Regina v. Allen (Appellant) (On Appeal From The Court of Appeal (Criminal Division)) [2001] UKHL 45

House of Lords
[2001] UKHL 45
Between
ReginaAppellantAllenAppellant
Before
Lord Bingham of CornhillLord Nicholls of BirkenheadLord SteynLord HuttonLord Scott of FoscoteDate 11 October 2001
[1]I have had the benefit of reading in draft the opinion of my noble and learned friend Lord Hutton, with which I am in full agreement. For the reasons he gives I would dismiss this appeal. LORD NICHOLLS OF BIRKENHEAD My Lords,[2]I have had the advantage of reading in draft the speech of my noble and learned friend Lord Hutton. For the reasons he gives I too would dismiss this appeal. LORD STEYN My Lords,[3]I have read the opinion of my noble and learned friend Lord Hutton. For the reasons he gives I would also dismiss the appeal. LORD HUTTON My Lords,[4]The appellant, Brian Roger Allen, was charged before His Honour Judge Hordern and a jury in the Crown Court at Knightsbridge on 13 counts of cheating the public revenue of income tax and corporation tax. He was convicted on 19 February 1998 on all counts and on 20 February he was sentenced to 13 concurrent terms of seven years' imprisonment. A confiscation order was made against him pursuant to section 71 of the Criminal Justice Act 1988 in the sum of £3,137,165 with a consecutive term of seven years' imprisonment in default.[5]Each of the first seven counts charged the same offence of cheating the public revenue of corporation tax by concealing and/or otherwise failing to disclose the existence of profits made by an offshore company, which was managed and controlled by the appellant in the United Kingdom. Count 1 was as follows:
"STATEMENT OF OFFENCE Cheating Her Majesty the Queen and the Commissioners of Inland Revenue, contrary to common law. PARTICULARS OF OFFENCE BRIAN ROGER ALLEN, between 1 January 1980 and 31 March 1992, with intent to defraud and to the prejudice of Her Majesty the Queen and the Commissioners of Inland Revenue, cheated Her Majesty the Queen and the Commissioners of Inland Revenue of public revenue, namely corporation tax, by concealing from and/or otherwise failing to disclose to the Commissioners of Inland Revenue for the purposes of the Taxes Acts the existence of profits made by an off-shore company, namely Meldrette Investments Ltd, which was managed and controlled by him in the United Kingdom during the said period."
Counts 2 to 7 charged the same offence in relation to six different offshore companies.[6]Counts 8, 9, 10, 12 and 13 charged the same offence of cheating the public revenue of income tax by delivering and/or causing to be delivered a tax return for a particular year showing income which was false, misleading and deceptive in that it omitted to declare all the income and benefits which the appellant received during that period. Count 8 was as follows:
"STATEMENT OF OFFENCE Cheating Her Majesty the Queen and the Commissioners of Inland Revenue, contrary to common law. PARTICULARS OF OFFENCE BRIAN ROGER ALLEN, on or about 3 April 1992, with intent to defraud and to the prejudice of Her Majesty the Queen and the Commissioners of Inland Revenue, cheated Her Majesty the Queen and the Commissioners of Inland Revenue of public revenue, namely income tax, by delivering and/or causing to be delivered to an Inspector of Taxes a tax return for the year 1989/1990 showing income for the year to 5 April 1989 in respect of himself which was false, misleading and deceptive in that it omitted to declare all the income and benefits which he received during the said period. Particulars of omitted income and benefits are - income and benefits received from: (i) Peche D'Or Investments Ltd; (ii) Meldrette Investments Ltd."
Count 9 related to the year 1990/1991, count 10 related to the year 1991/1992, count 12 related to the year 1992/1993 and count 13 related to the year 1994/1995. Counts 9 and 10 related to the omission of income and benefits received from (i) Peche D'Or Investments Ltd and (ii) Meldrette Investments Ltd. Count 12 related to the omission of income and benefits received from (i) Peche D'Or Investments Ltd, (ii) Meldrette Investments Ltd and (iii) Berkshire Investments Ltd. Count 13 related to the omission of income and benefits received from Peche D'Or Investments Ltd.[7]The Crown case against the appellant on counts 1 to 7 was that he had dishonestly concealed the fact that he managed and controlled in the United Kingdom the businesses of the respective companies specified in those counts in order to give the false impression that the companies were not resident in the United Kingdom so as to avoid corporation tax being charged against those companies. The Crown case against the appellant on counts 8 to 10 and 12 to 13 was that the appellant concealed the provision of living accommodation and benefits received from the offshore companies for which he was liable to income tax as a shadow director. Count 11 was as follows:
"STATEMENT OF OFFENCE Cheating Her Majesty the Queen and the Commissioners of Inland Revenue, contrary to common law. PARTICULARS OF OFFENCE BRIAN ROGER ALLEN, on or about 3 April 1992, with intent to defraud and to the prejudice of Her Majesty the Queen and the Commissioners of Inland Revenue, cheated Her Majesty the Queen and the Commissioners of Inland Revenue of public revenue, namely income tax, by delivering and/or causing to be delivered to an Inspector of Taxes a schedule of assets as at 31 January 1991 in respect of his assets and the assets of his minor children which was false, misleading and deceptive in that it omitted to disclose divers assets which were owned by him. Particulars of the omitted assets are - his beneficial interest in shares issued by off-shore companies, his beneficial interest in properties held in the names of off-shore companies, and his beneficial interest in bank accounts held in the United Kingdom and in Jersey in the names of off-shore companies."
