SPC00427
Income Tax; tax return; enquiry into returns; requests for information; notice requiring the production of documents; failure to produce adequate or sufficient information and documents; enquiry closed; notice amending return; appeal against amended self assessment; Taxes Management Act 1970 Sections 9A, 19A, 28A, 114; Notices of Determination under Regulations 49 & 55 of the Income Tax (Employments) Regulations 1993; Notice of Decision relating to National Insurance Contributions.

THE SPECIAL COMMISSIONERS

	DR  A GORDON SIWEK & SIWEK LIMITED	Appellant

	- and -

	THE COMMISSIONERS OF INLAND REVENUE    	Respondents

				Special Commissioner:  J GORDON REID Q.C., F.C.I.Arb.

Sitting in Edinburgh on Tuesday 27th July 2004

for the Appellant   No appearance

for the Respondents   John Hughes, Head of Unit, Appeals Unit Glasgow

© CROWN COPYRIGHT 2004

DECISION

Introduction

Parties

1.	These are appeals by Dr A Gordon Siwek and Siwek Ltd (the “Company”).  Dr. Siwek is the sole director of the Company.  The appeals were heard together at Edinburgh on 27/7/04.  The Inland Revenue were represented by John Hughes, Head of Unit, Appeals Unit Glasgow.  A Mr Hone was also present for the Revenue.  Dr. Siwek did not attend the Hearing and was not represented.  Nor was the Company.  The Inland Revenue intimated and lodged timeously a bundle of documents.  Since the appeals were marked, various documents have been produced by Dr Siwek and I refer to some of these below.  At the Hearing, Mr Hughes led the evidence of David Burness, Inspector of Taxes, Aberdeen, and George Laing, Inland Revenue Compliance Manager, Aberdeen.

Dr Siwek’s Absence

2.	By letter dated 24/7/04 (a Saturday) to the Office of the Special Commissioners, Dr. Siwek advised that he was not resident in the United Kingdom but in Almaty, Kazakhstan (this does not appear to be a full or complete address).  The letter records that it had been Dr. Siwek’s intention to attend the Hearing but “due to illness of my daughter I am not able to attend on 27th”.  He requested, expressly in terms of Rule 16(2) of the Special Commissioners (Jurisdiction and Procedure) Regulations 1994, that the Hearing be rescheduled to a later date.  No further explanation was given.  A fax of this letter was received by the Office of the Special Commissioners on the morning of Monday 26/7/04.  It was faxed to the Revenue for comment.  They, by fax, opposed the application to postpone the Hearing on the basis that the reasons given were insufficiently specific and unsupported by medical evidence.  Having considered the relevant documents, which were also faxed to me at the Edinburgh Tribunal Centre, I declined, at that stage, to order that the Hearing be postponed.

The Appeals

3.	A great deal of correspondence has passed between the parties over the last few years.  The appeals, which fall to be determined, are as follows:-

A	Appeal by Dr Siwek

Appeal against Closure Notice dated 2/6/03 given under Section 28A(1)&(2) of the Taxes Management Act 1970 (as amended) (the “TMA”) in relation to the tax year 1999/2000, following an enquiry.

This relates to an amendment to Dr. Siwek’s Self Assessment and showed tax due of £12,020.40.

By letter dated 6/6/03, Dr. Siwek appealed against the enquiry conclusions and the amendment made to the self assessment.  In summary, his grounds of appeal are:-

i)	The amendment was incompetent as the enquiry was the subject of an appeal under section 56A(10) of the TMA.  According to Dr. Siwek’s contentions, the enquiry was subject to an appeal to the House of Lords (see paragraph 10 below);

ii)	The purported enquiry concerns a repayment claim and the letter dated 14/6/01 (by which the Revenue intimated to Dr. Siwek that they intended to make some enquiries into his tax return) did not conform to Schedule 1A paragraph 6(1)&(2) of the TMA; the enquiry was therefore incompetent and illegal.

iii)	An enquiry should have been made within the provisions of Schedule 1A paragraph 6(2) and not section 19A of the TMA.

B	Appeals by the Company

1	Appeal against a Notice of Decision issued on 17/1/03 that the Company is liable to pay primary and secondary Class 1 National Insurance Contributions for the period between 19/9/98 and 30/9/00 in respect of earnings of a non-specified employee; that the amount so payable is £7305.73, and the amount actually paid is nil.  The notice was given under section 8 of the Social Security (Transfer of Functions etc) Act 1999.

