Louis Andre Monteil v Board of Inland Revenue

This appeal raises the question whether the pay as you earn (“PAYE”) provisions of the Income Tax Act (Ch 75:01) (“ITA”) were at the relevant time the mandatory and exclusive means by which the Board of Inland Revenue (“the Revenue”) could recover unpaid income tax on an employee's income from emoluments and interest thereon.

The appeal involves a question of the interpretation of certain provisions of the ITA in the context of the statute as a whole. No secondary materials have been adduced to assist in the interpretation of the relevant provisions. In carrying out the task of statutory interpretation the court is “seeking the meaning of the words which Parliament used”: Williams v Central Bank of Nigeria[2014] UKSC 10; [2014] AC 1189, para 72 per Lord Neuberger of Abbotsbury. The House of Lords in R v Secretary of State for the Environment, Transport and the Regions, Ex p Spath Holme Ltd[2001] 2 AC 349, 396–398 per Lord Nicholls of Birkenhead, and the United Kingdom Supreme Court in R (Project for the Registration of Children as British Citizens) v Secretary of State for the Home Department[2022] UKSC 3; [2023] AC 255, paras 29–31 per Lord Hodge, have placed emphasis on the importance of interpreting statutory words in their context. In the latter case the Court stated:

“Words and passages in a statute derive their meaning from their context. A phrase or passage must be read in the context of the section as a whole and in the wider context of a relevant group of sections. Other provisions in a statute and the statute as a whole may provide the relevant context. They are the words which Parliament has chosen to enact as an expression of the purpose of the legislation and are therefore the primary source by which meaning is ascertained.” (para 29)

It is necessary to read the PAYE provisions of the ITA, on which the appellant founds, in this wider statutory context. The scheme of the ITA, which the legislature must have envisaged to be a workable scheme, assists in the interpretation of those provisions.

The appellant, Mr Louis Andre Monteil, was an employee of Colonial Life Insurance Co (Trinidad) Ltd (“CLICO Trinidad”) from 1991. In 2005 his employment agreement was transferred to CL Financial Ltd, the parent company of CLICO Trinidad. In 2009 the Government of Trinidad and Tobago had to bail out CL Financial Ltd and thereby became its largest creditor. CL Financial Ltd has since been placed into liquidation.

In July 2009 the appellant submitted his tax return for the income tax year 2007/2008 together with certificates from his employers within the CLICO group of companies under regulation 12 of the Income Tax (Employment) Regulations (“the Regulations”) that stated that the total amount of all emoluments paid to him was TT$1,380,985.

The Revenue initially accepted the appellant's income tax return. Thereafter, having conducted an audit of the tax return, the Revenue proposed to adjust the return, stating that there were both unreported income of TT$20,305,285.50 and benefits in kind of TT$28,002,495.73 and disallowing tertiary expenses of TT$60,000. The Revenue therefore proposed to adjust the appellant's income tax liability upwards by TT$12,091,945.56.

By a notice of assessment dated 1 October 2012 (“the disputed assessment”) the Revenue assessed the appellant's income tax liability in the sum of TT$20,351,875.61, comprising a slightly reduced additional tax liability of TT$12,085,496.10 and additional interest on that sum of TT$8,266,379.51. The Revenue later adjusted the additional tax liability to TT$12,383,117.40 by letter of 1 December 2014.

The appellant appealed this assessment to the Tax Appeal Board on 13 January 2015.

In his grounds of appeal to the Tax Appeal Board the appellant challenged the categorisation of substantial sums as taxable emolument income. The Board is not concerned with those challenges which the Tax Appeal Board has not yet determined. The only matter before the Board is the preliminary issue addressed by the Tax Appeal Board, which is whether the statutory PAYE regime prescribed a mandatory and exclusive procedure for the Revenue to collect and recover taxes on emolument income, with the effect that the Revenue can recover outstanding sums of such tax only from the appellant's insolvent former employers.

By a ruling on the preliminary issue dated 2 February 2017 the Tax Appeal Board (HH Anthony DJ Gafoor (Chairman), HH Roland N Hosein and HH Ishri H Rampersad) held that the Revenue had the power to raise an assessment or an additional assessment on an individual emolument earner under sections 83 or 89 of the ITA and that, if his employers failed to deduct and remit PAYE to the Revenue, the employee remained under an obligation to pay the tax under section 79(7) of the ITA.

The appellant appealed by case stated to the Court of Appeal. In a judgment dated 18 November 2022 the Court of Appeal (Bereaux, Kokaram and Boodoosingh JJA) dismissed the appeal. In the judgment delivered by Kokaram JA the Court of Appeal held that section 99 of the ITA, which established the PAYE regime, did not prevent the Revenue for raising an additional assessment against a taxpayer, who had received emolument income, for income tax which his employer had not deducted from the income which it paid to him. Sections 79(7), 83 and 89 of the ITA empowered the Revenue to assess the employee to income tax and to recover the assessed liability to tax from him.

The appellant now appeals to the Board with the leave of the Court of Appeal.

As the Board has stated at the outset of this judgment, the issue is whether the PAYE provisions of the ITA for the collection from an employer of income tax on the emolument income of an employee were the mandatory and exclusive means by which the Revenue could recover unpaid tax on an employee's income and interest thereon. The parties have divided this issue into two questions, each of which contains an alternative. The Board, for ease of exposition, presents those questions as the following four questions:

The Board observes that the third and fourth questions, which speak of the sums stated in the adjusted assessment, are to be understood as being subject to the substantive challenges which the appellant has made to the categorisation of the sums which the Revenue has treated as the appellant's income from emoluments in the tax year 2007/2008 which the Tax Appeal Board has yet to determine. See para 9 above.

The appellant's submission, that the PAYE provisions are the mandatory and exclusive means by which the Revenue can recover income tax on income from emoluments, rests on the wording of section 99 of the ITA, which is located in a group of sections under the heading “Collection and recovery of tax”. This section provides so far as relevant:

“(1) Notwithstanding any provision of this Act to the contrary, where emoluments arise or accrue in or are derived from or received in Trinidad and Tobago in a year of income for the benefit of an employee or the holder of an office, tax shall, subject to and in accordance with any Regulations made under section 125, be deducted or withheld by the person providing the emolument. (Emphasis added)

(1A) If any question arises as to whether—

• (a) an amount is an emolument in respect of which tax shall be deducted or withheld pursuant to this section …

such question shall be determined by the Board in writing subject to the provisions of this section relating to objections and appeals against the determination of the Board. (Emphasis added)

(1B) Where the Board is of the opinion that an amount is an emolument and that the correct taxes have not been deducted or withheld, it shall –

• (a) cause to be served on the person providing the emolument, notice of its determination under subsection (1A), demanding the amount of tax to be deducted or withheld by that person; and

• (b) inform the person of his right to object.” (Emphasis added)

Subsection (1C) provides that that person served with the notice of determination may give a notice of objection to the Revenue requesting the Revenue to review its decision; and subsection (1D) applies mutatis mutandis other sections of the Act relating to objections and appeals for the purposes of section 99.

Section 99 continues:

• “(2) The tax deducted or withheld as required by subsection (1) shall … be paid to the Board by the person deducting or withholding the same … and on the payment thereof the Board shall send to such person a receipt which shall … be a good and...