“Where the debt claimed in the statutory demand is based on a judgment, order, liability order, costs certificate, tax assessment or decision of a tribunal, the court will not at this stage inquire into the validity of the debt nor, as a general rule, will it adjourn the application to await the result of an application to set aside the judgment, order decision [sic], costs certificate or any appeal.”
“Please can you forward additional information to S Bush ... and explain all payments into business and personal bank accounts, plus information pertaining to work carried out by other drivers. If such information is available HMRC may be able to review the case, however your client is out of time for an appeal or review and this would only be a concession. We would not enter into a meeting at this stage. If nothing has been received by6 July 2016 and I have not been advised to delay action, a statutory demand will be served on your client.”
“In the interim please advise your client that he is allowed 30 days from the date of the assessment or penalty to appeal. As we received your appeal after the 30-day limit, this is a late appeal. The law says that when you appeal to [HMRC], you must do so within the time limit. We may accept a later appeal if you had a reasonable excuse for not appealing within the time limit and you appealed as soon as you could after the reasonable excuse ended. The law does not say what a reasonable excuse is. [HMRC’s] view is that a reasonable excuse is normally an unexpected or unusual event, either unforeseen or beyond your control, that prevented you from sending an appeal within the time limit. We consider each case on its own facts. Your client has not given any reason for this late appeal, neither has he given his reasons why he asks for a review. If he requires HMRC to consider a late request for an internal review by an officer not previously involved in this matter he must write to me by3 September 2016 giving details of his reasons for not applying at the correct and his grounds for a review.”
“Please find enclosed a copy of the letter issued to Mr Vieiria [sic] today concerning your request for a review of my decision to compulsorily register him for VAT that was made in 2012. Your client has not given any reason for making a late appeal except that he says he did not understand the implications of my decision. It should be noted that Mr Vieiria was represented by his agent at all stages of my enquiry and full explanations behind the reasons for my decision have been submitted to both Mr Vieiria and his advisor. Your letter dated30 December 2015 refers to your client’s bank account. Pease note that business income was paid into both his business accounts. This was verified with Mr Vieira at the time. HMRC also addressed the extent of work put to other drivers and established that Mr Vieiria acts as a Principle [sic] in the business not an agent in making a supply to the customer. As Principle he must include all of the following when calculating his turnover. ● the full amount payable by the customer before deducting any payment made to his drivers ● any fares he (as the sole proprietor, director or partner) receives if he drives for the firm ● the full fares payable by passengers even if he sub-contracts work to an independent business or owner or owner driver and ● any referral fee he receives from other taxi businesses. Further information on this may be found in Notice 700/25 Taxis and Private Hire Cars. In the absence of any new information or reason for a late appeal then I am unable to agree to a meeting to discuss the matter.”
“If you think that these circumstances apply to you, please write to us stating the reasons why you failed to appeal within the 30 day time limit. If these circumstances don’t apply, we can’t accept your agent’s letter as an appeal because the deadlines for appealing against the assessment and penalty have passed. If you don’t agree that your appeal is too late If you don’t agree that your agent’s appeal was too late for us to consider, you can ask for the case to be reviewed by HM Courts and Tribunal services. They’ll arrange for an independent tribunal to consider the appeal. You’ll need to do this by4 August 2016 . ”
“Where an amount has been assessed and notified to any person under subsection (1), (2), (3) or (7) above it shall, subject to the provisions of this Act as to appeals, be deemed to be an amount of VAT due from him and may be recovered accordingly, unless, or except to the extent that, the assessment has subsequently been withdrawn or reduced.”
“In the case of an assessment there is no question of consideration as there is in the case of a judgment: there is a mere administrative assessment with a special mode of appeal provided which must be followed. I cannot think it possible that it is competent to the Bankruptcy Court, on the invitation of the trustee in bankruptcy or of the debtor, to reopen questions of that kind on a motion to expunge. It is quite impossible to conceive that it would be competent for me sitting here to go into the question of the rateable values of a union or of a parish, or any question of that sort. That seems to me to be a case which is analogous to the case in which I am at present invited to act. I think the application fails and must be dismissed with costs; but my decision will not interfere with any application the debtor may be advised to make to the Inland Revenue under the Board of Trade Regulations of May, 1888.”
“In my opinion, therefore, all issues on the merits of these cases, as to fact or law, should have been determined by appeal to the Commissioners and cannot be raised at this stage. If there has been no appeal to the Commissioners the debts become absolute and conclusive, and their legal effect cannot be denied.”