2	An appeal against a second Notice of Decision of the same date in substantially the same terms except that it related to the earnings of Dr. Siwek between 19/9/98 and 5/4/02 but in the sum of £23,651.26

By letter dated 13/2/03, the Company, per Dr. Siwek, appealed against the Notices.  In summary, the grounds of appeal are:-

i)	The notices are incompetent because the Special Commissioners have failed to obtemper Rule 41.7(4)(a)(i)&(ii) of the Rules of the Court of Session;

ii)	The person referred to in the Notices of Decision is exempt from contributions because of the “amount of time spent outwith the United Kingdom”.

3	Four Notices of Determination also issued on 17/1/03 under Regulation 49 of the Income Tax (Employment) Regulations 1993 and relating to PAYE tax due by the Company in respect of Dr A.W. (sic) Siwek who was at the material time a director of the Company; the tax years and the amounts determined are as follows:-

Tax Year	Amount
	
1998/1999	£  5,534.51	
1999/2000	£11,833.34	
2000/2001	£12,568.68	
2001/2002	£  9,607.60	

By Notice dated 12/2/03, the Company appealed against these Notices on the following grounds:-

i)	No one of the name AW Siwek has been an employee or director the Company;

ii)	Any tax liability of any director of the Company is currently the subject of court action in Edinburgh (reference XA100/02).  Until the Court action is complete it is not competent for the Inland Revenue to issue a notice of determination {Note:-the reference here is to the appeal by Dr. Siwek against my Determination dated 27/5/02 refusing his appeal against a notice issued under section 19A of the TMA; the appeal to the Court of Session was, on 25/4/03, dismissed as incompetent}

Certain other arguments which are raised in the correspondence are considered below.

The Hearing

4.	As noted above, Dr. Siwek did not attend the Hearing.  

5.	At the outset of the Hearing, Dr. Siwek, having failed to appear and the Company not being represented, I gave Mr Hughes an opportunity to address me on whether the Hearing should proceed and, in particular, on the terms of the representations contained in Dr. Siwek’s fax letter.  He invited me to proceed with the Hearing because no satisfactory explanation justifying its postponement had been given.  

6.	I again declined to postpone the Hearing.  The basis for postponement set forth in Dr. Siwek’s fax letter was wholly inadequate.  The date of the Hearing has been known for many months.  There is no information about the illness of Dr. Siwek’s daughter.  I was informed that she was an adult.  There was no explanation of why Dr. Siwek had to look after her.  Illness of a relative may be a good and sufficient reason for a party’s absence and may justify a postponement or adjournment.  However, for aught yet seen, the mere fact of the illness of Dr. Siwek’s adult daughter is a wholly insufficient reason to justify postponing a Hearing in a long running dispute such as this.  If there truly exists a good and sufficient reason, then Dr. Siwek may, on his own behalf and/or on behalf of the Company, attempt to invoke Rule 19 and have the determinations contained in this Decision reviewed and set aside or varied.

Facts in relation to Dr. Siwek’s Appeal

7.	Following the submission by Dr. Siwek of his tax return dated 21/1/01 for the year ended 5/4/00, he was informed by the Revenue, by letter dated 14/6/01, that an enquiry was being opened under section 9A of the TMA.  In that letter, an informal request was made for a variety of information including (i) details of a particular source of income amounting to £390, (ii) whether Dr. Siwek’s former wife had remarried, (iii) information about deduction of tax from his income as an employee of the Company, (iv) information relating to rental income and expenditure, and (v) information about his residency status (his completion of the relevant part of the return indicated both “resident in the UK” and “not ordinarily resident in the UK”).

8.	Correspondence passed between the parties but the requested information was not produced.  A section 19A Notice was issued on 12/10/01 requiring the provision of the information previously requested informally.  Dr. Siwek appealed to the Special Commissioners.  His appeal was heard on 15/5/02 and was dismissed by written Decision dated 27/5/02 (A subsequent appeal to the Court of Session was, on 25/4/03, dismissed as incompetent).

