R Tony Michael Jimenez v The First Tier Tribunal (Tax Chamber) (First Respondent) HM Commissioners for Revenue and Customs (Second Respondent)
| Jurisdiction | England & Wales |
| Judge | Charles J |
| Judgment Date | 20 October 2017 |
| Neutral Citation | [2017] EWHC 2585 (Admin) |
| Court | Queen's Bench Division (Administrative Court) |
| Date | 20 October 2017 |
| Docket Number | Case No: CO/4331/2016 |
[2017] EWHC 2585 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Charles
Case No: CO/4331/2016
Rory Mullan and Paul Luckhurst (instructed by Excello Law) for the Claimant
Julie Anderson (instructed by HMRC) for the Second Respondent
Hearing date: 28 June 2017
Introduction
Permission to bring these proceedings for judicial review was limited to one ground which raises an issue of statutory construction on the jurisdiction of the Second Respondent (the Revenue – who I shall refer to in the singular) to give a notice under Schedule 36 to the Finance Act 2008 (Schedule 36) to the Claimant in Dubai.
The Claimant summarised this ground as follows: "The power to issue notices under Schedule 36 does not extend to subvert the sovereignty of foreign states. It does not have extra territorial effect. There was no power to issue a notice against the Claimant who is resident in Dubai". In advancing this ground the Claimant refers to and relies on the Masri principle and places particular reliance on a decision of the Supreme Court relating to disclosure notices given pursuant to an order made under the Proceeds of Crime Act 2002 ( POCA), namely Perry v SOCA [2012] 4 All ER 795.
The Revenue complained about the recitation by the Claimant as facts that he was resident in Cyprus for much of the period to which the notice relates, which covers the period 6 April 2004 to 5 April 2013 (although a request about the use of chauffeurs when visiting the UK does not have an end date) and that he is now resident in Dubai. But the Revenue has not sought to justify the giving of the notice under Schedule 36 to the Claimant by asserting either that he was resident in the UK when it was given, or that he was not resident or did not live in Dubai when the notice was given.
Rather, the Revenue asserts that the Claimant is a taxpayer for the purposes of Schedule 36 and it has the power to give a notice under Schedule 36 to any such taxpayer outside the UK to assist it to establish that taxpayer's tax position (as defined by Schedule 36). In other words, the Revenue argues that there is no territorial limit to the giving of a notice to a taxpayer under Schedule 36.
The underlying disputes on residence and the Claimant's liability to UK tax and whether that liability could be founded on residence rather than domicile may have been relevant to fairness grounds for which the Claimant was not given permission to bring proceedings for judicial review. But it was not argued that they, or the Claimant's challenge to the point that the notice was reasonably required for the relevant purpose set out in Schedule 36, were relevant on the jurisdictional issue for which permission to bring this challenge was given.
So, I proceed on the basis that the two underlying contentions of the respective arguments are correct namely that, as the Revenue asserts, the Claimant is a taxpayer (for the purposes of Schedule 36), and that when the notice was given to the Claimant he was, as he asserts, resident in Dubai (or was living there and any issues on his residence are not relevant to the jurisdictional issue).
The First Respondent, the First-tier Tribunal, has taken no part in these proceedings.
Schedule 36
By Part 1 of Schedule 36, the Revenue is given the power to serve information notices, which are defined by paragraph 6 of Schedule 36 to include notices under paragraphs 1, 2 and 5 thereof. So, all three types of notice are "information notices" with the result that references to an information notice in the later provisions of Part 7 "Penalties" and Part 8 "Offences" apply to all of them.
By Part 2 of Schedule 36, the Revenue is given the power to enter a person's business premises and to inspect them and business assets and documents that are on the premises if the inspection is reasonably required for the purpose of checking that person's tax position.
The first type of information notice is defined as a "taxpayer notice" and can be given to a person if the information or document is reasonably required for the purpose of checking that person's (the taxpayer's) tax position (see paragraph 1 of Schedule 36).
The second type of information notice is defined as a "third party notice" and can be given to a person if the information or document is reasonably required for the purpose of checking the tax position of another person whose identity is known to the Revenue (the taxpayer). Such a notice must name the taxpayer to whom it relates unless the First-tier Tribunal has approved the giving of the notice and disapplied this requirement.
