Ransom v R & C Commissioners
| Jurisdiction | England & Wales |
| Judgment Date | 29 August 2008 |
| Date | 29 August 2008 |
| Court | Special Commissioners |
special commissioners decision
Richard Barlow
Andrew Walker of counsel instructed by Messrs Speechly Bircham, solicitors, for the Appellant
Ms June Kennerley, Inspector of Taxes for HM Revenue and Customs
Self assessment - amendment to self assessment return - delivered on time? - question of fact - yes - appeal allowed.
A special commissioner decided that, on the facts, an amendment to the taxpayer's self-assessment return had been delivered to the Revenue in compliance with Taxes Management Act 1970 section 9ZATMA 1970, s. 9ZA.
The taxpayer had entered into a film partnership during the year ending 5 April 2002 and had made a substantial trading loss which he intended to carry back and set off against a substantial capital gain he had made upon the exercise of a number of share options during the year ending 5 April 2001. On 12 December 2002 the Court of Appeal's judgment was released in the case of Mansworth v JelleyTAX[2003] BTC 3 and the taxpayer's advisors realised that it would no longer be necessary to rely upon the trading loss to offset the gain. On the other hand that loss might well be capable of being used to the taxpayer's advantage in later years and so they advised him to amend his return in order to carry it forward from the year ending 5 April 2002 which necessitated the amendment of the return for the year ending 5 April 2001 to reverse the carry back.
If the taxpayer effectively amended the 5 April 2001 return, it was agreed that he would save a substantial amount of tax in respect of the year ending 5 April 2006 by offsetting the film partnership loss which would, if that amendment was effective, still be available and so that appeal was technically an appeal against the Revenue's amendment to the taxpayer's 2005-06 self-assessment return by a closure notice dated 21 March 2007. It was agreed between the parties that an amendment to the return would comply with TMA 1970, s. 9ZA in the circumstances of this case if it was delivered to any office of the Revenue at or before midnight on 31 January 2003, whether or not it came physically into the hands of an officer by that time and indeed whether or not it was delivered to the office that would deal with it.
The taxpayer argued that the amendment was delivered by hand to the Revenue's Woking Enquiry Office on the evening of 31 January 2003 after that office closed but before midnight on that day. The Revenue contended that the document could not have been delivered by that time as it was in fact posted to their North East Metropolitan Area Office, in Middlesbrough, arriving there on 7 February 2003.
Whether the amendment to the taxpayer's tax return for the year ending 5 April 2001 was made not more than 12 months after 31 January 2002 so as to be an effective amendment under TMA 1970, s. 9ZA, as amended.
The special commissioner (Richard Barlow) (allowing the appeal) said that the legal burden of proof lay upon the taxpayer and the standard of proof was the balance of probabilities. The taxpayer had produced apparently credible evidence that the amendment was hand delivered and the Revenue had produced evidence that, if their procedures were correctly followed, the document must have been posted to NEMA but that, as it only arrived on 7 February, it must have been posted after 31 January so that no issue arose as to whether posting by first class post on 30 January would be enough to satisfy the statutory time-limit.
There was some evidence to suggest that other documents were not dealt with correctly by the Woking office at the time. Had the matter to be decided only on a strict analysis of the evidence the tribunal would have found in favour of the taxpayer on a balance of probabilities. Furthermore, on the evidence, the commissioner was satisfied that the document had been delivered in time as he asserted.
Therefore, the appeal would be allowed subject only to allowing the parties to revert to the tribunal if they were unable to agree the consequences of the tribunal's finding.
1. The issue in this appeal is whether or not an amendment to the appellant's tax return for the year ending 5 April 2001 was made not more than twelve months after 31 January 2002 so as to be an effective amendment under Taxes Management Act 1970 section 9ZAsection 9ZA of the Taxes Management Act 1970, as amended.