9.	Further correspondence ensued in which the Revenue repeated their requests for information.  These requests were reasonable in the circumstances.  Dr. Siwek, in correspondence, raised a variety of irrelevant matters which displayed a lack of understanding or deliberate misinterpretation of the Decision of 27/5/02.  A penalty notice dated 23/8/02 was served on Dr. Siwek in terms of section 97AA(1)(a) of the TMA in respect of his failure to comply with the section 19A Notice dated 12/10/01.  A further notice imposing a daily penalty was served on 3/10/02 in respect of Dr. Siwek’s continuing failure to comply with the Notice dated 12/10/01.  As at 3/10/02 Dr. Siwek had still not complied with that Notice.  He appealed against the imposition of the daily penalty by letter dated 25/10/02.  That appeal is not the subject matter of this Hearing.

10.	On 14/5/03, Dr. Siwek wrote to the Revenue informing them that his appeal (dismissed by the Court of Session on 25/4/03) was “now the subject of an appeal to the House of Lords”.  In fact, no such appeal was ever proceeded with.  The time limit for appealing to the House of Lords has long since expired.  There is no pending appeal to the House of Lords.

11.	By letter to Dr. Siwek dated 21/5/03, the Revenue informed Dr. Siwek that, in light of his continued failure to produce the information required by their section 19A Notice dated 12/10/01, they intended to close the enquiry into his 1999/2000 return using their own figures.  By letter dated 2/6/03 to Dr. Siwek, the enquiry was closed.  The result was that the return, which claimed repayment of £4,103.60, was amended to show tax due of £12,020.40.  In summary, the amendments made were (i) relief in respect of £1,970 was disallowed because Dr. Siwek failed to respond to the Revenue’s enquiries as to whether his wife or former wife had remarried, (ii) he was treated as resident or ordinarily resident in the United Kingdom for the whole of the tax year (he had been requested by letter dated 12/10/01 to complete and return form P86 but refused or delayed to do so [Inland Revenue Form P86 is essentially a questionnaire dealing with residence and domicile], (iii) a tax deduction of £11,973 in respect of land and property income was disallowed because Dr. Siwek failed, in spite of repeated requests, to substantiate the claim, (iv) a claim for deduction of £1,193 in respect of maintenance, repairs and renewals was disallowed for the same reason, (v) likewise, a claim in respect of finance charges, including interest, in the sum of £10,123 was disallowed for the same reason, (vi) a claim in respect of the costs of services, including wages, of £886, was likewise disallowed, and (vii) a claim in respect of expenses of £429 was disallowed because it, too, was not substantiated.

12.	By letter dated 6/6/03, Dr. Siwek appealed against the enquiry conclusions and the amended self assessment.  The grounds of appeal are summarised above at paragraph 3A.

13.	The amended assessment gave no credit for PAYE deduction in respect of the salary of £36,731 paid by Siwek Ltd.  In light of the investigations below, the Revenue have now given credit for the sum of £8,494.20, which is taken into account in the Determinations under Regulation 49 of the Income Tax (Employments) Regulations 1993 in relation to the Company.  The Revenue have also accepted, in the light of Dr. Siwek’s fax dated 30/1/04 (which was in response to a Special Commissioner’s Directions following a Hearing on 15/12/03 which Dr. Siwek did not attend and was not represented) stating that “he was in possession of no knowledge of his former wife remarrying”, that £1970 should be allowed in respect of maintenance payments.  The result is that Dr. Siwek’s outstanding tax liability in respect of his 1999/2000 return is £3,821.60.  That sum has been reasonably assessed on the basis of the limited information which the Revenue have been able to obtain from Dr. Siwek.

Facts in relation to the Appeal by Siwek Ltd

14.	By letter to the Company dated 27/2/02, the Revenue intimated that they wished to call at the Company’s premises and review its records.  Dr. Siwek, the Company’s sole director, replied, by letter dated 2/3/02, enclosing a “notice of election for appeal to the Special Commissioners”.  The letter then stated “Appeal against incompetent notice (section 55(3)(c) Income Tax (Employment) Regulations 1993)”.  Accompanying the letter was a manuscript document, signed by Dr. Siwek.  This document stated that the Company believed that the Notice served under section (sic) 55(3)(c) of the 1993 Regulations was incompetent.  In fact, no such notice had been served on the Company; the letter dated 27/2/02 does not contain the word Notice, makes no reference to any such Regulations and contains no statutory demand or requirement.  It refers to a Booklet, which was enclosed.  That Booklet is an Inland Revenue Publication entitled “Reviews of employers’ and contractors’ records”.  It is a Code of Practice which explains in straightforward language how the Revenue carries out visits to check the records of employers.  It makes no reference to the 1993 Regulations although it does refer, at page 9, to the issuing of notices of decision where agreement cannot be reached on the amount due.