"Taxpayer" in relation to a taxpayer notice and a third party notice is defined by paragraph 58 as having the meaning in paragraph 1( 1) or 2(1) as appropriate. Paragraph 58 also provides that "checking" includes the carrying out of any investigation of any kind and so at least arguably whether a person is a taxpayer. Paragraph 64 provides that a person's tax position includes his position as regards past, present and future liability to pay any tax and paragraph 63 defines "tax" by reference to a list of UK taxes and "relevant foreign tax", which is defined as follows:
(4) In this Schedule "relevant foreign tax" means—
(a) a tax of a member State, other than the United Kingdom, which is covered by the provisions for the exchange of information under the Directive of the Council of the European Communities dated 19 December 1977 No. 77/799/EEC (as amended from time to time), and
(b) any tax or duty which is imposed under the law of a territory in relation to which arrangements having effect by virtue of section 173 of FA 2006 (international tax enforcement arrangements) have been made and which is covered by the arrangement.
The third type of information notice is not given a name and can be given pursuant to paragraph 5 of Schedule 36 to a person if the information or document is reasonably required for the purpose of checking the tax position of a person or class of persons whose identities are not known to the Revenue.
The power to give all three types of information notice is triggered if the relevant reasonable requirement exists.
A taxpayer notice can be given without the approval of the First-tier Tribunal. So can a third party notice, if the taxpayer has agreed that it can be given (and in some other special cases set out in Part 6)..
When it can give an information notice without the approval of the First-tier Tribunal, the Revenue can, and I understand often does, seek and obtain the approval of the First-tier Tribunal to the giving of a taxpayer and a third party notice. That approval has the result that the person who is given the information notice cannot appeal against the notice or any requirement in it. However, a person given the third type of information notice (that can only be given with the approval of the First-tier Tribunal) can appeal to the First-tier Tribunal on the ground that it would be too onerous to comply with it.
Also, the approval of the First-tier Tribunal is a condition of the offences of concealing etc documents included in Part 8 for which a person can be fined on summary conviction and imprisoned on conviction on indictment.
Pursuant to paragraph 3 of Schedule 36, the Revenue sought the approval of the First Respondent (the First-tier Tribunal) for the giving of the notice to the Claimant that is the subject of these proceedings.
Paragraphs 3 and 4 of Schedule 36 provide:
Approval etc of taxpayer notices and third party notices
3(1) ————————
(2) An officer of Revenue and Customs may ask for the approval of the First-tier Tribunal to the giving of any taxpayer notice or third party notice (and for the effect of obtaining such approval see paragraphs 29, 30 and 53 (appeals against notices and offence)).
(3) The First-tier Tribunal may not approve the giving of a taxpayer notice or third party notice unless—
(a) an application for approval is made by, or with the agreement of, an authorised officer of Revenue and Customs,
(b) the Tribunal is satisfied that, in the circumstances, the officer giving the notice is justified in doing so,
(c) the person to whom the notice is addressed has been told that the information or documents referred to in the notice are required and given a reasonable opportunity to make representations to an officer of Revenue and Customs,
(d) the First-tier Tribunal has been given a summary of any representations made by that person, and
(e) in the case of a third party notice, the taxpayer has been given a summary of the reasons why an officer of Revenue and Customs requires the information and documents.
(4) Paragraphs (c) to (e) of sub-paragraph (3) do not apply to the extent that the First-tier Tribunal is satisfied that taking the action specified in those paragraphs might prejudice the assessment or collection of tax.
(5) Where the First-tier Tribunal approves the giving of a third party notice under this paragraph, it may also disapply the requirement to name the taxpayer in the notice if it is satisfied that the officer has reasonable grounds for believing that naming the taxpayer might seriously prejudice the assessment or collection of tax.
Copying third party notice to taxpayer
4(1) An officer of Revenue and Customs who gives a third party notice must give a copy of the notice to the taxpayer to whom it relates, unless the First-tier Tribunal has disapplied this requirement.
(2) The First-tier Tribunal may not disapply that requirement unless—
(a) an application for approval is made by, or with the...
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