R David Bottomley (Claimant) The General Commissioners of Income Tax Pontefract Division (Defendant) The Commissioners for HM Revenue and Customs (Interested Party)
| Jurisdiction | England & Wales |
| Judgment Date | 25 June 2008 |
| Neutral Citation | [2009] EWHC 1708 (Admin) |
| Docket Number | CO/503/2007 |
| Court | Queen's Bench Division (Administrative Court) |
| Date | 25 June 2008 |
[2009] EWHC 1708 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
THE ADMINISTRATIVE COURT
Kenneth Parker QC
(Sitting as a Deputy High Court Judge)
CO/503/2007
Dr R A Milton acting as McKenzie Friend appeared on behalf of the Claimant
Mr V Sacholeva (instructed by Treasury Solicitors) appeared on behalf of the Defendant
Mr C Zwart (instructed by Her Majesty's Revenue and Customs) appeared on behalf of the Interested Party
THE DEPUTY JUDGE:
Introduction
The claimant, Mr David Bottomley, brings this judicial review against the decision dated 11th January 2007 of the General Commissioners of Income Tax Pontefract Division (“the General Commissioners”) taken after a two day hearing, first, to dismiss the claimant's appeals against Revenue assessments made pursuant to section 29 of the Taxes Management Act 1970 (“ TMA 1970) for the tax years 1998/99, 1999/2000 and 2000/01 and, secondly, to dismiss appeals against the amendments made to the self-assessments by the Commissioners for Her Majesty's Revenue and Customs (“the Revenue”) under section 28A(2)(b) TMA 1970 for the tax years 2001/02 and 2002/03.
The claimant alleges that the decision of the General Commissioners, who are the defendants to this claim, was vitiated by bias, real or apparent, in favour of the Revenue, who is the interested party in this claim. The amount of income tax at issue is about £12,500.
The claimant had a right of appeal by way of case stated under regulation 20 of the General Commissioners (Jurisdiction and Procedure) Regulations 1994 to challenge the relevant decision for an error of law, which would include any alleged material error in the procedure adopted by the General Commissioners that rendered the hearing unfair to the claimant. The claimant has not pursued that alternative course, but has, as I have mentioned, chosen to bring his claim against the General Commissioners by way of judicial review to this court.
Background
On 21st November 2002 the 2001/02 tax return of the claimant was submitted by the claimant's then agents, Messrs M Wesley Chapman & Co (“MWC”). This return contained entries in respect of the claimant's self-employment as sole proprietor of The Vintner Restaurant, 42a Flowergate, Whitby, North Yorkshire.
On 31st October 2003 the Revenue opened an inquiry into the return pursuant to section 9A of the TMA by writing to the claimant, with a copy to the agent, asking for information and production of business records. MWC submitted a copy of the business accounts, tax computations and analysis of private drawings together with business records for the year ended 31st March 2002. The Inspector examined the business records and information provided.
The Revenue had concerns over the accuracy of the records and the amount of recorded cash drawn by the claimant and available for private spending. The Revenue held a meeting with the claimant and MWC. No final agreement was reached and the inquiry continued. The Revenue requested production of private bank accounts, which MWC provided for a sample period, with an explanation that deposits into the account included amounts paid in by the claimant's partner who was living with him and contributing towards household expenses.
On 15th December 2004 the Inspector wrote to the agent stating that the onus of proving the source of the deposits into his private bank account lay with the client and, in the absence of verification, the Revenue would treat the deposits as unrecorded business takings. The Inspector also indicated that he would need to see further documents. However, as an alternative to requiring production of further documents, the Inspector put forward some proposals for additions to profit on a without prejudice basis not only for 2002, but also earlier years and for 2003. These proposals were not accepted.
On 8th February 2005 the Revenue issued a notice requiring the production of documents and other information under section 19A of the TMA 1970.
On 28th March 2005 Dr Milton of Milton & Co wrote to the Inspector to tell him that that firm now acted for the claimant in respect of the inquiry. According to the oral evidence which he gave to this court, Dr Milton has both considerable expertise in tax law and practice and very substantial experience gathered over many years of advocacy on behalf of appellant tax payers before the General Commissioners. Further correspondence followed between Dr Milton and the Revenue, and on 17th April 2005 Dr Milton asked for the case to be listed before the General Commissioners for a closure notice.