15.	Dr Siwek’s manuscript document, referred to above, then proceeds to set out two questions of law for the Special Commissioners in the following terms:-

1	Is the appellant entitled, within the provisions of Section 55(3)(a) of statutory instruments currently in force (1993/744) as made by the Commissions (sic) of Inland Revenue under TA 1988 ss 203, 204, 824(5) and TMA 1970 se 98A(1) to expect notification within section 55(3)(a)?
2	In the circumstances narrated do taxpayers and employers have right to expect Inland Revenue to operate within the law?

The document concludes with the words “This case is stated by me Siwek Ltd” and is signed by Dr. Siwek in his capacity as director of the Company.

16.	Further correspondence ensued in which the Revenue stated in clear terms that there had been no formal decision made against which the Company could appeal.  In a letter dated 21/3/02 the Company, per Dr. Siwek, stated, in effect, that any inspection of the Company’s records had to be undertaken within the provisions of section (sic) 55(3)(a).  Dr. Siwek stated his intention to proceed with the appeal.  The Office of the Special Commissioners, to whom the Company had written on 6/3/02, informed Dr. Siwek, by letter dated 26/3/02, that the Special Commissioners had no jurisdiction to deal with the matter.  Undaunted, the Company, per Dr. Siwek, requested, by letter dated 29/3/02, that the Special Commissioners state a case for the Opinion of the Court of Session and enclosed a Minute setting forth questions of law all based upon the erroneous view that the letter dated 27/2/02 was a statutory notice.  

17.	The Revenue’s further attempts through correspondence to examine the Company’s records by agreement were met with the riposte, contained in the Company’s letter, per Dr. Siwek, dated 26/4/02, that the matter was with the Special Commissioners and so no progress could be made until the issue was resolved.  

18.	The Revenue again took up the matter of informal review of the Company’s records in July 2002.  The Company, per Dr. Siwek, responded by letter dated 10/7/02, stating inter alia, that matters could not proceed “until such time as the Special Commissioner issues his certificate”.  This was a reference to the Special Commissioners certifying their “decision”.  The “decision” which Dr Siwek had in mind was a decision to refuse to state a case for the opinion of the Court of Session (see Rules of the Court of Session RC41.7 which requires a tribunal which refuses to state a case on a particular question to issue a certificate specifying the date of the decision and the reason for the refusal).  However, Dr Siwek had already been informed by letter dated 26/3/02 and again by letter dated 11/6/02 that the Special Commissioners had no jurisdiction and could assist him no further in this matter.

19.	Eventually, by letter dated 25/9/02, the Revenue gave the Company Notice under Regulation 55 of the Income Tax (Employments) Regulations 1993 and paragraph 26 of Schedule 4 of the Social Security (Contributions) Regulations 2001 to produce, for inspection, certain specified records for the period 6/4/01 to date, including wages and salaries books or equivalent and deduction working sheets, forms P45/P46, P6/9, P11Ds and P9Ds.  The letter discussed where the records were to be produced for inspection, suggesting agreement, and referring to production at the Company’s principal place of business or, if different, the place where the records were normally kept.  By letter in reply dated 25/10/02, the Company, per Dr Siwek, again relied upon the Special Commissioners’ refusal to deal with his “appeal”, and said matters could not be progressed until they issued a “certificate of their decision not to make a decision”.  He also stated that the Revenue had no jurisdiction to issue a “second” notice (the letter dated 27/2/02 being the first according to Dr. Siwek).

20.	Thereafter, the Inland Revenue officer dealing with the matter, Mr George Laing, obtained copies of the Company’s accounts for the years to 30/9/99, 30/9/00, and 30/9/01.  These showed the payment of remuneration of £50,760, £67,783 and £44,005, the bulk of which related to directors’ emoluments.  A check of Inland Revenue records revealed that no PAYE or National Insurance contributions had been paid by the Company to the Inland Revenue in respect of that remuneration over those years.  Mr Laing wrote to the Company per Dr Siwek about this on 11/11/02.  The Revenue eventually took the view, in the light of previous experience of Dr. Siwek, that the best way forward was to issue Tax and NIC determinations.

