Bye v Coren
| Jurisdiction | England & Wales |
| Judgment Date | 03 July 1986 |
| Date | 03 July 1986 |
| Court | Court of Appeal (Civil Division) |
Court of Appeal (Civil Division).
Mr. Andrew Park Q.C. and Mr. Alan Moses (instructed by the Solicitor of Inland Revenue) for the Crown.
Mr. C.W. Koenigsberger (instructed by Messrs. Israel, Arnold & Strange) for the taxpayers.
Before: Lawton, Dillon and Woolf L.JJ.
The following case was referred to in the judgment:
R. v. General Commissioners of Income Tax for Freshwell (ex parte Clarke) TAX(1971) 47 T.C. 691
Income tax - Assessment under Sch. D, Case I - Assessment to capital gains tax for same transaction final and paid - Whether income tax assessments valid - Whether double taxation arose - Taxes Management Act 1970 section 32 subsec-or-para (1)Taxes Management Act 1970, sec. 32(1).
This was an appeal by taxpayers against a decision of Scott J. in the High Court, Chancery Division, that certain income tax assessments made on them were not unlawful.
The taxpayers, who were husband and wife, provided their tax inspector with details of commodity dealings transactions carried on by them. In consequence, the inspector raised assessments to income tax for 1978-79 and 1979-80 on the husband and wife and an assessment to capital gains tax (CGT) for 1978-79 on the husband alone. The income tax assessments were alternative to the CGT assessment. The taxpayer husband did not appeal against the CGT assessment which became final and was paid. The taxpayers did, however, appeal to the General Commissioners against the income tax assessments, raising a preliminary issue of the validity of the procedure adopted by the inspector and contending that the income tax assessments could not stand once the CGT assessment had become final. The Commissioners upheld the taxpayers' case and ordered that the income tax assessments be discharged. An appeal against that decision was allowed by Scott J. (reported at [1985] BTC 7).
The taxpayers appealed to the Court of Appeal. At the hearing they contended that the Revenue could not lawfully pursue the income tax appeals once the assessment to CGT had become final, and capital gains tax paid and settled. To do so would amount to double taxation, or place the taxpayers in jeopardy of double taxation. Alternatively, the finalising of the CGT assessment prevented anyone from arguing that the taxpayers were trading. The taxpayer always thought that the gains he had made were capital gains and therefore he could not in good conscience appeal against the assessments to CGT.
The Crown argued that the adopted procedure, which was commonly used in cases where a tax inspector had doubts as to which of the taxes applied to a transaction, was not unlawful. The risk of double taxation did not exist as it was open to a taxpayer in such circumstances to appeal against all the assessments, apply to appeal out of time against the CGT assessment or make a claim for repayment of the CGT. Moreover, the Revenue was not estopped from pursuing the income tax assessment by virtue of having accepted the CGT payment from the taxpayer. A tax inspector as an officer of the Crown could not be estopped from performing his statutory duty.
It was agreed before the Court of Appeal that the inspector could not be estopped from performing his statutory duty to prepare assessments to income tax.
Held, dismissing the taxpayers' appeal:
1. When the tax inspector put in alternative assessments to income tax and CGT he was following a procedure accepted as a sensible and proper way of dealing with difficult...
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