Consolidated Goldfields Plc v Commissioners of Inland Revenue ; Gold Fields Mining & Industrial Ltd v Same
| Jurisdiction | England & Wales |
| Judgment Date | 15 March 1990 |
| Date | 15 March 1990 |
| Court | Chancery Division |
Chancery Division.
Scott J.
Mr Andrew Park QC and Mr David Goy (instructed by Freshfields) for the taxpayers.
Mr Christopher McCall QC and Mr Alan Moses (instructed by the Solicitor of Inland Revenue) for the Crown.
The following cases were referred to in the judgment:
Bird (RA) & Co v IR Commrs TAX(1924) 12 TC 785
Leith, Hull and Hamburg Steam Packet Co v Musgrave TAX(1899) 4 TC 80
Lupton (HMIT) v FA & AB Ltd TAX(1971) 47 TC 580
Newlin v Woods (HMIT) TAX(1965) 42 TC 649
R v Special Commrs of Income Tax, ex parte Emery TAX(1980) 53 TC 555
R v Special Commrs of Income Tax, ex parte Morey TAX(1972) 49 TC 71
Way v Underdown (HMIT) TAX(1974) 49 TC 215
Corporation tax - Case stated by special commissioners - Commissioners had found that certain leasing transactions were not trading for purposes of claiming capital allowances - Application to remit for further facts to be found to support taxpayer's argument on appeal - Whether order to remit should be made - Taxes Management Act 1970 section 56 subsec-or-para (7)Taxes Management Act 1970, sec. 56(7).
These were applications by the taxpayers, in advance of the hearing of their appeals from the decision of the special commissioners, to remit the case to the commissioners to find further facts to support the arguments that they intended to raise on the appeals. The issue being identical in both applications, the court dealt with the application of Consolidated Goldfields plc ("Goldfields").
Goldfields had appealed against assessments to corporation tax in respect of two accounting periods ending 30 June 1981 and 1982. The question for determination was whether the taxpayers were entitled to any, and if so what, first-year capital allowances in respect of the leasing of machinery or plant effected during the periods under appeal.
Goldfields bought machinery from a finance house or a bank on hire-purchase terms paying an immediate deposit, the balance to be paid by instalments over the period of the lease. Goldfields as lessor then leased the machinery to BMIF as lessee. The rental payments received by Goldfields were equal to the payments to be made by Goldfields under the hire-purchase agreements.
Arrangements were made for BMIF to pay the rental directly to the finance house, bypassing Goldfields, with a non-recourse provision that if the lessee failed to pay Goldfields was released from liability. The credit risk was therefore taken by the finance house.
The commissioners concluded that Goldfields' purpose in entering into the leasing transactions was in order to obtain first-year allowances and thus avoid or defer corporation tax. Accordingly Goldfields' leasing activity could not be described as "trade".
Before the final form of the case stated was settled some but not all of the additional findings of fact desired by Goldfields were agreed after correspondence with the commissioners and the Revenue.
The facts sought by the application to be found related to the fiscal significance of certain features of the leasing transactions, to past treatment of similar transactions, and to the reasons for entering into the transactions considered by the executive responsible who, having predeceased the commissioners' hearing, was not able to give evidence.
Held, dismissing the application:
1. It was the sensible and correct procedure when a taxpayer took issue with the contents of a case stated to make an application under the Taxes Management Act 1970 section 56 subsec-or-para (7)Taxes Management Act 1970, sec. 56(7) in advance of the hearing of the appeal rather than to seek an order of mandamus by way of judicial review.
2. The following principles were to be considered in deciding whether to grant the application: (a) the findings of fact were for the commissioners who could not be instructed to find facts nor as to the manner in which they expressed their findings; (b) the parties were entitled to expect that the commissioners would make findings covering the matters relevant to the arguments advanced; and (c) the applicant must show that the desired findings were material to some tenable argument, were at least reasonably open on the evidence that had been adduced and were not inconsistent with the findings already made. If the case stated fully and broadly covered the territory desired to be dealt with by the proposed additional findings, the court should be slow to send the case back, particularly so if it appeared that the commissioners had the proposed findings in mind.