21.	Two Notices of Decision in respect of NIC (specified in paragraph 3B above) were issued on 17/1/03.  They were accompanied by a full explanatory letter of the same date.  The letter explained, inter alia¸ that as the Revenue had not had the opportunity to examine the Company’s records or discuss the matter, the national insurance liability had been determined from information in the Company’s accounts for the three years mentioned above, that the information had been attributed to tax years on a pro rata basis with an estimate based on the average earnings for the period from 30/9/01 to 5/4/02. The Company appealed by letter dated 13/2/02.  The grounds of appeal are set out above in paragraph 3B.

22.	By letter dated 18/2/03, the Revenue requested from Dr. Siwek details of the dates when he was out of the United Kingdom and related information.  Neither the Company nor Dr. Siwek provided the information requested.  The Company’s accounts for the years to 30/9/00 to 30/99/02 stated that the principal activities of the Company (the provision of offshore and overseas medical care and advisory services) were carried out wholly or mainly within the United Kingdom.

23.	Meanwhile, four Notices of Determination under regulation 49 of the 1993 Regulations were also issued on 17/1/03 (see paragraph 3B above).  By letter dated 12/2/03, the Company, per Dr. Siwek, appealed to the Special Commissioners against these Determinations.  The grounds of appeal are set out at paragraph 3B above).  By letter dated 14/3/03 to the Company, per Dr. Siwek, the Revenue acknowledged that the Notices contained a typing error.  They referred to AW Siwek whereas they should have referred to AG Siwek.  This was an error but the mistake was not material.  There was no evidence of any confusion or prejudice as a result of this error.

24.	On 15/12/03, a Preliminary Hearing took place before a Special Commissioner (TG Coutts Q.C.).  He issued Directions dated 31/12/03 which required the Company and Dr. Siwek to produce a variety of information.  By fax dated 30/1/04, on his own behalf and on behalf of the Company, Dr. Siwek inter alia repeated contentions made in previous correspondence.  Subsequently, the Company produced handwritten accounts for the year to 30/9/02 showing remuneration of “directors and employees” of £25,206 all of which related to Director’s emoluments.

25.	In the light of these latest accounts, the NIC contribution for the period 19/9/98 to 5/4/02 has been recalculated by the Revenue.  The calculations are set forth in Tab X/5 in the Bundle.  The resulting figure is now £22,729.48.  

26.	In the light of these latest accounts and what appear to be other minor arithmetical errors, the Regulation 49 Notices of Determination have also been recalculated.  The calculations are set forth in Tab X/2 in the Bundle.  The resulting figures for the relevant tax years are as follows:-

1998/1999		£  5,532.78
1999/2000		£11,833.84	(no change)
2000/2001		£12,567.34
2001/2002		£  6,509.20

All the various calculations and resulting figures have been made to the best of the Revenue’s judgement, on the basis of the information available to them at the time the calculations, Decisions, Determinations and notices were made and issued.

Submissions

27.	Mr Hughes summarised the facts.  He submitted that Dr. Siwek had not discharged the onus on him under section 50(6) of TMA in relation to his appeal.  He relied on Nicholson v Morris 1977 51 TC 95 (Ct of Appl.).  The enquiry into Dr. Siwek’s return was properly and reasonably conducted in accordance with section 9A of the TMA.  Amendment by the Revenue of that return was competent (section 28A).  Despite repeated reasonable requests, Dr. Siwek provided no worthwhile information except in relation to his former wife’s marital status.  It was submitted that Dr. Siwek’s conduct was bordering on the vexatious.  He had been given every opportunity to substantiate his claims both formally and informally, but has failed to do so.  Information eventually produced enabled the Revenue to give relief of £1,970 in relation to maintenance payments.  Mr Hughes asked for a Determination of £4,086.60.  This assumed that PAYE liability will be met by the Company.  If the Company defaults, the Revenue, he advised, will, in due course, seek to attach that liability to Dr. Siwek.

28.	In relation to the Company, the Appellant had again not discharged the onus under section 50(6) of the TMA.  The Company failed to provide information, informally or formally requested, and under Direction of Special Commissioner Coutts.  Recent information, namely the handwritten accounts, required the Notices of Determination (PAYE) and the Notices of Decision (NIC) to be modified in the Company’s favour. 

29.	All the grounds of appeal were unsound.  His argument that the Notices of Determination were incompetent or inept had no proper basis (see section 114 of the TMA).  There is no evidence of any Court of Session proceedings being in dependence and no evidence of any pending appeal to the House of Lords by either Dr. Siwek or the Company.

