New Fashions (London) Ltd v R & C Commissioners
| Jurisdiction | England & Wales |
| Judge | THE HONOURABLE MR JUSTICE LIGHTMAN,Mr Justice Lightman |
| Judgment Date | 21 July 2005 |
| Neutral Citation | [2005] EWHC 1628 (Ch) |
| Docket Number | Case No: CH/2005/APP/0315 |
| Court | Chancery Division |
| Date | 21 July 2005 |
[2005] EWHC 1628 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr Justice Lightman
Case No: CH/2005/APP/0315
Mr M A Nusrat (instructed by Blue Star Universal, 203/209 North Gower Street, London NW1 2NJ) for the Appellant
Mr Akash Nawbatt (instructed by The Solicitor, HM Revenue and Customs, Somerset House, Strand, London WC2R 1LB) for the Respondent
Hearing dates: 21 st July 2005
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Mr Justice Lightman
INTRODUCTION
This is an appeal by way of case stated by New Fashions (London) Limited ("the Taxpayer") from a decision ("the Decision") of the General Commissioners ("the Commissioners") confirming determinations under Regulation 49(1) of the Income Tax (Employment) Regulations 1993 and decisions made under Section 8 of the Social Security Contributions (Transfer of Functions etc) Act 1999. The question of law that arises on this appeal is whether the Commissioners, on the facts found by them, were entitled to dismiss the Taxpayer's appeal. The Taxpayer was represented by Mr Nusrat and the Revenue, the defendant to the appeal, by Mr Nawbatt.
BACKGROUND
The Taxpayer specialises in the manufacture of ladies clothing. The Taxpayer began trading from premises in East London on the 1st March 2001. On the 11th October 2002 and the 21st July 2003, determinations were issued under Regulation 49(1) of the Income Tax (Employment) Regulations 1993 for the years 2001/02 and 2002/03 respectively. Corresponding decisions were issued under Section 8 of the Social Security Contributions and Benefits Act 1992.
The determinations were issued following a full employer compliance review which concluded that a series of invoices purporting to have originated from two companies, namely Golden Tower Clothing Limited ("Golden") and Dexan Fashion Limited ("Dexan"), had been falsely created in order to disguise, as trading expenses, cash payments taken out of the taxpayer company as remuneration. The inclusion of these invoices in its annual accounts and returns had enabled the Taxpayer to avoid Schedule E/PAYE deductions and national insurance contributions.
The invoices total £236,020 for the tax years 2001/02 and 2002/03. The determinations estimated the total tax due as £111,591. The corresponding decisions estimated that National Insurance Contributions totalling £36,062 were due for the same tax years.
The Taxpayer appealed to the Commissioners who heard the case on the 27 th May and the 30th September 2004. The question for their determination was whether the amounts drawn in cash from the Taxpayer's bank account had been paid in settlement of legitimate trading expenses. Having heard evidence from witnesses called by both the Taxpayer and the Revenue, by the Decision the Commissioners confirmed both the Regulation 49 determinations and the Section 8 decisions. The Decision was communicated to the Taxpayer in a letter dated the 2nd October 2004.
GROUNDS OF APPEAL
I shall consider in turn each of the Taxpayer's grounds of appeal. I must acknowledge the valued assistance which I received from Mr Nawbatt.
(a) Article 6
The first ground is that the Commissioners reached the Decision in breach of Article 6 of the European Convention on Human Rights ("Article 6") in that Mr Rahman, the director of the Taxpayer, who attended the hearing and gave evidence on its behalf, was born and brought up in Bangladesh and has a very poor command of English, but at the hearing was not provided with the assistance of a Bengali interpreter and he could not understand the proceedings.
There is no legal or factual merit in this claim. Article 6 does not apply to tax disputes as, although of direct financial interest to the taxpayer, they do not involve "civil rights and obligations": Ferrazzini v Italy [2001] STC 1314. Insofar as the Taxpayer may say that the failure to provide Mr Rahman with a Bengali interpreter amounted to a "serious procedural or other irregularity" within CPR Rule 52.11(3)(b), it is to be noted that:
i) (as Mr Nusrat confirmed to me) Mr Rahman knew of his entitlement to legal representation at the hearing but decided against it;
ii) no request for an interpreter was made either before or at the hearing before the Commissioners;
iii) during the hearing Mr Rahman gave evidence in English and was cross-examined in English. At no stage did Mr Rahman say or give any indication that he could not understand the proceedings;
iv) the Taxpayer was represented at the hearing by its qualified accountant, Mr Zaman of S A Zaman & Co who (Mr Nusrat confirmed) was fluent in English. Representation by Mr Zaman is recorded in the Case Stated. There is no basis for the contention in the Taxpayer's skeleton argument that Mr Zaman was only present as a witness; this contention is at odds with the Case Stated which records that only Mr Rahman and Mr Dhar (the Taxpayer's manager) gave evidence on behalf of the Taxpayer at the hearing;
v) (as established by the witness statement of Mr Walsh) prior to the hearing before the Commissioners several meetings took place between Mr Rahman and Customs and Excise and the Revenue, all of which were satisfactorily conducted exclusively in English. No request for an interpreter was ever made at any of these meetings.
(b) Witness Statements
The second ground is that the Taxpayer had not been asked or advised to file and serve the defence witness statements and that this constituted a procedural irregularity which was unfair and prejudicial to the Taxpayer.
In Kingsley v Billingham (Inspector of Taxes) [1992] STC 132 at 138 Knox J said:
"Whether a person has professional representation before the Special Commissioners is a matter for the person to decide, but if he decides to dispense with professional representation, although a tribunal will other things being equal be anxious to prevent any unfair advantage being taken of his lack of experience and expertise, nevertheless the person subjects himself to the normal legal process and there is no transfer of responsibility from the litigant however unversed in the technicalities of the law he may be to the tribunal, in this case the Special Commissioner, of the obligations of each side to make their case before the tribunal".
This passage was cited with approval by Potter LJ in Hurley v Taylor (Inspector of Taxes) [1999] STC 1 at 18.
The Commissioners were not required or obliged to advise or guide the Taxpayer on the conduct of...
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