Walker v Smith (Inspector of Taxes)
| Jurisdiction | England & Wales |
| Judgment Date | 07 May 1999 |
| Date | 07 May 1999 |
| Court | Chancery Division |
Chancery Division.
Rattee J.
The taxpayer appeared in person.
Timothy Brennan (instructed by the Solicitor of Inland Revenue) for the Crown.
The following case was referred to in the judgment:
Les Croupiers Casino Club v Pattinson (HMIT) TAX[1987] BTC 475
Income tax - Capital allowances - Industrial building allowance for long leases - Notice of election to be given within two years of grant of lease - Taxpayer claimed that notice was posted by his accountant shortly after grant of leases and that general commissioners should have allowed a witness to be called as to credibility of the accountant - Finance Act 1978, s. 37 (Capital Allowances Act 1990 section 11Capital Allowances Act 1990, s. 11).
This was an appeal by the taxpayer against a decision of the general commissioners for Barnet that no election had been made in time for industrial building allowances.
In January 1988 the taxpayer acquired three leases of office suites in Docklands. The leases were eligible for industrial building allowances under the Capital Allowances Act 1990 section 11Finance Act 1978, s. 37 subject to notice of an election being given within two years. The Revenue disallowed the allowances because they said they had received no such notice, but the taxpayer maintained that his accountant had posted three notices to the Revenue on 11 March 1988. The accountant gave evidence before the commissioners that he had posted the notice to the Revenue. He had sworn a solemn declaration in a jewish court to that effect and an application was made to call his rabbi to testify to the accountant's credibility. The commissioners refused to allow the rabbi to be called.
The taxpayer produced what purported to be photocopies of carbon copies of the three notices dated 11 March 1988, which the Revenue had had examined by a government chemist. His opinion was that the documents were not photocopies of carbon copies but copies of documents printed by an inkjet printer which was not in common use in 1988.
The taxpayer contended that the evidence showed that the three notices had been posted and, under Interpretation Act 1978 section 7s. 7 of the Interpretation Act 1978, the Revenue had to prove that they had not been received, which they had not done. The taxpayer also contended that the commissioners should have exercised their discretion under SI 1994/1812 section 15 subsec-or-para (6)reg. 15(6) of the General Commissioners (Jurisdiction and Procedure Regulations) 1994 to allow the rabbi to be called.
Held, dismissing the taxpayer's appeal:
1. The general commissioners were not satisfied on the evidence that the notices had been posted, with the result that there was no proof of service in time within Capital Allowances Act 1990 section 11s. 37 of the 1978 Act.
2. It would be extremely unusual, if not improper, that a court or tribunal considering evidence of fact should permit one witness to give evidence as to the credibility of another witness. The commissioners, if they had a discretion, had decided to exercise it against admitting the rabbi's evidence and there was no ground on which the court could interfere with that decision.
1. At a meeting of the general commissioners for the division of Barnet held on 27, 28 and 29 October 1997 Mr GJS Walker ("the appellant") appealed against the refusal of the Inspector of Taxes, Hatfield District (Mrs D Smith) to allow a claim for capital allowances in relation to the appellant's expenditure of £1.25m incurred on premiums paid in respect of three long leases of office suites at 10, 11 and 12, Ensign House, South Quay, London E14 which leases were granted to the appellant on 8 January 1988. The inspector refused to admit the claim on the basis that no notice in writing of elections by the grantor and grantee pursuant to the provisions contained in Capital Allowances Act 1990 section 11s. 37 of the Finance Act1978 had been given to the inspector of taxes on or before 7 January 1990.
2. Shortly stated, the question for determination was one of fact; whether the appellant had written, addressed and posted a letter sent and dated 11 March 1988 enclosing three elections.
3. The appellant was represented by Mr Richard Bramwell QC, the inspector by Mr Timothy Brennan of counsel.
[The witnesses for the appellant who were examined under oath or affirmation were listed.]