“12. I understand that, but I have to remind myself (as [counsel for the Revenue] has submitted), that authority clearly establishes that where assessments to tax are concerned Parliament has provided a clear and exclusive machinery for considering appeals against them. The statutory machinery does provide for appeals to the court. That machinery, as [counsel] correctly submits, is an exclusive machinery and an assessment, when made, is final and binding if it is not appealed. If it is appealed, the determination of an appeal is likewise final and binding, subject to any application there may be, in appropriate circumstances, to the court. In particular, she submits, it is not for the Bankruptcy Court to go behind those matters. As [counsel] also submits, there is a wealth of authority to that effect, stretching back (in relation to predecessors of the current legislation) to the latter part of the 19th century. 13. [Counsel] is correct in that submission. It is not open to the Bankruptcy Court to review the manner in which the assessment has been made, much less to investigate the merits of the assessment. I can see that if there were evidence that the assessments had been made in some fraudulent or collusive way, or there were some other glaring miscarriage of justice, it might be that the Bankruptcy Court could go behind the assessment and not make the Bankruptcy Order based upon the debt created by the unpaid tax resulting from the assessment, but there is no suggestion of that in this case. On the contrary, as I have endeavoured to show, the Revenue have entertained attempts by Mr Lam, personally and through advisers, to reconsider the amount of the assessments, but have not been persuaded on the information that has been provided that they should do so.”
“… the cases establish that what is required before the court is prepared to investigate a judgment debt, in the absence of an outstanding appeal or an application to set it aside, is some fraud, collusion, or miscarriage of justice. The latter phrase is of course capable of wide application according to the particular circumstances of the case. What in my judgment is required is that the court be shown something from which it can conclude that had there been a properly conducted judicial process it would have been found, or very likely would have been found, that nothing was in fact due to the claimant. It is clear that in those circumstances the court can enquire into the judgment and the judgment debt, even though the debtor himself has previously applied to have the judgment set aside, and even though that application has been refused and that refusal has been affirmed by the Court of Appeal …”
“It is no longer open to Mr Worby to seek to disturb by an appeal to this court the previous determinations of tax, liability to tax for previous years. That liability could have been challenged only in accordance with the statutory procedure laid down by Parliament for appeals to the Commissioners for Income Tax and appeals from there up to this court by way of case stated. It is not open to the court now to re-open and re-examine liability for tax in those previous years.”
“12. Clearly the purpose intended to be achieved by this elaborate, long established statutory scheme would be defeated if it were open to a taxpayer to leave undisturbed an assessment with which he is dissatisfied and adopt the expedient of applying to the High Court for a declaration of how much tax he owes and, if he has already paid the tax, an order for repayment of the amount he claims was wrongly assessed. In substance, although not in form, that would be an appeal against an assessment. In such a case the effect of the relief sought in the High Court, if granted, would be to negative an assessment otherwise than in accordance with the statutory code. Thus in such a case the High Court proceedings will be struck out as an abuse of the court's process. The proceedings would be an abuse because the dispute presented to the court for decision would be a dispute Parliament has assigned for resolution exclusively to a specialist tribunal. The dissatisfied taxpayer should have recourse to the appeal procedure provided by Parliament. He should follow the statutory route. … 15. Lord Wilberforce’s formulation [in In re Vandervell’s Trusts[1971] AC 912 at 939-940] indicates that, apart from cases of straightforward abuse, there is an area where the court has a discretion. In Glaxo Group Ltd v Inland Revenue Commissioners[1995] STC 1075 , 1083-1084, Robert Walker J put the matter this way: ‘It is not easy to discern any clear dividing-line between High Court proceedings which are, and those which are not, objectionable as attempts to circumvent the exclusive jurisdiction principle. Possibly the correct view is that there is an absolute exclusion of the High Court's jurisdiction only when the proceedings seek relief which is more or less co-extensive with adjudicating on an existing open assessment: but that the more closely the High Court proceedings approximate to that in their substantial effect, the more ready the High Court will be, as a matter of discretion, to decline jurisdiction.’ I respectfully agree with this approach, subject to noting that, at least as a general principle, the taxpayer and the revenue are each entitled to insist that the statutory procedure for dealing with disputed assessments should be followed.” ‘It is not easy to discern any clear dividing-line between High Court proceedings which are, and those which are not, objectionable as attempts to circumvent the exclusive jurisdiction principle. Possibly the correct view is that there is an absolute exclusion of the High Court's jurisdiction only when the proceedings seek relief which is more or less co-extensive with adjudicating on an existing open assessment: but that the more closely the High Court proceedings approximate to that in their substantial effect, the more ready the High Court will be, as a matter of discretion, to decline jurisdiction.’ I respectfully agree with this approach, subject to noting that, at least as a general principle, the taxpayer and the revenue are each entitled to insist that the statutory procedure for dealing with disputed assessments should be followed.”
