R (Browallia Cal Ltd) v City of London General Commissioners
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE EVANS-LOMBE |
| Judgment Date | 04 November 2003 |
| Neutral Citation | [2003] EWHC 2779 (Admin) |
| Court | Queen's Bench Division (Administrative Court) |
| Docket Number | CO/1917/2003 |
| Date | 04 November 2003 |
[2003] EWHC 2779 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
THE ADMINISTRATIVE COURT
Royal Courts of Justice
Strand
London WC2
MR JUSTICE EVANS-LOMBE
CO/1917/2003
MR T BRENNAN QC (instructed by K Legal) appeared on behalf of the CLAIMANT
The DEFENDANT did not attend and was not represented
This is an application for judicial review of a decision by the General Commissioners refusing to extend time for lodging an appeal against a loss determination by an inspector disallowing certain losses alleged by the taxpayer company Browallia Cal Ltd, ("the taxpayer"), for the year of account 1st January to 31st December 1995. During that year, the taxpayer conducted a business of fund management, commodity and financial futures broking and foreign exchange dealing. The losses in question are said to have arisen from commissions paid by the taxpayer in that year of account.
The facts from which the application to this court arises are as follows: it appears that by early 1999, the taxation affairs of the taxpayer had fallen substantially into arrears. At that point in July 1998, the taxpayer appointed Messrs KPMG, the well known firm of chartered accountants, to get its tax affairs straight. Accordingly, on 13th December 1999, Messrs KPMG submitted tax returns for 3 years: 1995, 1996 and 1997. In respect of the year to 31st December 1995, that return included an amount for trading losses of £1,169,567, a sum sufficient to over-top the profits of rather less than a million pounds that the taxpayer made in that year of account. The submission of those returns was acknowledged by the Inspector of Taxes.
On 17th November 2000, the part of Messrs KPMG dealing with the taxpayer's affairs moved its offices from 1–2 Dorset Rise to 1 Canada Square in London. On 10th December of 2001, the relevant Inspector of Taxes made a determination in respect of the claimed tax losses, disallowing them as a deduction from profits. Accordingly, on 11th December, a different inspector issued an assessment to tax against the taxpayer which showed that those losses had been disallowed, but not by reference, it appears, to the fact that there had been an adverse loss determination.
On the same day, the Inspector of Taxes that had raised the assessment also issued a penalty determination against the taxpayer of some £64,086. Messrs KPMG's offices at 1–2 Dorset Rise forwarded the loss determination to their offices at 1 Canada Square on 14th December 2001. I should say that that was a somewhat informal document, the determination being simply handwritten.
It appears that unfortunately the loss determination never became married up with the other documents relating to the taxpayer's affairs in the offices of Messrs KPMG, 1 Canada Square, because on 28th December a notice of appeal by the taxpayer was lodged by Messrs KPMG against the amended assessment to tax for the year to 31st December 1995, and also against the penalty determination, but no appeal was lodged against the loss determination.
On 8th January, the Inspector of Taxes acknowledged the appeal of the taxpayer against the assessment and penalty determination, but no reference was made to the loss determination. In due course, time expired for the lodging of an appeal against the loss determination, and subsequently, when the matter came to light, the Inspector, on application by the taxpayer, declined to permit a lodging of the appeal out of time.
The relevant statutory provisions dealing with applications in respect of proceedings brought out of time are contained in section 49(1) of the Taxes Management Act 1970, which provides as follows:
"An appeal may be brought out of time if on an application for the purpose an inspector or the Board is satisfied that there was a reasonable excuse for not bringing the appeal within the time limited, and that the application was made thereafter without unreasonable delay, and gives consent in writing; and the inspector or the Board, if not satisfied, shall refer the application for determination by the Commissioners."
In the present case, the Inspector received an application for extension of time for lodging the relevant appeal from Messrs KPMG and determined that there had been no reasonable excuse for failing to lodge the appeal within time. It does not appear that any point was raised that the application itself had been made without unreasonable delay.
The matter was then referred to the General Commissioners. Having set out the relevant facts, as I have described them, and section 49(1), the Commissioners concluded in the following way:
"It is common ground between the parties that the failure to appeal the Revenue's Notice of Determination dated 10 December 2001 was an oversight on the part of the Company's advisers. Mr Whitehouse, on behalf of the Company, has argued that the General Commissioners have a wider discretion than that conferred on them by the TMA and that they should have regard to broader principles. The Revenue's position is that our discretion is restricted by section 49(1) of the Act, that is that the only question before us...
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