[8]The appellant appealed against his convictions to the Court of Appeal on a number of grounds, and his appeal was dismissed and the convictions affirmed [2000] QB 744. One ground of appeal advanced before the Court of Appeal and rejected by it was that under section 739(2) of the Income and Corporation Taxes Act 1988 the income of the offshore companies was deemed to be the income of the appellant and that the income was also deemed not to be the income of those companies. In consequence none of the companies was liable to any corporation tax as the income was not their income and therefore the appellant's dishonesty could not have caused any loss to the revenue and he could not be guilty of the offence of cheating the revenue.[9]In respect of this issue the Court of Appeal certified the following point of law: "Whether section 739(2) of the Income and Corporation Taxes Act 1988 has either of the additional effects, in relation to income which it requires to be deemed to be income of an individual ordinarily resident in the United Kingdom a) of requiring, for corporation tax purposes, that same income to be deemed not to be the income of a company incorporated outside the United Kingdom whose income it actually is; b) of requiring for income tax purposes, that same income to be deemed not to be the income of the person (whether an individual or a company) resident or domiciled outside the United Kingdom whose income it actually is".[10]The appellant's appeal was heard together with the appeal of Dermot Jeremy Dimsey who had administered on behalf of the appellant the offshore companies (and their bank accounts) specified in the indictment against the appellant and who had been convicted of the offence of conspiracy to cheat the public revenue. On the appellant's appeal before this House his counsel, Mr Newman QC, adopted the argument of counsel for Dimsey, Mr Venables QC, on the section 739(2) point. For the reasons given in the speech of my noble and learned friend Lord Scott of Foscote in the case of Dimsey, with which I am in full agreement, I would reject the appellant's ground of appeal in relation to section 739(2). The shadow director point[11]Another ground of appeal advanced before the Court of Appeal and rejected by it was that as a shadow director the appellant was not liable to tax in respect of the provision of living accommodation and benefits in kind. In respect of this issue the Court of Appeal certified the following point of law:
"Whether section 145 and/or section 154 of the Income and Corporation Taxes Act 1988 impose a charge to tax under Schedule E in respect of relevant benefits received from a company by an individual who, while having no actual office or employment with that company, none the less falls within the extended meaning of 'director' under section 168(8) of the Act."
[12]Under the provisions of Chapters I and II of Part V of the Income and Corporation Taxes Act 1988 (the ICTA) where, by reason of his employment, a person is provided with living accommodation or he or members of his family or household are provided with benefits in kind, the value of the accommodation or the cash equivalent of the benefits is to be treated as emoluments of his employment for the purposes of Schedule E.[13]Section 145(1) in Chapter I provides in relation to the provision of living accommodation:
"Subject to the provisions of this section, where living accommodation is provided for a person in any period by reason of his employment, . . ., he is to be treated for the purposes of Schedule E as being in receipt of emoluments of an amount equal to the value to him of the accommodation for the period, less so much as is properly attributable to that provision of any sum made good by him to those at whose cost the accommodation is provided."
Section 145(8) provides:
"For the purposes of this section— (b) the expressions 'employment', 'family or household', 'director', 'full-time working director', 'material interest' and (in relation to a body corporate) 'control' shall be construed in accordance with subsections (2), (4) and (8) to (12) of section 168 as if this section were included in Chapter II of this Part."
Section 154(1) in Chapter II provides in relation to benefits in kind:
"Subject to section 163, where in any year a person is employed in employment to which this Chapter applies and— (a) by reason of his employment there is provided for him, or for others being members of his family or household, any benefit to which this section applies; and (b) the cost of providing the benefit is not (apart from this section) chargeable to tax as his income, there is to be treated as emoluments of the employment, and accordingly chargeable to income tax under Schedule E, an amount equal to whatever is the cash equivalent of the benefit."
