Valentine v Jackson
| Jurisdiction | England & Wales |
| Judge | Lord Chancellor,Viscount Dilhorne,Lord Pearson,Lord Cross of Chelsea,Lord Salmon |
| Judgment Date | 22 March 1972 |
| Judgment citation (vLex) | [1972] UKHL J0322-1 |
| Date | 22 March 1972 |
| Court | House of Lords |
[1972] UKHL J0322-1
House of Lords
Lord Chancellor
Viscount Dilhorne
Lord Pearson
Lord Cross of Chelsea
Lord Salmon
Upon Report from the Appellate Committee, to whom was referred the Cause Pearlberg against Varty (Inspector of Taxes), that the Committee had heard Counsel as well on Monday the 14th, as on Tuesday the 15th, days of February last, upon the Petition and Appeal of Henry Hyman Pearlberg, of 18 Wilton Crescent, S.W.1, in Greater London, praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of Her Majesty's Court of Appeal of the 12th of February 1971, might be reviewed before Her Majesty the Queen, in Her Court of Parliament, and that the said Order might be reversed, varied or altered, and that the Petitioner might have the relief prayed for in the Appeal, or such other relief in the premises as to Her Majesty the Queen, in Her Court of Parliament, might seem meet; as also upon the Case of Leslie Anderson Varty (one of Her Majesty's Inspectors of Taxes), lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:
It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of Her Majesty the Queen assembled, That the said Order of Her Majesty's Court of Appeal of the 12th day of February 1971 complained of in the said Appeal, be, and the same is hereby, Affirmed, and that the said Petition and Appeal be, and the same is hereby, dismissed this House: And it is further Ordered, That the Appellant do pay, or cause to be paid, to the said Respondent the Costs incurred by him in respect of the said Appeal, the amount thereof to be certified by the Clerk of the Parliaments.
My Lords,
The facts leading up to the appeal in these proceedings are stated in the opinion about to be delivered by my noble and learned friend, Viscount Dilhorne.
The point, and the only point, at issue in the appeal is whether the taxpayer has a right of audience before, or a right to make written representations to, the single Commissioner before he gives leave under section 6(1) of the Income Tax Management Act, 1964, to raise back assessments on an application of the Inspector or other officer of the Board made under that section. The appellant argues in favour of such a right on the basis of natural justice, or, as it was called by Byles J. in ( Cooper v. Wandsworth Board of Works (1863) 14 C.B.N.S. 180 at page 194), "the Justice of the Common Law". I am decisively of the opinion that the section affords no such right, and because I so wholly agree with the judgment of Buckley L.J. in the proceedings before the Court of Appeal, and with the opinions of my noble and learned friends, particularly those of Lord Pearson and Viscount Dilhorne, about to be delivered, I will content myself with a few short observations on my own account.
A number of factors have influenced my opinion. None of them, in the absence of the others, would be conclusive. But the totality is cumulative and in the absence of countervailing points, is in my view decisive in the result.
First amongst the factors influencing me I must mention the language of section 6 of the Income Tax Management Act itself. There are two points here to be made. First, subsection (1), which provides that the late assessments to which the section applies can only be raised by leave of a single General or Special Commissioner, makes no reference to a right of audience or to make representations, and, read grammatically, is rather consistent than otherwise with the view that the only person whose views are to be before the Commissioner is the Inspector or other Officer of the Board.
I would not attach so much importance to this factor if I thought that the result of excluding the right to a hearing would be to produce a substantial injustice to the taxpayer, which, as I shall show, it does not, or if the contrast between the language of section 6 and the statutory procedures existing before that section was enacted did not make it quite obvious, at least to me, that the draftsman's omission of mention of any right to make representations was deliberate and that the procedure envisaged the exclusion of any such right.
The second point to note about the language of section 6 of the Act of 1964 is the disqualification imposed by subsection (2) on the single Commissioner giving leave from any part in the subsequent proceedings—even extending the prohibition to his presence thereat—if the taxpayer subsequently appeals against the assessments which he has allowed.