Decision

31.	My findings of fact reflect my assessment of the evidence presented to me.  I found David Burness and George Laing to be credible and reliable witnesses.  They spoke to and supplemented the correspondence and other documents contained in the Revenue’s Bundle.  They gave their evidence with moderation and restraint.  The general flavour of the correspondence demonstrates that the Revenue have gone to considerable lengths to obtain relevant information pursuant to their legitimate enquiries both informally and subsequently formally.  They have acted reasonably throughout.

32.	Dr Siwek, for his own part and as director of the Company, has misconstrued the correspondence on a number of occasions and has generally done everything he could to be obstructive, to procrastinate, to obfuscate and delay producing relevant information properly requested and latterly properly required.  The onus lay on him to show that the assessment was wrong (Nichilson v Morris 1977 51 TC 95 at 110E-G; 119E-F).  He has objected on the most spurious of grounds, displaying ignorance of the law but sufficient knowledge of appeals procedure to enable him to prevent progress being made.  As a result of his conduct the Revenue have expended a very considerable amount of time and effort on what should normally be relatively straightforward matters.  I consider the detailed grounds of appeal as follows:-

1	Dr Siwek

The first ground is a challenge to the competency of the closure notice.  That challenge is unsound  There was, at the date of the closure notice, no pending appeal either to the Court of Session or the House of Lords.

The second and third grounds, insofar as they are relevant at all, constitute a challenge to the competency of the procedure begun by the letter dated 14/6/01.  The letter does not require to conform to Schedule 1A paragraph 6(1) & (2) of the TMA.  The enquiry related to a return and therefore fell within section 9A of the TMA.  The enquiry was not conducted under Schedule 1A and did not have to be so conducted.  The fact that the return sought a repayment has no bearing on the Revenue’s entitlement to make enquiries under section 9A of the TMA and to follow the procedure they adopted.  A valid section 19A notice was subsequently given and its validity was upheld on 27/5/02.  An appeal against that decision was dismissed as incompetent by the Court of Session on 25/4/03.

33.	Further points have been made by Dr. Siwek in a letter dated 29/1/04.  I consider them as follows:-

The first is that Dr. Siwek apparently served in the British Army.  This appears to relate to Dr. Siwek’s residence status for tax purposes.  The point, whatever it might be, is made with such obscurity, that I cannot comment further upon it.  It does not assist Dr. Siwek or the Company.

The second relates to the marital status of Dr. Siwek’s former wife.  It confirms that Dr. Siwek is divorced and indicates that his former wife has not re-married.  This enabled the Revenue to give Dr. Siwek relief to the extent of £1970.  It is not a ground of appeal. 

The third is a comment on part of the Direction dated 23/12/03 which required the production of documents justifying the non- deduction of PAYE from earnings from the Company.  The comment made by Dr Siwek was simply that he could not assist the Special Commissioner with the Direction to produce documents showing why tax was not deducted from remuneration paid by the Company in the tax year 1999/2000 because this, he said, was not relevant to the appeal against the enquiry and closure notice relating to his tax return. Again, as a comment, it is not a ground of appeal and does not assist Dr. Siwek or the Company.

The fourth relates to income from land and property and suggests that the Revenue already have all relevant documents.  Whatever documentation that may be it is not specified.  Again, it is not a ground of appeal and does not assist Dr. Siwek or the Company.

The fifth point simply provides information as to Dr. Siwek’s address in 1999-2000.  I can make nothing of this.  It is not a ground of appeal and does not assist Dr. Siwek or the Company.

None of the grounds upon which Dr. Siwek’s appeal is based is well founded and must all be rejected.

2	Siwek Ltd

(a)	National Insurance Contributions

The first ground of appeal relates to a misunderstanding on the part of the Company and Dr. Siwek.  There was no requirement on the part of the Special Commissioners to state a case for the opinion of the Court of Session.  There were no proceedings before them to trigger the operation of any such requirement.  Consequently, there was no question of a certificate of refusal to state a case being issued.  There can therefore be no failure on the part of the Special Commissioners to obtemper the Rules of the Court of Session because they were not applicable.  In any event, it is difficult to see how the competency or validity of a statutory notice can be affected by the subsequent procedure adopted by a statutory tribunal.

