Guyer v Walton (HM Inspector of Taxes)
| Jurisdiction | England & Wales |
| Judgment Date | 19 March 2001 |
| Date | 19 March 2001 |
| Court | Special Commissioners (UK) |
special commissioners decision
Dr AN Brice.
1 Mr George Henry Guyer (the appellant) appeals against a notice underTaxes Management Act 1970 section 19As. 19A of theTaxes Management Act 1970 (the 1970 Act). The notice was dated 23 December 1999 and related to the appellant's return for the year of assessment 1996-97. It required the production of the appellant's clients' ledger, his clients' cash book, and any copy invoices, receipts, bank statements, cheque stubs or building society passbooks supporting the entries in the clients' ledger and the clients' cash book.
2 The appellant did not attend and was not represented at the hearing of the appeal. Regulation 16 of the Special Commissioners (Jurisdiction and Procedure) Regulations 1994 (SI 1994/1811) provides:
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16(1) If a party fails to attend or to be represented at a hearing of which he has been duly notified, the tribunal may-
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(a) unless it is satisfied that there is good and sufficient reason for such absence, hear and determine the proceedings in the absence of the party or his representative, or
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(b) postpone or adjourn the hearing.
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16(2) Before deciding to hear and determine any proceedings in the absence of a party or his representative, the Tribunal shall consider any representations in writing or otherwise submitted by or on behalf of that party in response to the notice of hearing and shall give any party present at the hearing an opportunity to be heard in regard to those representations.
3. The appellant wrote on 19 February 2001 in response to the notice of hearing. In that letter he indicated that he would not attend the hearing and made written representations. From these it became clear that the appellant had seen the bundle of documents to be produced at the hearing and also a copy of the witness statement of the respondent containing the evidence to be given at the hearing. Accordingly, under reg. 16(1)(a) I decided to hear and determine the proceedings in the absence of the appellant and to consider the representations in his letter of 19 February 2001 during the hearing of the appeal.
4. Taxes Management Act 1970 section 19A subsec-or-para (1)Section 19A(1) of the 1970 Act provides that the section applies where an officer of the Board gives notice under Taxes Management Act 1970 section 9A subsec-or-para (1)s. 9A(1) to the taxpayer of his intention to inquire into the return on the basis of which a taxpayer's self-assessment was made. It was not disputed that a notice under s. 9A(1) had been given to the appellant and that it had been given in time.
5. Subsections 19A (2) and (6) provide:
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(2) For the purpose of enquiring into the return … the officer may at the same or any subsequent time by notice in writing require the taxpayer, within such time (which shall not be less than 30 days) as shall be specified in the notice-
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(a) to produce to the officer such documents as are in the taxpayer's possession or power and as the officer may reasonably require for the purpose of determining whether and, if so, the extent to which the return is incorrect or incomplete … and
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(b) to furnish the officer with such accounts or particulars as he may reasonably require for that purpose…
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(6) An appeal may be brought against any requirement imposed by a notice under subsection (2) above to produce any document or to furnish any accounts or particulars.
6. The appellant argued that the requested documents were not reasonably required by the respondent; that the duty of confidentiality which he owed to his clients prevented disclosure of the requested documents; and, alternatively, that the documents were the subject of legal professional privilege. He also relied upon the Human Rights Act 1998 and the Data Protection Act 1998. The respondent disputed all these claims.
7. Thus the issues for determination in the appeal were:
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(2) whether the requested documents were reasonably required for the purpose of determining whether the appellant's return for 1996-97 was incorrect or incomplete;
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(3) whether the appellant's duty of confidentiality to his clients prevented the disclosure of the requested documents;
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(4) whether the requested documents were covered by legal professional privilege;
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(5) whether disclosure of the requested documents would contravene art. 8 of the Convention in Sch. 1 of the Human Rights Act 1998; and
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(6) whether disclosure of the requested documents would infringe theData Protection Act 1998.
8. A statement of agreed facts was produced. Oral evidence was given by the respondent on his own behalf. A bundle of documents was produced by the respondent which also contained the documents referred to by the appellant in his written representations of 19 February 2001.