Section 167(1) sets out the employment to which Chapter II relates:
"This Chapter applies— (a) to employment as a director of a company (but subject to subsection (5) below), and (b) to employment with emoluments at the rate of £8,500 a year or more."
Section 168 provides:
"(1) The following provisions of this section apply for the interpretation of expressions used in this Chapter. (2) Subject to section 165(6)(b), 'employment' means an office or employment the emoluments of which fall to be assessed under Schedule E; and related expressions shall be construed accordingly. (8) Subject to subsection (9) below, 'director' means— (a) in relation to a company whose affairs are managed by a board of directors or similar body, a member of that board or similar body; (b) in relation to a company whose affairs are managed by a single director or similar person, that director or person; and (c) in relation to a company whose affairs are managed by the members themselves, a member of the company, and includes any person in accordance with whose directions or instructions the directors of the company (as defined above) are accustomed to act. (9) A person is not under subsection (8) above to be deemed to be a person in accordance with whose directions or instructions the directors of the company are accustomed to act by reason only that the directors act on advice given by him in a professional capacity."
Schedule E set out in section[14]The argument of the Crown can be briefly summarised as follows. A director of a company is treated by sections 167(1) and 168(2) as being in "employment" for the purposes of Chapter II of Part V, even if he is not actually employed by the company. Therefore the effect of section 167(1)(a) is that the Chapter applies to a director who has no actual employment. The effect of the concluding part of section 168(8) is that for the purposes of the Chapter and in particular for the purposes of section 168(2) a shadow director is treated as holding the office of director. Accordingly the appellant as a shadow director was chargeable under Schedule E in respect of the value of the living accommodation and benefits in kind received from the companies.[15]Mr Kessler, junior counsel for the appellant, advanced two main arguments. The first argument was that in Edwards v Clinch [1982] AC 845, 861 Lord Wilberforce stated that the word "office" must "connote a post to which a person can be appointed, which he can vacate and to which a successor can be appointed". Therefore a shadow director does not hold an office. Section 168(8) states that a "director" includes a shadow director, but it should not be read as deeming a shadow director to hold an office. The purpose of section 168(8) was to avoid the repetition of the words "director or deemed director" when the word "director" is used numerous times in Chapter II. The purpose was not to extend the meaning of other words such as "office".[16]The second argument was that even if the effect of the concluding part of section 168(8) is that a shadow director has an "office", he does not have "employment" within the meaning of section 168(2) because he does not have an office "the emoluments of which fall to be assessed under Schedule E". Two reasons were advanced in support of this argument. The first was that in respect of the deemed office of a director, it is not one the emoluments of which fall to be assessed under Schedule E. On this point the Crown's argument was circular because it assumed this requirement to be satisfied in order that the emoluments can be regarded as falling to be assessed under Schedule E. The second reason was that the charge which the Crown seeks to impose is one to which paragraph 5 of Schedule E relates and that paragraph does not impose a territorial limitation. In consequence the Crown's argument would result in a charge to tax without territorial limitations so that shadow directors throughout the world provided with living accommodation or benefits would be caught, which cannot have been the legislative intention. Mr Kessler relied on the acceptance of this argument by a Special Commissioner, Dr John Avery Jones, who, in respect of the equivalent section in the Finance Act 1977 to section 145, stated in In re Taxpayer FI (SC 3099/93):
"As we have seen, the definition of employment has the effect of providing a territorial limitation; if the employment is within that limitation, section 33 deems there to be Schedule E emoluments unrelated to any Case of Schedule E. If one could use the deemed emoluments under the section to complete the circle in the definition of employee and make the section apply, there would be no territorial limitation to the section and all employees in the world provided with living accommodation would be caught. This cannot have been intended. This seems to me to be a compelling reason why one cannot use the deemed emoluments to make the section apply."
