Hannigan v The Commissioners for Revenue & Customs [2009] UKFTT 334 (TC)

FTT-Tax
Hannigan v The Commissioners for Revenue & Customs
[2009] UKFTT 334 (TC) · 2009-11-19
[1]This was a hearing to consider if the Tribunal had jurisdiction in respect of an appeal made by Mr Hannigan on 30 March 2009 to the Special Commissioners. As expressed in his notice of appeal, the appeal relates to all tax and national insurance for the years 1996 to 2005, and reference is there made to three letters written by Mr Hannigan on 18 August 2008 to various officers of HMRC.[2]The history of this matter revolves around Mr Hannigan being declared bankrupt on 3 May 2005 in the High Court on the petition of HMRC as sole petitioning creditor. The background to this was the failure by Mr Hannigan to provide self assessment returns of income for the period of 10 years from 1996/97 to 2005/06. HMRC raised determinations in estimated amounts which Mr Hannigan failed to pay. Bankruptcy proceedings ensued and the bankruptcy order was made against Mr Hannigan in the sum of £29,524.33.[3]Some time later, on 6 May 2008, Mr Hannigan’s accountant provided HMRC with completed returns for all the years covered by the bankruptcy petition. For years 2001/02 to 2005/06 HMRC accepted the returns and made statutory adjustments. For the earlier years the returns were out of date, but HMRC accepted them under the procedure known as “equitable liability”. This two processes reduced the debt to £1,885.08, comprising unpaid Class 2 national insurance contributions of £765.08 in respect of Mr Hannigan’s self employment from May 1999 to May 2005, and costs of the bankruptcy petition of £1,120.[4]All these adjustments were made in July 2008 shortly after the receipt of Mr Hannigan’s outstanding returns. At that time therefore all the income tax assessments were withdrawn.[5]Following Mr Hannigan’s appeal to the Special Commissioners (which is now before this Tribunal) HMRC conducted a review of the case papers and decided by concession not to pursue the Class 2 NICs liability. HMRC notified the Tribunal, with copy to Mr Hannigan, of this decision by letter dated 2 June 2009.[6]Mr Hannigan argued that, notwithstanding that the income tax assessments and the claim in respect of NICs had been withdrawn, he should nevertheless be permitted to pursue this appeal. He explained to me that at the time of the original estimated assessments he had disputed them and that HMRC had not followed the correct procedure by putting the matter before the General Commissioners. HMRC had claimed that he had no right of appeal and had proceeded with the bankruptcy petition, in spite of the fact that Mr Hannigan was in poor health and unable at that time to deal with the relevant matters. Mr Hannigan had asked for the hearing of the bankruptcy petition in May 2005 to be postponed to give him more time to prepare his accounts for the relevant periods, but the bankruptcy order had been made in his absence.[7]Mr Hannigan informed me that he would be making an application in another court for his bankruptcy order to be annulled. He referred me to s 282(1)(a) of the Insolvency Act 1986, which provides that the court may annul a bankruptcy order if at any time it appears to the court that, on any grounds existing at the time the order was made, the order ought not to have been made. His purpose in making the appeal to the Special Commissioners was to obtain a decision that the original assessments had been wholly excessive and that HMRC could not have honestly and bona fide, after due care and diligence, believed the tax to have been due. Mr Hannigan referred in this respect to Scott and another (trading as Farthing Steak House) v McDonald [1996] STC (SCD) 381, which in turn cites R v Bloomsbury Income Tax Commissioners 7 TC 59 and Allen v Sharp (1848) 2 Exch 352.[8]Mr Hannigan relied upon s 32 of the Taxes Management Act 1970 as giving him a right of appeal. Section 32, prior to its amendment with effect from 1 April 2009, read as follows:
“ 32 Double assessment (1) If on a claim made to the Board it appears to their satisfaction that a person has been assessed to tax more than once for the same cause and for the same chargeable period, they shall direct the whole, or such part of any assessment as appears to be an overcharge, to be vacated, and thereupon the same shall be vacated accordingly. (2) An appeal on a claim under this section shall lie to any of the bodies of Commissioners having jurisdiction to hear an appeal against the assessment, or the later of the assessments, to which the claim relates.”
Mr Hannigan argued that although s 32 was headed “Double assessment”, its effect should not be so confined. He referred me in particular to the words “or such part of any assessment as appears to be an overcharge”. I do not agree. Section 32 is clearly confined in its application to cases where tax has been assessed in respect of the same subject matter more than once for the same chargeable period. Here by contrast there was only one estimated assessment to income tax for each relevant period. Section 32 cannot apply in this case.[9]Furthermore, the income tax assessments had been withdrawn well before Mr Hannigan submitted his appeal to the Special Commissioners. In the absence of any such assessment there is nothing for Mr Hannigan to appeal against, and there is no power for the Tribunal to make a determination in relation to the circumstances of the making of an assessment that has been withdrawn before the appeal is made to it. The first indication of an appeal by Mr Hannigan to HMRC is in one of his letters of 18 August 2008 (to Mr Timms, Higher Debt Manager) in which he says:
“I therefore appeal to the Board (I guess that this is now HMR&C) under Section 32 TMA (1970) on ‘the basis that such part of any assessment that appears to be an overcharge’.”
Similar references to an appeal to the Special Commissioners are made in his letters of the same date to Mrs Rebecca Howard, HM Inspector of Taxes and Mr J Bennett, Higher Debt Manager. These appeals were made after the assessments were withdrawn.[10]It follows from this that I conclude that this Tribunal does not have jurisdiction in relation to Mr Hannigan’s appeal in respect of the estimated income tax assessments for the years 1996/97 to 2005/06. Pursuant to rule 8(2)(a) of the Tribunal Procedure (First-tier Tribunal) Rules 2009 I am accordingly obliged to strike out that part of these proceedings.[11]Mr Hannigan indicated to me that he wished the Tribunal to adjudicate on whether HMRC had followed correct procedures in relation to this matter. In so far as this might relate to the income tax assessments, the Tribunal would have no jurisdiction for the reasons I have explained. Furthermore, the Tribunal does not have a general supervisory jurisdiction in respect of procedural matters, the remedy for which would be an application to the court for judicial review or a complaint to the Adjudicator.[12]Mr Lewis, for HMRC, also argued that the Tribunal did not have jurisdiction in relation to the outstanding claim for bankruptcy petition costs. I agree, but Mr Hannigan informed me that his appeal did not concern those costs and I need make no order in that respect.[13]That leaves the matter of the Class 2 national insurance contributions. The claim in this respect was withdrawn, by concession, by HMRC after Mr Hannigan had made his appeal both to HMRC and to the Special Commissioners. To that extent this Tribunal does have jurisdiction and the appeal needs to be determined. I consider that the proper way for me to deal with that element of the appeal is to allow it.[14]Accordingly, I make the following

order

(1) The appeal in respect of the Class 2 national insurance contributions in respect of Mr Hannigan’s self assessment from May 1999 to May 2005 is allowed; and(2) In all other respects the proceedings of this appeal are struck out. Each of the parties has a right to apply for permission to appeal against this decision pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice. ROGER BERNER TRIBUNAL JUDGE RELEASE DATE: 19 November 2009

Cited in 1 later judgment