R v Commissioners of Inland Revenue, ex parte Archon Shipping Company and Others
| Jurisdiction | England & Wales |
| Judgment Date | 29 June 1998 |
| Date | 29 June 1998 |
| Court | Crown Court |
Queen's Bench Division (Crown Office List).
Scott Baker J.
Patrick Way (instructed by Hill Taylor Dickinson) for the applicants.
Timothy Brennan (instructed by the Solicitor of Inland Revenue) for the Crown.
The following cases were referred to in the judgment:
R v IR Commrs, ex parte Continental Shipping Ltd SA TAX[1996] BTC 341
R v IR Commrs, ex parte Coombs (TC) & Co TAXELR[1991] BTC 89; [1991] 2 AC 283
R v IR Commrs, ex parte Kingston Smith TAX[1996] BTC 556
Judicial review - Revenue's power to call for documents - Notice requiring information relating to overseas companies alleged to be controlled by taxpayers whose affairs were being investigated - Whether consent of general commissioner properly obtained - Whether notices valid - Taxes Management Act 1970 section 20 subsec-or-para (3) section 20 subsec-or-para (7)Taxes Management Act 1970, ss. 20(3), (7).
This was an application for judicial review seeking to quash notices requiring disclosure of documents under Taxes Management Act 1970 section 20 subsec-or-para (3)s. 20(3) of the Taxes Management Act 1970.
As a result of an investigation of the affairs of two individuals, the Kollakis brothers, the Revenue obtained the consent of a general commissioner pursuant to Taxes Management Act 1970 section 20 subsec-or-para (7)s. 20(7) of the 1970 Act to issue eight notices under Taxes Management Act 1970 section 20 subsec-or-para (3)s. 20(3). Six notices were issued to a ship broker and two notices to a bank requiring the production of documents in respect of offshore companies, suspected of fraud, which the Revenue believed were under the control of the Kollakis brothers and which they believed were liable to UK tax. The brokers and the bank had raised no objection to the notices.
The applicants submitted that the general commissioner should not have consented to the issue of the notices for the following reasons. The inspector could not have reasonably believed that all the companies concerned were guilty of fraud. The Revenue's approach was general, not specific. Since at least 24 notices were issued at the same time (including 16 which were not the subject of the present application) there could not have been time at the hearing before the general commissioner to consider the merits of each, particularly since each company was accused of fraud. Three of the notices were demonstrably wrong in that the documents specified could not have existed because they predated the incorporation of the companies in question. The notices were part of an oppressive campaign against the Kollakis brothers. In the circumstances the presumption that the Revenue had acted regularly was rebutted.
Held, refusing the application:
Parliament had created safeguards for the taxpayer by requiring an independent general commissioner to be satisfied that proposed notices were justified. There was no appeal provision for an appeal from the commissioner's giving of consent. Where consent had been obtained, the court should not set aside a notice on an application for judicial review except in exceptional circumstances where there were clearly identifiable reasons to do so. Here there was no evidence on which the presumption of regularity could be rebutted, or to suggest that the notices were not properly issued.
Scott Baker J: This is an application for judicial review of a decision by an inspector of taxes to issue eight notices pursuant toTaxes Management Act 1970 section 20 subsec-or-para (3)s. 20(3) of The Taxes Management Act 1970. All are dated 16 January 1997 and the applicants seek to have the notices quashed.
Six were served on H Clarkson & Co Ltd, two were served on Chase Investment Bank Ltd.
The notices were all signed by JW Graham, an inspector of taxes, and also by a general commissioner.
The applicants are Liberian or Cypriot companies, that is, offshore companies.
Since 1993 the Revenue has been interested in the taxation affairs of Mr Pantelis Kollakis and Mr George Kollakis, who are brothers. The Revenue's enquiries have led on to a large number of offshore companies, including the applicants.
The Revenue believe that they are liable to corporation tax in the UK.
Clarkson are shipbrokers who have acted in relation to the purchase or sale of ships owned by a number of companies which the Revenue believe to be under the control of the Kollakis brothers. These include all the applicant companies, except Wethersfield. Neither Clarkson nor Chase has raised any objection to these notices.
I turn next to the notices. The first notice is directed to H Clarkson & Co Ltd at 12 Camomile Street in the City of London, and it runs as follows:
I the undersigned, being one of Her Majesty's Inspectors of Taxes, authorised for the purpose of Taxes Management Act 1970 section 20section 20 of The Taxes Management Act 1970 for the purpose of enquiring into the tax liability of Archon Shipping Corporation, hereby require you under Taxes Management Act 1970 section 20 subsec-or-para (3)subsection 3 of that section, not later than 23 February 1997 to deliver to me at the above office, or, if you so elect, make available for inspection by JW Graham, all such documents in your possession or power for the period from 6 April 1988 to 5 April 1996 as specified or described in the schedule below.
Then in para. 2 attention is drawn to Taxes Management Act 1970 section 20B subsec-or-para (4)s. 20B(4) and Taxes Management Act 1970 section 20BB subsec-or-para (1) section 20BB subsec-or-para (5)s. 20BB(1) and (5) on an enclosed form; and then the schedule is headed in relation to the vessel Mineral Europe and then it seeks records of instruction given, the correspondence files, and "internal records of your company relating to its dealings with Cappa Maritime Ltd, Cappa Maritime Ltd's representatives or advisers, including all discussion notes".
The second notice is in similar terms but it relates to the tax liability of Orica Maritime Ltd, and the vessel concerned in the schedule is Shining Star.
The third notice is in similar terms, but the tax liability there relates to Regina Marion Inc, and the vessel is Star Beacon.
The fourth notice relates again in similar terms to the tax liability of Armada Shipping Corp, and the vessel is Mineral Zulu.
The fifth notice is again in similar terms, but here the tax liability is of Manifest Shipping Co Ltd, and the vessel Star Sea.
The sixth notice is again in similar terms, but the tax liability is of Julia Shipping Corp and the vessel is Ocean Star.
The seventh notice is directed to Chase Investment Bank Ltd. It relates to the tax liability of Julia Shipping Corp. The period for the documents is between 6 April 1986 and 5 April 1996; and the schedule is headed: "In respect of your customer, Julia Shipping Corporation", and the documents sought (1) the bank statements in respect of the accounts in the name of Julia Shipping Corp; (2) minutes of meetings and other discussions relating to Julia Shipping Corp and its dealings with the bank; (3) the correspondence of Julia Shipping Corp; and (4) signed mandates and specimen signature card forms.
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