[17]Mr Kessler supported his two arguments on the construction of the statutory provisions by a third argument of a more general nature relating to the undesirable and anomalous consequences of the construction contended for by the Crown. He submitted that it is a world-wide practice to use companies as a vehicle to hold wealth. It is normal practice for persons resident but not domiciled in the United Kingdom to hold assets situated in the United Kingdom via an offshore company for the object of mitigating inheritance tax. In order to make the disposal of a foreign home easier, it is also normal practice for persons resident and domiciled in the United Kingdom to hold that home via an offshore company. The judgment of Morritt LJ in Secretary of State for Trade and Industry v Deverell [2000] 2 WLR 907 gives a wide meaning to the words in section 22(4) of the Company Directors Disqualification Act 1986 which are very similar to the concluding words of section 168(8) so that a person is regarded as a shadow director if the properly appointed directors surrender their discretion and give effect to directions or instructions from that person.[18]In consequence on the Crown's argument the scope of the living accommodation and benefit in kind provisions would be very wide. Mr Kessler further submitted that in many cases the link between the services rendered to the company by the alleged shadow director and the provision of living accommodation or benefits alleged to be emoluments would be tenuous or non-existent. There is a valid distinction between taxing benefits flowing from the holding of a real office or employment subject to charge under Schedule E and taxing a benefit which is not in reality attributable to an office or employment but is attributable to a person's direct or indirect ownership of a company.[19]My Lords,[19]I am unable to accept this argument. It is clear that it was the intention of Parliament that living accommodation and benefits in kind provided by a company for a director should be taxed as emoluments received by him from his office. Whilst in some cases the link between the services provided by a shadow director and the accommodation or benefits which he receives from the company may be tenuous, there will be many cases where the services of a shadow director are as valuable as those of an actual director and there would be no valid distinction between the services provided by a director and those provided by a shadow director. If the appellant's arguments were correct it would be simple for a person who is a director in all but name to avoid the charge to tax under sections 145 and 154. In my opinion it was the intention of Parliament in enacting the concluding part of section 168(8) that accommodation and benefits in kind received by a shadow director should be taxed in the same way as those received by a director, and I consider that the statutory provisions relied upon by the Crown are effective to achieve that purpose.[20]I am unable to accept Mr Kessler's first argument on the construction of the provisions. Under the concluding part of section 168(8) a shadow director is taken to be a director and therefore under section 167(1)(a) and section 168(2) he is employed in the office of a director if the emoluments of that office can be regarded as falling to be assessed under Schedule E. Taking account of the intention of Parliament in enacting the concluding part of section 168(8) that a distinction should not be drawn between directors and shadow directors I consider that Mr Kessler's circularity argument does not enable a shadow director to escape the charge to tax. In my opinion Mr Milne QC for the Crown was correct in submitting that there is a statutory circularity built into the provisions, so that as a shadow director is to be regarded as a director it follows that living accommodation and benefits received by him should be treated as emoluments falling to be assessed under Schedule E.[21]I am also unable to accept Mr Kessler's second argument in relation to territorial limitations. He submitted that the tax imposed by sections 145(1) and 154(1) was charged under paragraph 5 of Schedule E, which did not contain a territorial limitation, and not under one of the three Cases set out in paragraph 1. However paragraph 5 relates to other provisions of the Tax Acts directing tax to be charged "under this Schedule". The concluding words of paragraph 1 state:
"tax shall not be chargeable in respect of emoluments of an office or employment under any other paragraph of this Schedule."
Therefore when another provision of a Tax Act directs that benefits are to be charged to tax as emoluments under Schedule E, I consider that those emoluments will fall within paragraph 1 and are not to be regarded as falling within paragraph 5. A territorial limitation is contained within each of the three Cases in paragraph 1, and accordingly a territorial limitation is present in respect of the tax imposed by section 145(1) and section 154(1). Accordingly I would hold that the appellant was rightly convicted as a shadow director and that the convictions on counts 8, 9, 10, 12 and 13 are safe. Self-incrimination[22]The Crown case against the appellant on count 11 was that in a schedule of assets provided by him to the Revenue during the course of a Hansard investigation into his affairs he omitted to list his beneficial interest in shares issued by offshore companies. Before the Court of Appeal as a ground of appeal the appellant criticised part of the judge's summing up on the issue whether certain trust deeds were a sham. This ground of appeal was rejected by the Court of Appeal and the ground has not been renewed before this House.[23]However, with the leave of the House, the appellant was permitted to argue a new point relating to article 6 of the European Convention for the Protection of Human Rights and Fundamental Freedoms ("the Convention"). This argument consisted of two parts and can be briefly summarised as follows. First, under section 20(1) of the Taxes Management Act 1970 the Revenue requested the appellant to provide certain information, and then under the Hansard procedure the Revenue both threatened and induced the appellant to produce the schedule of assets to which count 11 related. In consequence the appellant's right to a fair trial under article 6 was violated because his right not to incriminate himself was breached. Secondly, although the trial and conviction of the appellant took place before the relevant sections of the Human Rights Act 1998 came into force on 2 October 2000 the appellant was entitled, pursuant to section 7(1)(b) and 22(4) of the Act to rely in an appeal heard after 2 October 2000 on rights conferred by the Convention and incorporated into English law by the Act. The House heard the submissions of the parties before the House gave judgment on 5 July 2001 R v Lambert [2001] 3 WLR 206. In Lambert's case the House held that the 1998 Act did not operate retrospectively to make unsafe by reason of a breach of article 6 a conviction prior to 2 October 2000 which was safe under English law at the time the conviction took place. Therefore, on that ground the appellant's argument in respect of his conviction on count 11 must fail. However as the issue whether there was a violation of the appellant's rights under article 6 was fully argued and as the point is one of general importance I propose to express my opinion on it.[24]As I have stated, the Crown case against the appellant on count 11 related to the schedule of assets referred to in that count in which the appellant omitted to specify his very substantial interests in offshore companies. Section 20 of the Taxes Management Act 1970 provides:
"(1) Subject to this section, an inspector may by notice in writing require a person— (a) to deliver to him such documents as are in the person's possession or power and as (in the inspector's reasonable opinion) contain, or may contain, information relevant to— (i) any tax liability to which the person is or may be subject, or (ii) the amount of any such liability, or (b) to furnish to him such particulars as the inspector may reasonably require as being relevant to, or to the amount of, any such liability. "(7) Notices under subsection (1) or (3) above are not to be given by an inspector unless he is authorised by the Board for its purposes; and— (a) a notice is not to be given by him except with the consent of a General or Special Commissioner; and (b) the Commissioner is to give his consent only on being satisfied that in all the circumstances the inspector is justified in proceeding under this section."