9. From the evidence before me I find the following facts.
10. The appellant is a solicitor who practises on his own account. Most of the professional work undertaken by the appellant is conveyancing. On 4 December 1997 the appellant submitted his self-assessment return for the year ending on 5 April 1997. This was reviewed and an enquiry opened by the respondent. The respondent informed the appellant, underTaxes Management Act 1970 section 9As. 9A of the 1970 Act, that he intended to make some inquiries into the return and asked for some information which was provided by the appellant. The information then provided by the appellant included copy invoices, expenses invoices, an office cash book, pass books for three building society accounts used for office account (National Provincial Building Society (National Provincial), Abbey National Building Society (Abbey National) and Marsden Building Society (Marsden)), and passbooks for four building society accounts used for clients' account (National Provincial, Abbey National, Bradford & Bingley Building Society (Bradford & Bingley) and Marsden).
11. The respondent examined this information which indicated that frequently the amounts included in the office cash book were greater than the amounts shown on the invoices. There was no evidence in the documents provided of the reason for the additional payments. Also, the office cash book showed that disbursements had been made for which no supporting documentation was provided. Two of many examples which illustrated the difficulties were put in evidence by the respondent.
12. In the first example a fee note was issued to client A on 25 October 1996 for acting in connection with a mortgage of £96,000.00. The amount of the professional fees shown on the fee note was £150.00. There was an entry in the office cash book on 29 October 1996 showing that £830.75 had been received from client A. This represented payment by client A for the fees and also the repayment of a short term loan of £680.75 made by the appellant to client A on 25 October 1996 and also recorded in the office cash book. In fact, the remittance received from client A amounted to £877.75 which was £47.00 more than the amount shown in the office cash book. On 29 October 1996 that amount was placed in the Marsden office account. On the same day, namely 29 October 1996, the sum of £47 was transferred from the Marsden office account to the Marsden client account and there were no further entries to explain what happened to that money. Also, the amount of the mortgage advance which was received was £95,843.60 and this was placed in the Bradford & Bingley client account. There was no explanation for the difference between this amount and the amount of the advance of £96,000.00 as shown on the invoice. The respondent formed the view that, as the destination of the £47.00, and the difference between the amount of the mortgage and the amount actually received, both concerned clients' money they would both be recorded in a clients' cash book and clients' ledger which would provide the information he required to reconcile the various entries.
13. In the second example a fee note was issued to client B on 13 May 1996 for acting in connection with the purchase of a property for £20,000.00 and a mortgage. The amount of the professional fees shown on the fee note was £300.00. On 17 May 1996, the office cash book recorded the receipt of the sum of £1,300.00 from client B being £1,000.00 for repayment of a loan and £300.00 for fees. Although the office cash book recorded the date of the grant of the loan to client B as 14 May 1996 there was also an earlier transaction on 8 March 1996 of £1,000.00, the receipt of which was recorded in the National Provincial client account. On the same day a receipt and withdrawal of the sum of £1,000 was recorded in the National Provincial office account. There were no explanations for these transactions. The actual remittance of £1,300.00 recorded in the office cash book on 17 May 1996 was not paid in to any of the office building society accounts. However, the National Provincial office account did record the deposit of £2,000.00 on 17 May 1996 and on the same day there was a transfer of £700.00 to the Abbey National client account. The £700.00 was not explained in the documents provided. Also, on 11 May 1996 the National Provincial office account recorded the receipt of £17,000.00 which was transferred to the Abbey National client account the same day. Withdrawals were made from the Abbey National client account of £18,000.00 on 14 May 1996 and of £40.00 and £657.00 on 17 May 1996. There were no explanations for these withdrawals. The respondent formed the view that he was unable to follow the flow of monies on the information he had. As all the discrepancies concerned clients' monies the respondent formed the view that the clients' cash book and clients' ledger were needed to follow the transactions.
14. Accordingly, on 30 April 1999 the respondent asked to see the clients' cash book...
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