 | Watchmaker and Jeweller | 1500 |
| 1948-49 | Untaxed interest | 150 |
| 1949-50 | Watchmaker and Jeweller | 2000 |
| 1949-50 | Untaxed interest | 25 |
| 1949-50 | Watchmaker and Jeweller | 1000 |
| 1949-50 | Untaxed interest | 100 |
| 1950-51 | Watchmaker and Jeweller | 2000 |
| 1950-51 | Untaxed interest | 50 |
| 1950-51 | Watchmaker and Jeweller | 1000 |
| 1950-51 | Untaxed interest | 100 |
| 1951-52 | Watchmaker and Jeweller | 2000 |
| 1951-52 | Untaxed interest | 60 |
| 1951-52 | Watchmaker and Jeweller | 1000 |
| 1951-52 | Untaxed interest | 100 |
| 1952-53 | Watchmaker and Jeweller | 2000 |
| 1952-53 | Untaxed interest | 200 |
| 1952-53 | Watchmaker and Jeweller | 1000 |
| 1953-54 | Watchmaker and Jeweller | 3000 |
| 1953-54 | Untaxed interest | 200 |
| 1954-55 | Watchmaker and Jeweller | 3000 |
| 1954-55 | Untaxed interest | 200 |
| 1955-56 | Watchmaker and Jeweller | 3000 |
| 1955-56 | Untaxed interest | 200 |
2. The assessments for the years 1940-41 to 1944-45 inclusive were additional assessments made on the Appellant under the provisions of Section 47 of the Income Tax Act, 1952, and at the commencement of the hearing Counsel for the Appellant took the point that as regards these years the onus was on the Crown to show that these additional assessments had been properly made. The Inspector of Taxes accepted that in the circumstances it was for him to satisfy the Commissioners that fraud or wilful default had been committed by or on behalf of the Appellant in relation to Income Tax for the years in question. The Inspector tendered the under-mentioned documents and gave the following evidence, which we accepted:
-
(a) The Appellant's Income Tax returns for the years 1940-41, 1943-44 and 1944-45 (these are annexed to this Case and marked exhibits 1, 2 and 3 respectively (1) ).
-
(b) An annual statement of the Appellant's assets (exhibit 4(1) ).
-
(c) An annual reconciliation of these assets with her known income (exhibit 5 (1) ). He stated that exhibits 4 and 5 had been prepared by him from information supplied by the Appellant and her former accountants, Messrs. Holmes & Halford, and inferences drawn therefrom by him. Copies of these exhibits had been supplied to the Appellant's present accountants, Messrs. Fisher, Conway, Fenton & Co., before the hearing. The information in exhibit 4 relating to the year 1938-39 (the year preceding the years under appeal), with the exception of the items cash in hand, personal jewellery and furs, which he had estimated himself, had been supplied or agreed by the Appellant's former accountants. The business profits returned by the Appellant for the years in question had been:
£
s.
d.
1940-41
…
…
122
1
4
1943-44
…
…
382
12
7
1944-45
…
…
500
0
0
estimated
-
(d)
-
(e) No returns had been made by the Appellant for the years 1941-42 or 1942-43. She had been assessed for those years in the sums of £180 and £500 respectively.
On his figures the business profits assessed to tax should have been:
| £ | |||
| 1940-41 | … | … | 1221 |
| 1941-42 | … | … | 1489 |
| 1942-43 | … | … | 1464 |
| 1943-44 | … | … | 1936 |
| 1944-45 | … | … | 2416 |
Inspection of the Appellant's bank statements (which had been produced to him by the Appellant's former accountants) had also disclosed that untaxed interest returned at £9 per year in 1943-44 (exhibit 2(1) ) and 1944-45 (exhibit 3 (1) ) had been under-stated by £50 and £73 respectively.
In cross-examination Counsel for the Appellant put to the Inspector of Taxes a bank statement (exhibit 6(1) ) relating to a deposit account at the National Provincial Bank, Ltd., Liverpool Street Station Branch, 216, Bishopsgate, London, E.C.2., containing entries of deposits made and interest earned for the years 1941 to 1948 inclusive, which showed that the account had been closed in April, 1948, and the balance therein of £3,175 9s. 9d., being withdrawn. On this account being put to him the Inspector stated that although the Appellant's taxation affairs had been under investigation since 1950, it had not previously been disclosed to the Inland Revenue and that to this extent the schedules prepared by him (exhibits 4 and 5(1) ) were incorrect.
3. The following further facts were admitted or proved:
-
(a) That the Appellant had been in business in Regent Street, Great Yarmouth, continuously for upwards of 17 years as a jeweller in general stock (i.e., fancy and gold rings and medium class jewellery).
-
(b) That the Appellant had made Income Tax returns in respect of her business for each year up to and including the year 1940-41 but failed to make returns for the years 1941-42 and 1942-43, although she made returns for following years.
-
(c) That the Appellant's shop in Regent Street, Great Yarmouth, remained open for business during the whole of the war years.
-
(d) That in July, 1941, the Appellant opened the deposit account (exhibit 6(1) ) at the National Provincial Bank, Ltd., Liverpool Street Station Branch, 216, Bishopsgate, London, E.C.2., with a deposit of £1,000 and that the following amounts of interest had been earned on deposits made in this account:
£
s.
d.
1941
…
…
2
15
4
1942
…
…
10
9
0
1943
…
…
10
11
2
1944
…
…
10
12
10
None of these items had been returned by the Appellant in her Income Tax returns. The amounts for 1943 and 1944 require to be added to those previously known to the Inspector and referred to in paragraph 2 above, making the total understatements £61 and £84 respectively.
4. The Appellant did not give evidence but Mr. Herbert Vincent Beckett, a member of the staff of H.M. Inspector of Taxes at Great Yarmouth, was called on her behalf. He stated that early in 1940 Great Yarmouth became a
prohibited area and that there was extensive evacuation of the population which adversely affected trade in the town, resulting in the closing of a number of shops.5. It was contended by the Inspector of Taxes that on the evidence:
-
(a) There had been fraud or wilful default within the meaning of Section 47 of the Income Tax Act, 1952.
-
(b) The additional assessments for the years 1940-41 to 1944-45 inclusive had accordingly been properly made.
6. It was contended on behalf of the Appellant:
-
(a) That the phrase "wilful default" meant failure to do what the law required with a view to avoiding a liability.
-
(b) That the case of Barney v. Pybus, 37 T.C. 106, referred to by H.M. Inspector of Taxes, was authority only for its own facts.
-
(c) If the contentions of the Inspector were well-founded every omission from returns made by a taxpayer would involve him in having assessments raised beyond the normal six year period.
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(d) That the standard of proof imposed on the Crown, which was higher than that in a civil case and lower than that in a criminal case, had not been discharged.
-
(e) That there was no evidence before the Commissioners that the shop would have reaped appreciable profits during the early war years and that, having regard to the reduction in population at that time, it was unlikely...
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