Section 98(1) of the 1970 Act provides:
"Subject to the provisions of this section and section 98A below, where any person— (a) has been required, by a notice served under or for the purposes of any of the provisions specified in the first column of the Table below, to deliver any return or other document, to furnish any particulars, to produce any document, or to make anything available for inspection, and he fails to comply with the notice, or (b) fails to furnish any information, give any certificate or produce any document or record in accordance with any of the provisions specified in the second column of the Table below, he shall be liable, subject to subsections (3) and (4)— below— (i) to a penalty not exceeding £300, and (ii) if the failure continues after a penalty is imposed under paragraph (i) above, to a further penalty or penalties not exceeding £60 for each day on which the failure continues after the day on which the penalty under paragraph (i) above was imposed (but excluding any day for which a penalty under this paragraph has already been imposed)."
[25]On 9 May 1991 the appellant was served with a notice pursuant to section 20(1) of the 1970 Act. The notice required a variety of information, including requirement 6, which stated:
"I require a certified statement of all your assets and liabilities as at 31 January 1991"
. The appellant failed to comply with the notice and he received a summons dated 13 August 1991 to appear before the General Commissioners:
"IN THE DIVISION OF LEEDS To Mr B R Allen of The Warleys, Hammerpond Road, Plummer Plain, Horsham, West Sussex INFORMATION has been laid this day by Mr G W Young of Inland Revenue, Special Office one of Her Majesty's Inspectors of Taxes that— 1. you were served for the purposes of section 20(1) of the Taxes Management Act 1970 with a notice dated 9 May 1991 requiring you to deliver to Mr A R Maxwell one of Her Majesty's Inspectors of Taxes, not later than 31 July 1991 the following document(s)— Per schedule attached. 2. you have failed to comply with the notice thereby rendering yourself liable under the provisions of section 98(1) of the Taxes Management Act 1970 to a penalty not exceeding fifty pounds. YOU ARE THEREFORE hereby summoned to appear before the Commissioners for the general purposes of the Income tax for the above-named Division sitting at 29 Park Place, Leeds on the 3rd day of September next at the hour of 2 o'clock in the afternoon to answer the information and to be further dealt with according to law. Dated the 13th day of August 1991 Your attention is drawn to the statutory provisions overleaf and in particular to those relating to penalties."