The second ground is wholly lacking in specification and has not been substantiated.  This ground of appeal must also be rejected.

34.	The appeal against the first notice must therefore be dismissed.  As for the second notice, the Revenue have modified its calculations as a result of information belatedly supplied by the Company per Dr. Siwek (see paragraph 25 above); the appeal is allowed but only to the extent of the modification.

35.	Further points have been made by Dr. Siwek in a letter dated 29/1/04.  I consider them as follows:-

The first ground is virtually incomprehensible and must be rejected.  It seems to proceed upon the view, which is wholly unfounded in fact and in law, that the letter dated 27/2/02, referred to in paragraph 14 above, was an appealable notice under regulation 55(3)(c) of the Income Tax (Employments) Regulations 1993.  It was not.  It may be that some issue was being made about the Company’s principal place of business.  Whatever it is, the point of the regulation is that the employer must, when called upon to do so, produce the relevant records for inspection at the Company’s principal place of business.  The Company and Dr. Siwek as its director, must know where that place is.  The address at which it was proposed to inspect the Company’s records was canvassed in correspondence (see letter 25/9/02 Revenue/Company per Dr. Siwek, referred to in paragraph 19 above).  I have been unable to make a finding of fact about the Company’s principal place of business in the United Kingdom.

The second “ground”, simply asks the question whether taxpayers and employers have a right to expect the Revenue to operate within the law, to which the answer is Yes but this does not assist the Company or Dr. Siwek.  

(b)	PAYE

The first ground of appeal relates to a minor mistake in the four Notices of Determination.  I have already found that the error is not material (see paragraph 23 above).  No one could have been misled by such an error.  Section 114(1) of the TMA provides that a determination shall not be quashed for want of form or be affected by reason of a mistake therein if the same is in substance and effect in conformity with or according to the intent and meaning of the Taxes Acts and if the person or property charged or intended to be charged or affected thereby is designated therein according to common intent and understanding.  

These notices were issued under regulations in pursuance of inter alia of section 203 of the Taxes Act 1988.  The notices are in substance and effect in conformity with and accord with the intent and meaning of the Taxes Acts.  The person charged thereby is the Company; the Company has been designated in the notices according to common intent and understanding.  Accordingly section 114(1) applies and the notices cannot be quashed because of the mistake in one of the initials of Dr. Siwek’s name.  Even if section 114(1) does not apply, then any reasonable reader would, in the circumstances, readily appreciate that the notices relate to Dr. Siwek in his capacity as an employee of the Company.  They are not invalidated because of such a mistake.

The second ground, which is based upon the existence of other proceedings, if relevant, is unfounded in fact and must therefore be rejected.

The sums originally specified in these Notices of Determination fall to be modified in the light of minor calculation errors and the production of the Company’s accounts for the year to 30/9/02 (see paragraph 26 above).

Result

36.	In relation to Dr. Siwek’s appeal, the grounds of appeal are rejected but his liability is modified to the sum of £3,821.60 and the assessment is reduced accordingly.

37.	In relation to the Company’s appeal against the two Notices of Decision (National Insurance Contributions) the grounds of appeal are rejected.  The terms of the Notice of Decision relating to the period between 19/9/98 and 30/9/00 in respect of the earnings of an unspecified employee are affirmed in the sum of £7,305.73.  The terms of the Notice of Decision relating to the period between 19/9/98 and 5/4/02 in respect of the earnings of Dr. Siwek are modified from £23,651.26 to the sum of £22,729.48.

38.	In relation to the Company’s appeals against the four Notices of Determination issued on 17/1/03 for the years 1998/99 to 2001/02, the Determination for the year 1999/00 in the sum of £11,833.84 is affirmed.  The other Determinations are modified as follows:-

1998/99		£  5,534.51	modified to	£  5,532.78
2000/01		£12,568.68	modified to	£12,567.34
2001/02		£  9,607.60	modified to	£  6,509.20

Expenses

39.	I appoint parties to lodge and intimate submissions in writing, if so advised, within twenty eight days of the release of this Decision, on the question of expenses.  Submissions should be lodged with the Office of the Special Commissioners.  If no submissions are received, no order as to expenses will be made.  If submissions are received, it may be necessary to fix a hearing on expenses.

J GORDON REID Q.C., F.C.I.Arb.
SPECIAL COMMISSIONER
Release Date: 8 Sepetmber 2004

SC 3077-78/03