Burford v Durkin (HMIT)
| Jurisdiction | England & Wales |
| Judgment Date | 25 October 1989 |
| Date | 25 October 1989 |
| Court | Chancery Division |
Chancery Division.
Mervyn Davies J.
Mr. Robin Mathew (instructed by Fairchild Greig & Co., Acton) for the taxpayer.
Mr. Alan Moses (instructed by the Solicitor of Inland Revenue) for the Crown.
The following cases were referred to in the judgment:
Agricultural, Horticultural and Forestry Industry Training Board v. Aylesbury Mushrooms Ltd. WLR[1972] 1 W.L.R. 190
Honig & Ors. v. Sarsfield (H.M.I.T.) TAX[1986] BTC 205
Income tax - Sub-contractors in the construction industry - Assessment on contractor for sums not deducted from payments to sub-contractors - Decision to assess taken and amount calculated by one inspector but assessment signed in Revenue's records by another - Whether assessments valid - Taxes Management Act 1970 section 1 subsec-or-para (3) section 113 subsec-or-para (1B)Taxes Management Act 1970, sec. 1(3), 113(1B); SI 1975/1960 section 12 subsec-or-para (1)Income tax (Sub-Contractors in the Construction Industry) Regulations 1975, reg. 12(1) (S.I. 1975 No. 1960).
This was an appeal against the decision of a Special Commissioner upholding assessments under the Income Tax (Sub-Contractors in the Construction Industry) Regulations 1975, SI 1975/1960 regulation 12reg. 12(1) for sums which the taxpayer failed to deduct from payments to workers who were not in possession of valid exemption certificates.
The taxpayer was both a contractor and a sub-contractor supplying workers to a building company on a labour only basis. In a number of cases over the years he paid some of his sub-contractors who were not in possession of valid exemption certificates issued pursuant to the Finance (No. 2) Act 1975, Finance Act 1975 section 70sec. 70 without making the proper deductions required by Finance Act 1975 section 69 subsec-or-para (4)sec. 69(4).
Assessments for the years 1978-79 to 1983-84 were made on him in increasing amounts from £18,106 to £97,914 pursuant to SI 1975/1960 section 12 subsec-or-para (1)reg. 12(1) of the 1975 Regulations in respect of the sums which ought to have been deducted, and his own exemption certificate was cancelled.
The taxpayer's appeal against the cancellation of his exemption certificate and against the assessments was dismissed. He accepted the Commissioner's decision in relation to the cancellation of his certificate and the amounts assessed under SI 1975/1960 section 12 subsec-or-para (1)reg. 12(1) but appealed to the High Court on the ground that the assessments were not validly made.
The Commissioner had found that one inspector had applied his mind to the circumstances of the case and had decided to make the assessments but another inspector, on instructions from his colleague, had processed the assessments and signed them in the Revenue's records.
The taxpayer contended that an assessment under SI 1975/1960 section 12 subsec-or-para (1)reg. 12(1) was validly made only if the same inspector who exercised the discretion required bySI 1975/1960 section 12 subsec-or-para (1)reg. 12(1)also "made" the assessment. An assessment under SI 1975/1960 section 12 subsec-or-para (1)reg. 12(1) was expressly subject to the provisions of the Taxes Management Act 1970, Pt. IV, V and VI and thus not subject to the other provisions of the Act. Taxes Management Act 1970 section 113 subsec-or-para (1B)Section 113(1B), enabling an inspector to entrust to another officer responsibility for completing the assessment procedure, appeared in Pt. XI of the Act to which SI 1975/1960 regulation 12reg. 12(1) was not subject.
The taxpayer further argued that Taxes Management Act 1970 section 113sec. 113 could not be invoked in relation to aSI 1975/1960 regulation 12reg. 12(1) assessment because that section was concerned with an assessment to tax.SI 1975/1960 regulation 12Regulation 12 was not concerned with an assessment to "tax" but with an assessment of the sum which should have been paid pursuant to Taxes Management Act 1970 section 69 subsec-or-para (4)sec. 69(4). Such sums were not, as between the Revenue and the contractor, "tax".
The Revenue contended that, although Taxes Management Act 1970 section 113sec. 113 was not in Pt. IV, V and VI of the Act, it must be referable to SI 1975/1960 regulation 12reg. 12(1). Because Pt. XI was headed "Miscellaneous and Supplemental", its provisions might be used when necessary reasonably to supplement the proper working of the Act including Pt. IV, V and VI. Further,Taxes Management Act 1970 section 1 subsec-or-para (3)sec. 1(3) of the 1970 Act provided that any administrative act might be continued by another inspector.
However, the Revenue's main argument was that in any event the assessment was valid because it was in fact "made" by the first inspector, the second inspector's role being purely administrative.
Held, dismissing the taxpayer's appeal:
That the assessments were valid could be established without reference to either Taxes Management Act 1970 section 113 subsec-or-para (1B)sec. 113(1B) or Taxes Management Act 1970 section 1 subsec-or-para (3)sec. 1(3). The process of making an assessment consisted of (i) the decision to make the assessment, and (ii) a calculation of the amount. The recording of the assessment was purely administrative. The assessment was "made" when the first inspector exercised his discretion to make it and calculated the amount.
1. On 5, 6 and 24 March 1986 a Commissioner for the special purposes of the Income Acts heard the appeals of Derek Burford ("Mr. Burford") against the inspector's refusal to grant Mr. Burford's application for a sub-contractor's tax exemption certificate and also against six assessments to income tax. Details of the appeals appear in the decision which was issued on 17 April 1986.