This summons was signed by two of the Commissioners for the general purposes of the income tax for the Division.[26]The appellant still failed to comply with the section 20(1) notice and at a meeting between the appellant and his accountant and officials of the Revenue the officials adopted what is termed "the Hansard procedure" whereby one of the officials formally read out to the appellant the reply of the Chancellor of the Exchequer to a Parliamentary Question on 18 October 1990 which was in the following terms: "The practice of the board of Inland Revenue in cases of fraud in relation to tax is as follows:(1) The board may accept a money settlement instead of instituting criminal proceedings in respect of fraud alleged to have been committed by a taxpayer.(2) It can give no undertaking that it will accept a money settlement and refrain from instituting criminal proceedings, even if the taxpayer has made a full confession and has given full facilities for investigation of the facts. It reserves to itself full discretion in all cases as to the course it pursues.(3) Nevertheless, in considering whether to accept a money settlement or to institute criminal proceedings, its decision is influenced by the fact that the taxpayer has made a full confession and has given full facilities for investigation into his affairs and for examination of such books, papers, documents or information as the board may consider necessary." (Hansard (HC Debates), 18 October 1990, written answers, col 882 ). At this meeting further questions relating to his financial affairs were also put to the appellant. Subsequently the appellant provided answers to the various questions put to him, and in compliance with requirement 6 of the section 20(1) notice he delivered to the revenue the schedule of assets referred to in count 11.[27]Mr Newman QC, on behalf of the appellant, submitted that in obtaining from the appellant the schedule of assets upon which the prosecution case was based the revenue had breached his right to a fair trial under article 6 because the appellant had been compelled under threat of penalty to incriminate himself by providing the schedule of assets. Mr Newman also submitted that the appellant had been subjected to an inducement to provide the schedule by the assurance implicit in the Hansard statement that if the taxpayer makes a full confession criminal proceedings would not be instituted against him.[28]In support of his submission relating to self-incrimination Mr Newman relied on the judgment of the European Court of Human Rights in Funke v France (1993) 16 EHRR 297, 326, para 44 in which it was held that the right to a fair trial given by article 6(1) includes the right "to remain silent and not to contribute himself to incriminating itself." Mr Newman also relied strongly on the judgment of the European Court in Saunders v United Kingdom (1996) 23 EHRR 313. In that case the Secretary of State for Trade and Industry appointed inspectors to investigate the affairs of Guinness Plc pursuant to sections 432 and 442 of the Companies Act 1985. During the course of that investigation Mr Saunders made statements to the inspectors in reply to questions from them. Mr Saunders was subject to legal compulsion to give evidence to the inspectors. He was obliged under sections 434 and 436 of the 1985 Act to answer the questions put to him by the inspectors in the course of the interviews which they conducted with him. A refusal by him to answer the questions put to him could have led to a finding of contempt of court and the imposition of a fine or committal to prison for up to two years, and it was no defence to proceedings consequent on a refusal that the questions were of an incriminating nature. In the course of the subsequent criminal trial in which he was charged with offences relating to an illegal share support operation the transcripts of Mr Saunders' answers to the inspectors, whether directly self-incriminating or not, were used against him by the prosecution in a manner which sought to incriminate him. Mr Saunders lodged an application with the European Commission of Human Rights complaining that the use at his trial of statements made by him to the inspectors under their compulsory powers deprived him of a fair hearing in violation of article 6(1) of the Convention. Both the European Commission and the European Court upheld Mr Saunders' complaint. In its judgments the European Court stated, pp 337-340, paras 68-74:"68. The Court recalls that, although not specifically mentioned in article 6 of the Convention, the right to silence and the right not to incriminate oneself, are generally recognised international standards which lie at the heart of the notion of a fair procedure under article 6. Their rationale lies, inter alia , in the protection of the accused against improper compulsion by the authorities thereby contributing to the avoidance of miscarriages of justice and to the fulfilment of the aims of article 6. The right not to incriminate oneself, in particular, presupposes that the prosecution in a criminal case seek to prove their case against the accused without resort to evidence obtained through methods of coercion or oppression in defiance of the will of the accused. In this sense the right is closely linked to the presumption of innocence contained in article 6(2) of the Convention.69. The right not to incriminate oneself is prima[29]My Lords,[29]the present case is one which relates to the obligation of a citizen to pay taxes and to his duty not to cheat the Revenue. It is self-evident that the payment of taxes, fixed by the legislature, is essential for the functioning of any democratic State. It is also self-evident that to ensure the due payment of taxes the State must have power to require its citizens to inform it of the amount of their annual income, and to have sanctions available to enforce the provision of that information. In the United Kingdom this power is contained in the provisions of the Taxes Management Act 1970. Section 8(1) provides:
"For the purpose of establishing the amounts in which a person is chargeable to income tax and capital gains tax for a year of assessment, and the amount payable by him by way of income tax for that year, he may be required by a notice given to him by an officer of the Board— (a) to make and deliver to the officer, on or before the day mentioned in subsection (1A) below, a return containing such information as may reasonably be required in pursuance of the notice, and (b) to deliver with the return such accounts, statements and documents relating to information contained in the return, as may reasonably be so required."
Section 93 provides:
"(1) This section applies where— (a) any person (the taxpayer) has been required by a notice served under or for the purposes of section 8 or 8A of this Act (or either of those sections as extended by section 12 of this Act) to deliver any return, and (b) he fails to comply with the notice. (2) The taxpayer shall be liable to a penalty which shall be £100. (3) If, on an application made to them by an officer of the Board, the General or Special Commissioners so direct, the taxpayer shall be liable to a further penalty or penalties not exceeding £60 for each day on which the failure continues after the day on which he is notified of the direction (but excluding any day for which a penalty under this subsection has already been imposed)."