3. Apart from the fiscal significance of the leasing transactions which was a matter of law and did not need findings of fact, the additional findings sought did not satisfy those criteria. They were all specifically, or by inference, covered by the findings made by the commissioners and the application would be dismissed.
Scott J: The applicant in this case is Consolidated Goldfields Ltd. There is also an application by Gold Fields Mining & Industrial Ltd, a subsidiary of Consolidated Goldfields. However, I shall simply deal with the application by Consolidated Goldfields: exactly the same points arise on the other application. The respondents are the Commissioners of Inland Revenue. The relief sought was described by Mr Park, counsel for the applicant, as unusual and by Mr McCall, counsel for the respondents, as wholly exceptional.
The matter arises out of a tax appeal by Goldfields heard by the special commissioners. Their decision was unfavourable to Goldfields, who then requested a case stated. A case was accordingly stated by the special commissioners. The matter before me is not, however, Goldfields' appeal on the case stated. Goldfields, being dissatisfied with the findings of fact contained in the decision annexed to the case stated, has applied by notice of motion for an order that the case stated be remitted to the special commissioners for further findings of fact to be made. The exact wording of the relief sought has been adjusted by Mr Park in the course of the hearing. He now seeks an order in this form:
Order that the case stated in this matter be remitted to the special commissioners and that,
(2) the special commissioners do consider whether or not all or any (and if some only then which) of the facts set out in Part I of the schedule to this order were wholly or to any extent established by the evidence;
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(3) by way of amendment or further supplement to the case stated the commissioners do
(a) make further findings in relation to such (if any) of the said facts as were wholly or to some extent established by the evidence, such further findings to be either in the terms appearing in the schedule hereto or in such modified or other terms as the commissioners may consider appropriate, and
(b) state which (if any) of the said facts they do not consider to have been established by the evidence.
There was a para. (3) which is now not pursued.
I will come later to the contents of the schedule. This, too, has been the subject of running amendments during the course of the hearing.
In justification of the procedure that Goldfields has adopted Mr Park referred me to R v Special Commrs of Income Tax, ex parte EmeryTAX(1980) 53 TC 555. This, too, was a case in which the taxpayer took issue with the special commissioners over the contents of a case stated. The taxpayer applied to the Queen's Bench Divisional Court for judicial review seeking an order of mandamus to the special commissioners to amend the case stated. In the event the issue was resolved by agreement, but the court gave guidance as to the appropriate procedure that should be followed in such cases and as to the principles to be applied.Donaldson LJ referred at p. 556 with approval to the opinion given by Lord Widgery CJ in an earlier case, R v Special Commrs of Income Tax, ex parte Morey TAX(1972) 49 TC 71, to the effect that applications and appeals arising under the Income Tax Acts ought, generally speaking, to be made to the appellate courts that would normally deal with such matters rather than to a Queen's Bench Divisional Court. Hence in the present case Goldfields has applied by notice of motion in the Chancery Division for relief of a mandamus character that might, in other contexts, have been sought by judicial review.
The jurisdiction of the court arises under Taxes Management Act 1970 section 56sec. 56 of the Taxes Management Act1970. This is the section that provides for the case stated procedure for appeals from special or general commissioners' decisions.Taxes Management Act 1970 section 56 subsec-or-para (4)Subsection (4) provides:
The case shall set forth the facts and the determination of the Commissioners, and the party requiring it shall transmit the case, when stated and signed, to the High Court, within thirty days after receiving the same.
Taxes Management Act 1970 section 56 subsec-or-para (7)Subsection (7) provides:
The High Court may cause the case to be sent back for amendment, and thereupon the case shall be amended accordingly, and judgment shall be delivered after it has been amended.
The present application is, therefore, made under Taxes Management Act 1970 section 56 subsec-or-para (7)subsec. (7). I can see no reason why applications for the case to be amended should not, as here, be made in advance of the hearing of the appeal proper. Accordingly it seems to me that Goldfields has adopted a sensible and correct procedure. I must now turn to the substance of the matter.
Taxes Management Act 1970 section 56 subsec-or-para (1)Section 56(1) provides:
Immediately after the determination of an appeal by...
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