| 21/8/2008 |
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| Court of Appeal - Decisions in Income Tax Cases |
| Case No: 73 |
Decided on 21 June 1968 |
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Whether An Agreement To Withdraw His Objection Had Been Improperly Extracted From A Taxpayer Who Claimed He Was Labouring Under A Misapprehension As To What Was The Proper Law, And By The Threats Of Moral Violence
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This appeal was from a decision delivered by the Civil Court, First Hall, not from a decision of the Board of Special Commissioners.
The Commissioner had refused to accept the taxpayer's returns, and raised estimated assessments. An appeal was filed to the Board of Special Commissioners which reduced the income brought to charge to tax, but still determined the income at more than twice what the appellant had declared.
The Revenue then issued additional assessments levying additional tax. Following an objection, the taxpayer was advised through his legal adviser that far from reducing the additional tax, the Revenue was contemplating criminal action for fraud. After some discussion, the taxpayer's adviser had drawn up a brief agreement whereby the taxpayer withdrew the objection against the additional tax, and the Revenue promised to refrain from taking criminal action. Taxpayer only paid part of the additional tax, in respect of which he later made a claim for refund, and filed an appeal to the Board of Special Commissioners. Before the Board the Revenue pleaded that the taxpayer had no objection still open as the matter had been closed by agreement. The taxpayer tried to impugn the agreement reached on the grounds that it had been consented to on the basis of a misconception as to the proper law applicable, and because his consent had been given under the threat of moral violence (i.e. threats of criminal steps). The Board refused to delve into this matter, but allowed the taxpayer to seek redress before the Civil Courts.
Both the Civil Court, First Hall, and the Court of Appeal, rejected the taxpayer's claims. Clearly, there had been no error at law involved: this was constituted, according to the taxpayer, by the fact that the additional tax could not be legally charged in the circumstances, and that criminal action was already statute based. The Courts saw no reason why additional tax could not be charged after the Board's decision, since the relative assessments were not re-opening matters which had already been closed on appeal. As regards criminal action, this could not be statute barred as fraud was contemplated. The protection of statute barring was only available in the case of minor offences.
The Court also said that the 'threat' by the Commissioner to have recourse to criminal prosecution did not vitiate the consent given by the taxpayer to the arrangements. In any case, the Commissioner was given powers to compound offences, and before he could do so it was only natural that he had first to declare that, in his opinion, he would be justified in seeking criminal prosecution.
Not an appeal from a BSC decision
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