Further subsections make provision for additional penalties if the taxpayer still fails to make a return.[30]The Tax Return for the year ended 5 April 2001 sent to every individual taxpayer contains the following notice on its first page:
"This Notice requires you by law to send me a Tax Return for the year from 6 April 2000 to 5 April 2001. Give details of all your income and capital gains using: * this form and any supplementary Pages you need …. Make sure your Tax Return, and any documents I ask for, reach me by: * 30 September 2001 if you want me to - calculate your tax, OR - collect any tax you owe (less than £2,000) through your PAYE code for 2002-2003, OR * 31 January 2002 at the latest, or you will be liable to an automatic penalty of £100. Make sure your payment of any tax you owe reaches me by 31 January 2002, or you will have to pay interest and perhaps a surcharge. Any Tax Return may be checked. Please remember that there are penalties for supplying false information."
It is clearly permissible for a State to enact such provisions and there could be no substance in an argument that there is a violation of article 6(1) if the revenue prosecuted a citizen for cheating the revenue by furnishing a standard tax return containing false information. Similarly in the present case, viewed against the background that the State, for the purpose of collecting tax, is entitled to require a citizen to inform it of his income and to enforce penalties for failure to do so, the section 20(1) notice requiring information cannot constitute a violation of the right against self-incrimination. The present case is therefore clearly distinguishable from Saunders on that ground. As Lord Bingham of Cornhill stated in Brown v Stott (Procurator Fiscal, Dunfermline) [2001] 2 WLR 817, 836:
"The jurisprudence of the European Court very clearly establishes that while the overall fairness of a criminal trial cannot be compromised, the constituent rights comprised, whether expressly or implicitly, within article 6 are not themselves absolute. Limited qualification of these rights is acceptable if reasonably directed by national authorities towards a clear and proper public objective and if representing no greater qualification than the situation calls for . . . . The Court has also recognised the need for a fair balance between the general interest of the community and the personal rights of the individual, the search for which balance has been described as inherent in the whole of the Convention: see Sporrong and Lönnroth v Sweden (1982) 5 EHRR 35, 52, para 69; Sheffield and Horsham v United Kingdom (1998) 27 EHRR 163, 191, para 52. "
[31]In respect of his argument that there had been a breach of article 6(1) because the delivery of the schedule of assets had been "involuntary" having been induced by a promise implicit in the Hansard statement that the appellant would not be prosecuted if he furnished the required information, Mr Newman QC relied on the decision of the Court of Appeal in R v Barker [1941] 2 KB 381. In that case at an interview a revenue official read an earlier version of the Hansard statement to the taxpayer and his accountant, the appellant Barker. This statement differed from the later statement made in October 1990 because it stated that where the taxpayer voluntarily disclosed the fact of his past frauds and furnished full information to the revenue "the board will not institute criminal proceedings, but will accept the pecuniary settlement" (see p 382). After the statement had been read to them, the appellant and the taxpayer produced to the revenue official two ledgers which had been fraudulently prepared to induce the revenue authorities to believe that the irregularities amounted to £7,000 in all. At a later interview two further ledgers and working papers were produced which showed that the earlier ledgers were incomplete and had been brought into existence to deceive the revenue. Subsequently a letter was written which made it clear that the full amount of the irregularities was about £10,400. The appellant and the taxpayer were prosecuted and convicted of the offences of conspiring the cheat the revenue and of having delivered false statements of account with intent to defraud.[32]Before the Court of Appeal counsel for the appellant argued that the statement read from Hansard was partly a promise or an inducement, and the appellant had produced the books or documents as a result of the promise, inducement or threat. Consequently his action was not free and voluntary and the books or documents should not have been admitted in evidence. This argument was accepted by the Court of Appeal and Tucker J stated, at pp 384 - 385:
"The court . . . . does not desire to question that there may be cases in which evidence can be given of facts the existence of which have come to the knowledge of the police as the result of an inadmissible confession. But in the present case the promise or inducement which was implied in this extract from Hansard expressly related to the production of business books and records, and the court is of opinion that if, as a result of a promise, inducement or threat, such books and documents are produced by the person or persons to whom the promise or inducement is held out, or the threat made, those documents stand on precisely the same footing as an oral or a written confession which is brought into existence as the result of such a promise, inducement or threat. The result is that, in the opinion of the court, these vital documents and books, namely, the ledgers and the working papers of the appellant, were wrongly admitted in evidence and in those circumstances the conviction of the appellant cannot stand."
