Haven Healthcare (Southern) Ltd v HM Inspector of Taxes

This is an application by the Respondent Inspector of Taxes to strike out an appeal by the Appellant Haven Healthcare (Southern) Ltd (“the Appellant”) against a decision of the Commissioners for the General Purposes of the Income Tax for the Division of Monmouth (“the Commissioners”) made on the 30^th July 2004. The application is made on the ground that the Appellant’s request to the Commissioners to state a case sent by fax at 18.51 on the 30^th August 2004 and received by the Commissioners on the 31^st August 2004 was out of time because Regulation 20(1) of the General Commissioners (Jurisdiction and Procedure) Regulations (“the GCR”) lays down the mandatory requirement that any notice requiring the Commissioners to state a case for the opinion of the High Court must be served within thirty days of the final determination challenged and that this period expired on the 29^th August 2004.

These proceedings arise out of an application made by the Appellant to the Commissioners to postpone tax assessment pending determination of an enquiry into its tax return in respect of its accounting period ending 30^th September 2002. The application was heard by the Commissioners on the 30^th July 2004. At the end of the hearing the Commissioners “made their final determination” (see paragraph 1 of the unchallenged statement dated the 20^th June 2005 of the Acting Solicitor to Her Majesty’s Revenue and Customs (“ASHMRC”)). On the 2^nd August 2004 the Clerk to the Commissioners issued notice of determination which set out in detail the reasons for their decision. On the 30^th August 2004 the Commissioners received a request by the Appellant to state a case. The Commissioners through their clerk indicated on the 22^nd September 2004 that, although they considered the request to have been made out of time, they would be prepared to state a case (without prejudice to the Respondent’s position). The Respondent subsequently argued that the request had been made out of time. The case was stated and signed by the Commissioners (and expressed to be without prejudice to the Respondent’s position) on the 29^th April 2005. On the 2^nd June 2005 the Appellant’s appeal was lodged with the High Court and on the 21^st June 2005 the Respondent issued the application now before me.

Date of Final Determination

The first issue raised is whether the request to the Commissioners to state a case was out of time. Regulation 16(1) of the GCR provides that the decision of the Tribunal of General Commissioners shall be made by the votes of the majority of the General Commissioners comprising the Tribunal and Regulation 16(2) provides that the “final determination” may be given orally by the Tribunal or may be reserved and in either event shall be recorded in a document which shall be signed and dated by the Tribunal. Regulation 2 defines “final determination” as meaning “the decision finally determining any proceedings before a Tribunal”. Regulation 16(3) provides that the Tribunal’s clerk shall send to each party a notice setting out the final determination recorded under Regulation 16(2). Regulation 16(4) provides that, except where the final determination is given at the end of the hearing, it shall be treated as having been made on the date on which the notice is sent to the parties under Regulation 16(3). Regulation 20(1) provides that within 30 days after the final determination of any proceedings any party to the proceedings, if dissatisfied with it as being erroneous in point of law, may by notice served on the clerk to the Tribunal require the Tribunal to state and sign a case for the Opinion of the High Court. Regulation 20(2) provides that a case stated pursuant to a requirement under paragraph (1) shall set forth the facts and the final determination of the Tribunal.

The evidence of the ASHMRC to which I have referred states that the final determination was given at the end of the hearing on the 30^th July 2004. The Appellant however contends that the final determination was not given until the 2^nd August 2004 when the clerk sent to each party the notice setting out the final determination on the ground that only by such notice did the Tribunal communicate its reasons and that to constitute a decision finally determining the proceedings before the Tribunal the decision had to give reasons. Reliance was placed on the decision of the Court of Appeal in English v. Emery Reimbold & Strick Ltd [2002] EWCA Civ 605 [2002] 1 WLR 2409 that a judicial decision which affects the substantive rights of the parties should be reasoned.