At a hearing on 6th September 2005 the General Commissioners directed the closure of the enquiries for the 2001/02 and 2002/03 tax years. In accordance with that direction on 15th September 2005 an Inspector issued the requisite notice in a letter to Dr Milton.
The notice proposed an increase in profits of £12,453 for 2002 and an addition of £8,000 for 2003. The Revenue also raised assessments to bring into charge additional profits in respect of the tax years 1998/99, 1999/2000 and 2000/01 of £6,000, £8,000 and £10,000. The total additional tax charged was £12,551.75. Appeals and applications to postpone payment of all additional tax were lodged by Dr Milton in his letter of 26th September 2005.
The hearing of the General Commissioners was originally set for 22nd November 2006. Dr Milton was served with two volumes of documents by the Revenue, including copies of correspondence, documents, legislation and authorities and two witness statements, one from the Revenue case worker, Mr Francis Tostevin, who had carried out the inquiry, and one from an employee of Scarborough Council who provided information about the date the former partner moved out of the home shared with the claimant. Dr Milton accepted the truth of the second statement and agreed that that witness need not attend the hearing. On arrival at the hearing venue the hearing was cancelled due to illness of one of the tribunal members. It was later re-listed for hearing on 8th and 9th January 2007.
The Revenue posted a supplementary bundle to the Clerk to the Commissioners and Dr Milton, comprising mainly the correspondence between November 2006 and the hearing date and a witness statement from a second Revenue officer in the light of Dr Milton's criticisms of that officer's conduct in the case. The claimant served no witness statement before the hearing and none was produced at the hearing.
The course of the hearing on 8th and 9th January 2007 was, in very broad outline, as follows. Dr Milton, on behalf of the claimant, was invited to open his case by the Chairman. He opened and called the claimant to give evidence and the claimant was cross-examined by the Revenue. Dr Milton concluded his case on the second day. The Revenue then presented their case and called its witness, Mr Francis Tostevin, who was cross-examined by Dr Milton. Dr Milton did not wish to cross-examine the second Revenue witness.
After the two day hearing the Commissioners dismissed the appeals, stating in their decision letter as follows:
“We, the Commissioners, are of the opinion that the evidence admitted to us in support of the appeals cannot be relied upon to show the whole of the trading profit of the business and we accept that all of the assessments made by the Revenue were properly made.”
The hearing before me
For the purposes of the hearing before me there were witness statements on behalf of the claimant from the claimant himself and from Dr Milton. The claimant and Dr Milton were cross-examined at the hearing on their statements by counsel for the General Commissioners. There were two witness statements from each of the tribunal members, that is the Chairman, Ian Bloomer, and the two wing members, Richard Gordon Smith and Paul Jervis. On behalf of the Revenue there were witness statements from Anne Aldridge, Head of the Revenue Appeals Unit based in Leeds, who acted as the Revenue's advocate at the relevant hearing, and from Francis Healey, a Senior Revenue Officer with the Appeals Unit, who attended the relevant hearing to assist Anne Aldridge.
On 12th June 2009 Dr Milton, on behalf of the claimant, confirmed that he did not wish to cross-examine any of the witnesses whose statements had been filed on behalf of the General Commissioners and the Revenue. Also before me were the notes of the relevant hearing, running to some 20 pages, made contemporaneously by the Clerk to the General Commissioners, Anne Caswell.
At the hearing of this claim I allowed Dr Milton to present the claimant's case, a course to which counsel for the General Commissioners and for the Revenue did not object.
The legal framework
As I have indicated, the claimant alleges bias on the part of the General Commissioners. The test for apparent bias was described in Lawal v Northern Spirit [2003] UKHL 35 as follows. The court must first ascertain all the circumstances which have a bearing on the suggestion that the judge was biased. It must then ask whether those circumstances would lead a fair-minded and informed observer to conclude that there was a real possibility, or a real danger, the two being the same, that the tribunal was biased. A judge may and commonly will begin forming views about the evidence as it goes along and he or she may...
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