“22. If Mr Owen does not file tax returns, then the system is such that the assessments made by HM Revenue & Customs stand as debts. The bankruptcy courts are not the process by which the adequacy or accuracy of those assessments may be challenged, as is made clear by the decision of Hart J in Cullinane v Commissioners of Inland Revenue[2000] BPIR 996 . 23. A statutory demand can only be set aside if the debtor establishes that he disputes the claimed debt on substantial grounds. Mr Owen, in effect, says that he is not yet in a position to dispute the debts because he cannot file appropriate tax returns which would enable the procedure under the Taxes Management Act to be followed through. That, I regret to say, does not, in my judgment, amount to substantial grounds. …”
“The interaction of the insolvency regime and the various tax regimes has led to a well established practice to the effect that the courts involved in the former leave the establishment of a liability to tax to the statutory procedures applicable by the latter. For instance the bankruptcy court does not usurp the jurisdiction of the VAT Tribunal by itself enquiring into matters within the statutory jurisdiction of the latter. This practice is well illustrated by Re Calvert[1899] 2 QB 145 and Lam v Inland Revenue[2005] BPIR 301 .”
“In the case of judgment debts the bankruptcy court has been prepared to go behind the judgment to satisfy itself that the judgment was not collusive or otherwise for proper consideration, see for example Ex Parte Kibble (1875) 10 Ch App 373. In addition the general principle appears to have admitted of exceptions in the case of the late council tax, see for example London Borough of Lambeth v Simon[2007] BPIR 1629 . Neither of those exceptions can avail the Applicant if, as I shall consider in due course, the statutory liability to VAT imposed by the VAT Act and subordinate legislation and the returns submitted by her in compliance with it created debts due by her to HMRC.”
“Second, the question whether those returns had been made in error and had overstated the amount of VAT due was clearly referable to HMRC pursuant to Regulation 35 of the VAT Regulations …. The Applicant made two voluntary disclosures under that Regulation after the bankruptcy order had been made, namely on4th July 2006 and20th August 2009 . The first was rejected on its merits the second was out of time. In those circumstances it was not open to the deputy judge to conclude as a matter of fact that the relevant returns had contained errors or overstatements ….. Nor was this such an exceptional case as was recognised by Lord Nicholls and Blackburne J as would entitle the bankruptcy court to entertain the question. …”
“It follows that the petition debt remains due as at today when I am asked by the Commissioners to make a winding-up order against the company. I therefore have to consider whether I should make that order. That is a matter for my discretion. It does not follow that, because the debt is deemed still to be due, it would be appropriate to make a winding-up order if I were satisfied that the company on its appeal to the VAT Tribunal stood a reasonable chance of succeeding with that appeal.”
“71. For the reasons I have tried shortly to express, I think the judge was wrong to say that the Companies Court must defer to the tax tribunal in a case of this kind. That does not meant that the tax tribunal will not normally be the appropriate forum to determine whether an appeal against a VAT assessment had a real prospect of success. Moreover, when the tax tribunal had reached a conclusion on such an issue, that decision is normally likely to be a compelling factor in the Companies Court’s exercise of discretion. That discretion is not, however, completely abrogated by the jurisdiction of the tax tribunal. It need not defer to the tax tribunal in every case, though it may often choose to do so. 72. Here, the facts are quite exceptional, and in my judgment the judge ought, after a full consideration, to have concluded that they showed the debts represented by the dispatch assessments were not disputed by the company in good faith and on substantial grounds.”
“40. … It is true, as the judge said, that the adjudication on the correctness of a tax assessment had been entrusted by Parliament to a specialist tax tribunal. But that does not mean that the question that the Companies Court has to decide is the same, or even substantially the same, as the one that faces the tax tribunal. The presentation of a petition to wind up a trader, which had appealed against a tax assessment, is not an indirect way of winning the appeal. The appeal will remain extant even if the trader is wound up. It is simply that there will be a process of collective execution in place that will allow the liquidator rather than the company’s directors to decide whether to pursue the tax appeal. For that reason, the House of Lords’ decision in the Autologic case is not applicable here. 41. As [counsel for Changtel] correctly stressed, the decision for the Companies Court both on the company’s application to dismiss the petition (and restrain advertisement) and on the petition itself is discretionary. … … 43. I accept that the substance of the decisions to be reached by the Companies Court and the tax tribunal may, in many cases, be similar, but they are not identical because of the difference between the essential nature of the underlying questions at issue. …”
“Although Lloyd's has a judgment against Mr Garrow, it has chosen to proceed by way of a statutory demand and the statutory demand is crucial to the making of a bankruptcy order. It would be contrary to the scheme of the legislation, and to the practice of the bankruptcy court, to allow a doubtful statutory demand to stand on the ground that the debtor would still have the opportunity of opposing a bankruptcy petition, once presented. Counsel for Lloyd's have argued that that course would enable Lloyd's to present a petition and so establish a date by reference to which transactions might be invalidated or impeached under s. 284 and 339ff. of theInsolvency Act 1986 , while protecting Mr Garrow by an adjournment of the final hearing of the petition. However it is precisely because of the far-reaching effect of those sections (and comparable sections in the winding-up legislation) that the bankruptcy court and the Companies Court have a strong and well-established policy of discouraging long or repeated adjournments of bankruptcy and winding-up petitions. The judge was right to reject the suggestion that he should allow a petition to be presented and then go into suspended animation.”