2. The questions for determination, the Commissioner's findings of fact on the evidence adduced, the respective contentions of Mr. R.K. Mathew on behalf of Mr. Burford and of Mr. W.J. Durrans on behalf of the Revenue together with the Commissioner's conclusion in principle are set out in the decision.
3. [Paragraph 3 listed the witnesses who gave evidence before the Commissioner.]
4. [Paragraph 4 listed the documents proved or admitted before the Commissioner.]
5. The cases cited in argument are noted in the decision.
6. Mr. Burford immediately after the determination of the appeal declared his dissatisfaction therewith as being erroneous in point of law and on 8 May 1986 required the Commissioner to state a case for the opinion of the High Court pursuant to the Taxes Management Act 1970 section 56Taxes Management Act 1970, sec. 56.
7. Before stating the case, a draft thereof was, in accordance with the Special Commissioners' usual practice, submitted to each of the parties on 4 June 1986 for any comments they might wish to make. Following the receipt of correspondence from the parties certain minor amendments were made to the decision. In addition, para. 8 of the case was inserted and para. 9 was amended.
8. The Commissioner made the following additional findings of fact:
(a) Mr. Martin instructed Mr. McEnhill to make the assessments on Mr. Burford.
(b) It was the practice in the Shepherds Bush Tax Office for assessments to be made in monthly batches. The assessment cards were signed usually by a management inspector and such cards were eventually bound up in the assessment book.
9. The questions of law for the opinion of the court were:
-
(a) whether on the facts as found the Commissioner erred in holding that:
(i) the assessments under appeal were not bad in law.
(ii) the assessments should be determined in the figures noted in the decision and
(iii) the inspector's refusal to grant Mr. Burford's application for a sub-contractor's tax certificate should be upheld, and
(b) whether there was evidence to support the conclusion that the assessments under appeal were not bad in law.
At all material times relevant to these appeals Mr. Derek Burford was both a contractor and a sub-contractor. As a sub-contractor he appeals against H.M. Inspector of Taxes' refusal to grant Mr. Burford's application for a sub-contractor's tax exemption certificate, pursuant to Finance Act 1975 section 70sec. 70 of theFinance (No. 2) Act 1975 ("the 1975 Act"). That refusal was dated 9 March 1984.
In his capacity as a contractor Mr. Burford appeals against the following assessments made on him pursuant to SI 1975/1960 regulation 12reg. 12(1) of the Income Tax (Sub-Contractors in the Construction Industry) Regulations 1975 (S.I. 1975 No. 1960) ("the Regulations"):
1978-79 |
£18,106.41 |
1979-80 |
£60,430.53 |
1980-81 |
£40,884.00 |
1981-82 |
£56,460.00 |
1982-83 |
£84,015.60 |
1983-84 |
£97,941.00 |
By agreement all the appeals were heard together, much of the evidence being relevant to all the matters in issue.
Mr. Burford, who is now aged 49, became an employee of Messrs. Deedes ("Deedes"), a firm of contractors, as a painter some 30 years ago. By 1970 he had become a foreman and he was then asked by his employers, together with other of their employees, to become a self-employed, labour only, sub-contractor. He complied with Deedes' request, applied to H.M. Inspector of Taxes for and obtained a sub-contractor's exemption certificate entitling him to be paid by contractors to whom he rendered services without deduction of tax at source. He traded at first in a small way of business for a few years without difficulty. For the whole period during which he was self-employed and at all times relevant to these appeals his services as a sub-contractor were rendered only to Deedes.
Mr. Burford had little business experience and he found difficulty in coping with the requirements of the fiscal legislation affecting sub-contractors. In or about the year 1973 he received a visit from officers of the Inland Revenue who alleged that he was not operating correctly the statutory provisions affecting sub-contractors in the construction industry, as then laid down in Finance Act 1971...
To continue reading
Request your trial
-
Burford v Durkin (HMIT)
...Industry) Regulations 1975 (SI 1975/1960), reg. 12. This was an appeal by the taxpayer against a decision of Mervyn Davies J ([1989] BTC 540) that assessments made on him under theSI 1975/1960 regulation 12Income Tax (Sub-Contractors in the Construction Industry) Regulations 1975, reg. 12(1......
-
The Post Office
...were referred to in the decision: Babber t/a Ram Parkash Sunderdass VAT(LON/89/341) No. 5958; [1991] BVC 789 Burford v Durkin (HMIT) TAX[1989] BTC 540 Don Pasquale (a firm) v C & E Commrs VATVAT(1989) 4 BVC 239; (1990) 5 BVC 76 Harris VAT(MAN/93/346) No. 11,925; [1995] BVC 773 House t/a P &......
-
Dart
...Tribunal Dart The following cases were referred to in the decision: Burford v Durkin (HMIT) TAX[1989] BTC 540 Clean (The) Car Co Ltd VAT(1991) VATTR 234; [1991] BVC 568 Din & Din t/a Indus Restaurant VAT(1984) VATTR 228; (1984) 2 BVC 205,131 Jenkinson VAT(1988) VATTR 45; (1988) 3 BVC 729 Lo......
-
The Far East Restaurant;
...7727; [1992] BVC 883 Bill Hennessy Associates Ltd VAT(LON/87/640) and (LON/87/709) No. 2656; (1988) 3 BVC 1362 Burford v Durkin (HMIT) TAX[1989] BTC 540. Grunwick Processing Laboratories Ltd v C & E CommrsVATVAT(LON/84/24) No. 2000; (1986) 2 BVC 200,240; (1987) 3 BVC 29 Jeudwine (1977) VATT......