I can see no reason for this exclusion unless the draftsman envisaged that the application for leave prescribed by subsection (1) was to be ex parte, and that the Commissioner's function, although in a sense judicial in character, in that the Commissioner must be satisfied on evidence, was to be administrative to the extent that the taxpayer had no right of audience or representation. It was thus improper for the single Commissioner, with his mind so influenced by material adduced in the taxpayer's absence, to participate in the subsequent proceedings at which the function was judicial.
This brings me to the next factor which influences my opinion, and that is the contrast between the language of the section under discussion, and the language both of section 51 of the Finance Act, 1960, which preceded it and still governs back assessments to which section 6 of the Act of 1964 does not apply, and, for instance, section 28 of the same Act which was considered in Wiseman v. Borneman [1971] A.C. 297, and which provides a system of written statement and counterstatement by the taxpayer to which, or, to something like it, the draftsman of section 6 of the Act of 1964 might well have had recourse had he desired to provide for a right to make representations.
The more relevant contrast, however, is that between the provisions of section 51 of the Finance Act, 1960, and section 6 of the Income Tax Management Act, 1964.
Prior to the Finance Act, 1960, late assessments of the kind under discussion could be made only in case of fraud and wilful default, and these did not require leave before they were raised. Section 51 of the Finance Act, 1960, introduced for the first time provision for late assessments in the case of neglect. At this time the raising of assessments was a function of the Commissioners and not of the Inspector. In practice an assessment was made by a Commissioner, in the relevant cases normally an additional Commissioner. Late assessments in the case of neglect, as distinct from fraud or wilful default, could be made without leave of any kind in respect of any year within the first period of six years before the "normal year". For any earlier period of six years, the leave of the General or Special Commissioners was required, and, on an application for such leave, a full oral hearing was required by subsection (7) of section 51 at which the taxpayer was entitled to be present and take part. The hearing would be before a quorum of a minimum of two Commissioners, and these are not subject to the disability imposed by section 6 of the Income Tax Management Act, 1964, on the single Commissioner and thus are able to take part in any subsequent proceedings on the hearing of an appeal from the assessment. This, presumably, was because they had heard both sides and were acting judicially. I do not mean by this that they ordinarily do take part in the subsequent proceedings, or should necessarily be encouraged to do so. I simply point out that there is nothing in the statute to prohibit them from doing so. A late assessment for a year within the first period of six years before the "normal year", raised, as I have said, ordinarily, by an additional Commissioner and requiring no leave, was made under subsection (3) of section 51. It was conceded that the function of this Commissioner at this date, in raising the assessment, was administrative and not judicial, and that the taxpayer was not entitled to be heard or make representations. It is this function which was superseded by section 6 of the Income Tax Management Act, 1964, which is now under discussion. Late assessments on the ground of fraud or wilful neglect continued, under the Finance Act of 1960, to be made, as before, without leave under the Income Tax Act, 1952, section 47(1), proviso, and section 229(3) proviso.
To understand the changes in the procedures introduced into the law by the Income Tax Management Act, 1964, it is necessary to remember that the policy was to transfer to the Inspector the function of raising assessments, which had hitherto been a function of the Commissioners. This transfer meant that Parliament thought it necessary to provide a fresh safeguard for the taxpayer where, before the change, a late assessment could be made by a Commissioner without leave. It was not thought right in such circumstances that a late assessment could be made by the Inspector without reference to a Commissioner. Where, however, the Act of 1960 provided that leave was necessary but could only be given by two Commissioners after a full judicial hearing under section 51(7) no such additional protection was necessary. But where a single Commissioner could raise late assessments without leave either by virtue of section 51(3) or by virtue of the provisoes to sections 47(1) and 229(3) of the Income Tax Act, 1952, or by virtue of section 53 of the Act of 1960 (which deals with the case where the taxpayer at fault had died) so much of the Commissioner's function was retained as to demand that the Inspector, whose function it was now to raise the assessment, had to obtain the leave of the single Commissioner, before he did so and satisfy this Commissioner that he had a prima facie case for so...
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