The provisions of the GCR in this context can usefully be compared with the provision of the Special Commissioners (Jurisdiction and Procedure) Regulations 1994 (“the SCR”). Regulations 18(4)-(6) of the SCR provide that a final determination by a Tribunal of Special Commissioners, whether given orally at the end of the hearing or reserved, shall contain a statement of the facts found by the Tribunal and the reasons for the determination or decision. The contrast is clearly and deliberately drawn between decisions of the two Tribunals. The GCR impose no express obligation on the Tribunal of General Commissioners to state its reasons. The Tribunal of Special Commissioners (which is chaired by a legally qualified person) is a judicial body which gives judicial decisions and accordingly its decisions must set out the reasons for them. But the Tribunal of General Commissioners is not such a judicial body and the same requirement does not apply. There is however no prejudice to the parties. For the parties, whilst not entitled to a reasoned final determination, are entitled within the time limits prescribed to require the Tribunal of General Commissioners to state a case and parties should be able to deduce from the statement of case the reasons for the decision and the reasons (or grounds) will in any event be fully explored on the appeal to the High Court.

I accordingly reject the contention of the Appellant that as a matter of law the final determination of the Tribunal of General Commissioners could only be made when reasons were given. Whether or not reasons were given on the 30^th July 2004, the final determination was made on that date and the 30 day limitation period runs from the 30^th July 2004. But even if I am wrong in law and for a final determination reasons had to be given, I am satisfied that they were given on the 30^th July 2004. The unchallenged evidence of the ASHMRC is to the effect that on that date the Commissioners made their final determination and accordingly (by implication) gave their reasons, and this accords with the statement made by counsel for the Respondent on instructions, that the notes of the Inspector who attended the hearing before the Tribunal showed that the Tribunal indeed gave reasons on that date. This statement was made without objection or challenge by the Appellant. It is irrelevant that, after the Tribunal gave its reasons, at the suggestion of the Respondent, the Tribunal (at the hearing on the 30^th July 2004) amended its order in favour of the Appellant to the extent of permitting a limited postponement in respect of certain payments, and indeed the contrary has not been suggested.

Effect of Non-Compliance with Time Limit

The second issue is the legal effect of the failure of the Appellant to make the request to state the case within time. There is a clear line of authority that the time limit laid down in Regulation 20(1) of the GCR and its statutory predecessors (which are in practically identical terms) is mandatory and not directory and that accordingly a request made after the time limit has expired is invalid and of no legal effect: see R v. General Commissioners ex parte Thomson (1928) 14 TC 313; R v. General Commissioners ex parte Clarke [1974] QB 220; Nicholson v. CIR (1974) 50 TC 287; and see also Petch v. Gurney (HMIT) [1994] STC 689 (“Petch”) which concerned the requirement under section 56(4) Taxes Management Act 1970 (“TMA 1970”) (now regulation 22(4) of the GCR) to transmit a stated case to the High Court within 30 days of receipt, where the Court of Appeal also considered the requirement imposed by section 56(2) of TMA 1970 (the predecessor of Regulation 20(1) of the GCR).

The Appellant however contends that a series of decisions of the highest authority culminating in the decision of the High Court of Australia in Project Blue Sky Inc. v. Australian Broadcasting Authority (1998) 194 CLR 355 (in particular at paragraph 93) and of the House of Lords in R v. Soneji [2005] 3 WLR 303 have pointed out that the classification of statutory provisions as mandatory or directory is the end of the inquiry, not the beginning, and that the task of the court was to concentrate on the consequences of non-compliance and the place of the requirement in the scheme of the legislation or regulation and whether it was the purpose of the legislation or regulation that an act done in breach of, or non-compliance with, the legislation or regulation should be invalid.

In my judgment this new approach in nowise alters the conclusion that a failure to comply with the 30 day time limit renders an application to state a case invalid. The previous decisions of the court on the predecessors of Regulation 20(1) in their reasoning applied the test now endorsed by the House of Lords and it is quite clear that the intention of the draftsman of Regulation 20(1) was that a request to the Tribunal to state a case could only validly be made within the 30 day period, whether made by the taxpayer or the Revenue. Most particularly the reasoning of Millett LJ at 695(e) in Petch is entirely apposite. This conclusion is confirmed, and indeed placed beyond any doubt, by the scheme of the GCR. For specific provision is made for cases when time limits can be relaxed (see e.g. Regulation 3(3), Regulation 9(2), Regulation 17(2) and Regulation 21(4)). Regulation 24 provides for situations where “irregularities” shall not affect the validity of proceedings. Neither that regulation nor Article 6(1) of the European Convention on Human Rights (which was at one time invoked by the Appellant) has any application: see Significant Ltd v. Farrel; [2005] All ER (D) 161.

I accordingly accede to the application and strike out this appeal on the ground that the court has no jurisdiction to entertain it.