2. The appellant had entered into a film partnership during the year ending 5 April 2002 and had made a substantial trading loss which he intended to carry back and set off against a substantial capital gain he had made upon the exercise of a number of share options during the year ending 5 April 2001. On 12 December 2002 the Court of Appeal's judgement was released in the case of Mansworth v JelleyUNK [2002] EWCA Civ 1829; [2003] BTC 3 and the appellant's advisors realised that it would no longer be necessary to rely upon the trading loss to offset the gain. On the other hand that loss might well be capable of being used to the appellant's advantage in later years and so they advised him to amend his return in order to carry it forward from the year ending 5 April 2002 which necessitated the amendment of the return for the year ending 5 April 2001 to reverse the carry back.
3. If the appellant did effectively amend the 5 April 2001 return, it is agreed that he will save a substantial amount of tax in respect of the year ending 5 April 2006 by offsetting the film partnership loss which will, if that amendment was effective, still be available and so this appeal is technically an appeal against the respondents' amendment to the appellant's 2005/06 self-assessment return by a closure notice dated 21 March 2007.
4. It was agreed between the parties that an amendment to the return would comply with section 9ZA in the circumstances of this case if it was delivered to any office of the respondents at or before midnight on 31 January 2003, whether or not it came physically into the hands of an officer by that time and indeed whether or not it was delivered to the office that would deal with it. It was agreed that the sole issue I have to decide is the question of fact whether or not the amendment was so delivered by that time. It is agreed that the legal burden of proof lies upon the appellant and the standard of proof is the balance of probabilities.
5. Briefly, the appellant's case is that the amendment was delivered by hand by Mr Kenneth Wilson, a chartered accountant then of Anderson Charnley Ltd, to the respondents' Woking Enquiry Office on the evening of 31 January 2003 after that office closed but before midnight on that day. It is the respondents' case that the document cannot have been delivered by that time and was in fact posted to their North East Metropolitan Area Office, in Middlesbrough, arriving there on 7 February 2003.
6. I should record that a separate point taken by the respondents that the appellant could not "re-open the 00/01 year, several years after the self-assessment became final simply by entering a different number brought forward onto a return for a later year" was abandoned.
7. The following witnesses gave evidence for the appellant: Mr Kenneth Wilson, chartered accountant employed by Anderson Charnley at the material time, Mr Quam Fatuga, tax manager of Anderson Charnley at the material time, Mr Stephen Clark, chartered tax advisor of Anderson Charnley at the material time and currently an advisor to Mr Ransom, Mr Christopher Loynes the major shareholder in Anderson Charnley at the material time and Ms Avril Millar who holds FSA authorisation and was the chief executive officer of Anderson Charnley at the material time.
8. Anderson Charnley is not a firm of accountants but it looked after the tax affairs of clients and managed their wealth in general and, as is obvious from the qualifications held by the witnesses, it employed the relevant professionals. The witnesses satisfied me that there was a general understanding within Anderson Charnley about the significance of the Mansworth v Jelley case and about the potential need to amend clients' tax returns as a consequence of it on behalf of several clients and also that there was a very good understanding of the need to present documents to the Inland Revenue timeously.
9. Mr Wilson did not look after Mr Ransom's affairs generally but he was asked by Mr Fatuga to deal with an amendment to Mr Ransom's return after the Mansworth v Jelley judgement was released because Mr Wilson dealt with the more technical tax matters at that time. Mr Wilson was dealing with several tax returns or amendments that had to be delivered by 31 January 2003.
10. He stated in evidence that he had habitually adopted the practice of hand delivering returns or amendments on 31 January to the Woking office because from a day or two before that date he regarded it as being too late safely to rely upon the postal service to deliver them on time. In 2001 he had delivered some returns or amendments by hand on the 31 January but there had been some problems because the tax offices to which they were addressed had stamped them on receipt at those offices rather than acknowledging receipt at Woking on 31 January. Those problems were resolved but, because they had arisen, when he hand delivered returns on 31 January 2002 he took with him a list of the returns he was submitting and queued up to have the list stamped as an acknowledgement of what had been delivered. A copy of that stamped list was produced. Mr Wilson's recollection was that he was still queuing until after midnight though evidence from the respondents satisfies me that he had not hand delivered those documents as late as that. Mr Wilson said that he may not have got home until after midnight and that was the only explanation he offered for what I find to be an incorrect recollection about the...
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