The effect of this decision was reversed by section 105 of the Taxes Management Act 1970 (which replaced an earlier and similar provision) and which provides:
"(1) Statements made or documents produced by or on behalf of a person shall not be inadmissible in any such proceedings as are mentioned in subsection (2) below by reason only that it has been drawn to his attention that— (a) pecuniary settlements may be accepted instead of a penalty being determined, or proceedings being instituted, in relation to any tax, (b) though no undertaking can be given as to whether or not the Board will accept such a settlement in the case of any particular person, it is the practice of the Board to be influenced by the fact that a person has made a full confession of any fraudulent conduct to which he has been a party and has given full facilities for investigation, and that he was or may have been induced thereby to make the statements or produce the documents. (2) The proceedings mentioned in subsection (1) above are— (a) any criminal proceedings against the person in question for any form of fraudulent conduct in connection with or in relation to tax, and (b) any proceedings against him for the recovery of any tax due from him, and (c) any proceedings for a penalty or on appeal against the determination of a penalty."
[33]Section 76(4) of the Police and Criminal Evidence Act 1984 provides:
"The fact that a confession is wholly or partly excluded in pursuance of this section shall not affect the admissibility in evidence— (a) of any facts discovered as a result of the confession; or (b) where the confession is relevant as showing that the accused speaks, writes or expresses himself in a particular way, of so much of the confession as is necessary to show that he does so."
Cross and Tapper on Evidence, 8th ed (1995), p 535 footnote 4 comment unfavourably on R v Barker and say:
"The extremely unsatisfactory case of R v Barker [1941] 2 KB 381, [1941] 3 All ER 33 which appeared to assimilate false accounts with a confession of false accounting, and which was overturned on its facts by Finance Act 1942, s 34 (see now Taxes Management Act 1970, s 105), appears to be inconsistent with s 76(4)(a) as a matter of law, and can be supported now only upon the basis of the judge's discretion, see Lord Diplock in R v Sang [1980] AC 402 at 435, [1979] 2 All ER 1222 at 1229."
[34]My Lords,[34]I am unable to accept Mr Newman's submission and to follow the reasoning of the Court of Appeal in R v Barker . In that case the court stated, at p 385:
"Those documents stand on precisely the same footing as an oral or a written confession which is brought into existence as a result of such a promise, inducement or threat"
. In my respectful opinion this is not so. When the Crown relies on an oral or written confession made by the accused and puts it in evidence it does so because it considers that the confession is true. When the courts have excluded a confession because it was involuntary having been obtained by an inducement they have done so on the ground that it was unsafe to rely on the confession as being true. As Lord Sumner explained in Ibrahim v R [1914] AC 599, 610-611:
"The rule which excludes evidence of statements made by a prisoner, when they are induced by hope held out, or fear inspired, by a person in authority, is a rule of policy. 'A confession forced from the mind by the flattery of hope or by the torture of fear comes in so questionable a shape, when it is to be considered as evidence of guilt, that no credit ought to be given to it': R v Warwickshall. It is not that the law presumes such statements to be untrue, but from the danger of receiving such evidence judges have thought it better to reject it for the due administration of justice: R v Baldry. "
[35]However in Barker and in this case the respective accused did not give information contained in the documents and the schedule respectively which the Crown claimed was true, both accused gave false information and were prosecuted for giving that false information. To the extent that there was an inducement contained in the Hansard statement, the inducement was to give true and accurate information to the revenue, but the accused in both cases did not respond to that inducement and instead of giving true and accurate information gave false information. Therefore, in my opinion, the appellant's argument in this case that he was induced by hope of non-institution of criminal proceedings held out by the revenue to provide the schedule and that its provision was therefore involuntary is invalid. If, in response to the Hansard statement, the appellant had given true and accurate information which disclosed that he had earlier cheated the revenue and had then been prosecuted for that earlier dishonesty, he would have had a strong argument that the criminal proceedings were unfair and an even stronger argument that the Crown should not rely on evidence of his admission, but that is the reverse of what actually occurred.[36]Accordingly, I would dismiss the appellant's appeal. LORD SCOTT OF FOSCOTE My Lords,[37]One of the grounds of appeal argued on behalf of the appellant was that under section 739(2) of the Income and Corporation Taxes Act 1988 the income of the off-shore companies (referred to in the judgment of the Court of Appeal [2000] 3 WLR 273 at 282) was deemed to be the income of the appellant and that the income must therefore be deemed not to be the income of the companies (see paragraph 5 of my noble and learned friend Lord Hutton's opinion).[38]As Lord Hutton has explained in paragraph 7 of his opinion, counsel for the appellant, Mr Newman QC, dealt with the section 739(2) point before your Lordships by adopting the argument on that point advanced before your Lordships by counsel for Dimsey. In a separate opinion which I have prepared for the purposes of Dimsey's appeal, I have set out my reasons for rejecting his ground of appeal based on section 739(2). For the same reasons I would reject Allen's section 739(2) ground of appeal.[39]Accordingly, for those reasons and for the reasons given by my noble and learned friend, with which I am in full agreement, I too would dismiss this appeal.

Cited in 6 later judgments