Karl Morris, Kenneth Cecil Fitch and Marcus Paul Hattersley v Her Majesty’s Revenue and Customs, E 00894
| Jurisdiction | UK Non-devolved |
| Judge | W Theodore O WALLACE |
| Judgment Date | 19 July 2005 |
| Respondent | Her Majesty’s Revenue and Customs |
| Appellant | Karl Morris, Kenneth Cecil Fitch and Marcus Paul Hattersley |
| Reference | E 00894 |
| Court | First-tier Tribunal (Tax Chamber) |
E00894
EVASION PENALTIES – Human Rights – Right to hearing within reasonable time – Powers of Tribunal in event of breach – Held on facts that no breaches – Applications dismissed
KARL MORRIS (LON/99/8004) Appellant
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and –
KENNETH CECIL FITCH (LON/97/1285 Appellant
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and –
HM REVENUE AND CUSTOMS Respondents
MARCUS PAUL HATTERSLEY (MAN/2001/810) Appellant
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and –
HM REVENUE AND CUSTOMS Respondents
Tribunal: THEODORE WALLACE (Chairman)
Sitting in public in London on 20-22 June 2005
Andrew Young, counsel, instructed by Vincent Curley & Co, for the Appellants
Caroline Neenan, counsel, instructed by the Acting Solicitor for HM Revenue and Customs, for the Respondents
© CROWN COPYRIGHT 2005
1. This decision concerns applications by three Appellants in separate appeals, all of whom are all represented by Vincent Curley & Co, for appeals against dishonest evasion penalties to be allowed for want of prosecution. Mr Morris appeals against penalties for evading betting duty which is entirely a domestic tax. The other two appeals concern VAT which is governed by the Sixth Directive. The applications were heard together at the request of the Appellants since they involve the same principles. The facts of course are different and require separate consideration in each case.
2. All the penalties although civil under UK law involve criminal charges for the purposes of Article 6.1 of the European Convention on Human Rights, the first sentence of which is as follows,
“In the determination … of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law.”
3. The Appellants submit that there has been a breach of Article 6.1 and that the Tribunal Rules 1986 enable the Tribunal to direct that the appeals should be allowed.
Rules 19(3) provides,
“Without prejudice to the preceding provisions of this rule a tribunal may of its own motion or on the application of a party to an appeal or application or other person interested give or make any direction as to the conduct of or as to any matter or thing in connection with the appeal or application which it may think necessary or expedient to ensure the speedy and just determination of the appeal including the joining of other persons as parties to the appeal.”
Rule 19(4) gives the Tribunal power to allow or dismiss an appeal or application if any party fails to comply with a direction.
Facts in the application of Mr Morris
4. Mr Morris appealed on 22 January 1999 against a review decision confirming a penalty notified on 12 November 1998 for dishonestly evading betting duty between March 1996 and April 1998, the penalty having been mitigated by 50 per cent to £7,652.
5. Following visits to his betting shop when Customs took up betting slips, Mr Morris was interviewed on 21 April 1998 after being given Notice 210 “Civil Evasion Penalty Investigation.” The interview was tape recorded.
6. In late April following the interview Mr Morris instructed Mr Curley to act for him. Mr Curley is a former Customs officer who is now in private practice as a consultant. After correspondence and a meeting Mr Morris signed a schedule of underdeclared betting duty from 03/96 to 04/98 declaring it to be a full estimate of the duty “not paid through my dishonesty.” The schedule was agreed by Customs and served by the Appellant on 31 October 1998. The penalty with 50 per cent mitigation was notified on 12 November. The penalty was confirmed on review and Mr Morris appealed on 22 January 1999 stating, “The penalty is excessive and does not fully reflect the co-operation provided.”
7. On 25 June 1999 following two extensions of time and a direction by the Registrar the Statement of Case was served. The appeal was stood over for two months at Mr Curley’s request for discussions as to a possible settlement and a further stand over was given to 9 November because Mr Curley was awaiting copy documents.
8. In late 1999 Mr Curley raised the point that the penalty is criminal for Human Rights purposes and asked Customs as the prosecuting authority for legal aid. An amended notice of appeal raised various points including the application of the Police and Criminal Evidence Act. Discussions followed between the parties as to joining Mr Morris’ appeal with that of Han and Yau, for whom Mr Curley also acted, to decide whether the penalties were criminal for the purposes of Article 6.1 of the European Convention on Human Rights.
9. After a hearing on 24 July 2000 the President directed by consent that a series of appeals including that of Mr Morris and Han and Yau should proceed to a preliminary hearing on the applicability of Article 6. The preliminary hearing was held on 5 December 2000 with Kenneth Parker QC appearing for Customs and Mr Oliver decided that Article 6.1 did apply [2000] VATTR 312.
10. Customs appealed with leave direct to the Court of Appeal. Their appeal was dismissed by a majority on 3 July 2001 [2001] STC 1188. Permission to appeal to the House of Lords was granted but was not pursued.
11. The implications of the application of Article 6.1 were not considered by the Tribunal and were not therefore the subject of the appeal to the Court of Appeal. In particular the applicability of the Police and Criminal Evidence Act and the standard of proof were not resolved, although observations were made by the Court.
12. No steps were taken by either party or the Tribunal following the decision of the Court of Appeal in July 2001 until 9 September 2002 when the Tribunal sent a letter for dates to avoid for an appeal hearing.
13. Vincent Curley & Co wanted to have a Tribunal decision in Han and Yau as to the burden of proof and standard of evidence and instructed leading counsel. They asked for Mr Morris’ appeal to be stood over meanwhile. Customs did not oppose the application and the appeal was stood over on 11 November 2002 for 6 months or 6 weeks from the decision in Han and Yau if sooner.
14. In the event the appeal in Han and Yau was allowed by the Tribunal on 15 May 2003 by reason of the failure of Customs to comply with a direction of the Tribunal.
15. A direction hearing on 12 June 2003 was adjourned for 14 days for inquiries as to the whereabouts of the betting slips. On 7 July the Appellant applied for the appeal to be allowed because Customs had not notified the Appellant within 14 days. On 15 July Customs notified the Tribunal that the slips were held at Cardiff.
16. After a hearing on 25 September 2003 the Tribunal dismissed the application for the appeal to be allowed under Rule 19(4) and directed the Appellant to serve a skeleton argument in support of the separate submission that the appeal should be allowed under Rule 19(3) applied in accordance with Article 6.1 providing for “a fair and public hearing within a reasonable time.”
17. The Appellant served a skeleton argument and applied for the application to be joined with those of Mr Fitch, Mr Hattersley and others to argue the...
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