One of the witnesses was Mr Laurence Myers, chartered accountant, the appellant's agent. The appellant requested that Mr Myers' rabbi be called, but the commissioners decided that accepting a religious "character reference" before the commencement of this particular case would both inhibit and compromise the commissioners as an impartial judicial body.
The commissioners had been made aware before the start of the proceedings that Mr Myers held deep religious beliefs, was a lay reader and that Rabbi Hool had given a statement. Further, the commissioners were aware that Mr Myers had attended a religious court (Beth Din) on 6 June 1997 to swear a solemn religious affirmation. Consequently, the commissioners decided not to call the witness and noted that there was no objection by the appellant's representative.
[The witnesses for the inspector were listed.]
4. [The documents proved or admitted in evidence before the commissioners were listed.]
5. From the oral and documentary evidence before us the commissioners found that:
(2) The appellant was a sick man and consequently his tax affairs had fallen into arrears. During 1987 he appointed Mr Myers both to deal with accounting and tax matters in relation to his firm (Stuart Walker & Co) as well as attending under power of attorney, to his personal tax affairs.
(3) Mr Myers was a deeply religious man and has made sworn affirmations to a religious court and was supported by his rabbi.
(4) Three underleases in respect of suites 10, 11 and 12 at Ensign House, Docklands were granted to the appellant on 8 January 1988.
(5) Three elections were executed dated 8 January 1988 in respect of the underleases in (3) above in favour of the appellant underCapital Allowances Act 1990 section 11s. 37 of theFinance Act 1978, entitling the appellant to claim capital allowances in the form of industrial building allowances, in substituting for the developer of the property.
(6) The appellant was entitled under Capital Allowances Act 1990 section 161 subsec-or-para (1)s. 37(3) to capital allowances industrial building allowances - "provided that" written notice was given to the inspector enclosing the elections (in para. 4 above) within two years from when the underleases took effect i.e. by 7 January 1990.
(7) We did not accept evidence that on 11 March 1988 Mr Myers had posted to the inspector the forms of elections required under Capital Allowances Act 1990 section 11s. 37 of the Finance Act1978.
(8) Our reasons for not accepting the evidence are detailed in para. 9(1) to (7) of this case stated.
6. It was contended on behalf of the appellant that:
(2) That the letter dated 11 March 1988 containing the elections was written, sent, prepaid and posted on that date by Mr Myers and that there was no evidence to suggest the contrary or that the letter was not received by the inspector.
(3) That by the implications of the inspector, suggesting that the letter dated 11 March 1988 was prepared after 7 January 1990, with intent to fraud, the test should be made that the letter was properly prepared and sent "beyond reasonable doubt" and not by "on the balance of probabilities" as found by the commissioners.
(4) That it was highly significant that Mr Myers, the author of the material letter, an observant and deeply committed Jew, had sworn that the letter was authentic. Further, he had deposed to this in a document that carried a particular religious significance in his faith and had a witness to attest to the significance of the deposition and to Mr Myers' character.
(5) That the evidence showed that any inconsistencies in Mr Myers' behaviour occurred after 1988; it was wrong to infer that he was inconsistent before that time, and the evidence showed his dealings at the material time in 1988 were reasonably efficient. Such inconsistencies as they could prove after 1988 were irrelevant to the case and stemmed from a particular series of events in 1995.
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(6) That as elections were sent to the inspector on 11 March 1988 claiming industrial building allowances, the inspector should admit the claim under Capital Allowances Act 1990 section 11s. 37 of the Finance Act 1978, since amended.
(i) That the evidence showed (and it was agreed) that the office of the Revenue did lose documents from time to time, and the fact that it could be shown conclusively that other material was missing from the Revenue's files, led to the conclusion that it was highly likely the material letter of March 1988 had been lost, not fabricated.
(ii) That the disputed letter had been typed by an outside typist of the appellant's firm in...
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