SPC00445
NOTICE under S.19A TMA 1970 – irrelevant objection to the notice – notice confirmed

THE SPECIAL COMMISSIONERS

	NERIJUS BALTRUSAITIS	Appellant

	- and -

	MRS JACQUELINE BYRNE
	(AN OFFICER OF THE BOARD)	Respondent

		Special Commissioner: 	DR JOHN F. AVERY JONES CBE 

Sitting in public in London on 19 November 2004

The Appellant did not appear and was not represented

Ian Mitchell, Inland Revenue Appeals Unit London, for the Respondent

© CROWN COPYRIGHT 2004

DECISION

1.	Mr Nerijus Baltrusaitis appeals against a notice under section 19A of the Taxes Management Act 1970.  The Appellant did not appear and was not represented; the officer was represented by Mr Ian Mitchell.
2.	Mrs Byrne, an Officer of the Board, provided a witness statement.  I find the following facts.
(1)	On 9 September 2003 Mrs Byrne opened an enquiry into the Appellant’s return for the year ended 5 April 2002 in which he had shown in a “three-line statement” applicable to turnover of less than £15,000 trading income as a subcontractor of £14,440, expenses of £6,642 and a profit of £7,798.  She requested information about income and expenditure for the period of the Return; capital allowances (there being no entry on the return relating to these); books and records; bank and building society statements relating to the business; bank and building society statements detailing the interest and dividends returned; and credit card statements relating to the business.
(2)	Messrs Charltons, chartered accountants, of Palmers Green, London N13 replied: “Before we consider your letter, we would like you to examine the fundamental issue (example enclosed) and let us have your comments.”  The example enclosed showed a self-employed person with income of £25,000, business expenses of £10,000, private expenses of £14,000 and cash at bank and in hand of £1,000, and a tax liability for 2002-03 of £2,781.25.
(3)	Mrs Byrne replied on 15 October 2003, in my view entirely properly, saying: “I note your comment regarding the Tax system.  However I have to check your client’s Tax Return in accordance with the Taxes Acts.”  They replied on 25 October 2003 “The example sent to you proves that there is something fundamentally wrong with the Taxes Act and there was no better way to demonstrate it.”
(4)	On 19 November 2003 she issued a notice under section 19A of the Taxes Management Act 1970 requiring the same information within 30 days.  Messrs Charltons wrote on 22 November 2003 saying “We wish to apply to the special commissioners to strike this case out on the grounds of your refusal to discuss the challenge to the present taxing system.”
(5)	Mr Mitchell of the Appeals Unit London then took over the appeal and in the course of correspondence wrote: “Since your appeal citing the ‘fundamental issue’ does not appear to relate to any of the documents or information requested under the S19A notice could you please clarify the basis on which the appeal is therefore based.”  Messrs Charltons repled “The appeal is basically our refusal to supply the records requested (or continue with the inquiry) on the grounds of the ‘fundamental issue’.”  Mr Mitchell also wrote saying that he had heard from a colleague that there were other cases where they had advanced the same argument.  Messrs Charltons replied on 10 June 2004 “We have no intention of attending any meeting by Special Commissioners to discuss the fundamental issue as planned by yourselves.  As the fundamental issue is not in the statute book yet it cannot be discussed by the Special Commissioners.”  Mr Mitchell replied saying “Since the ‘fundamental issue’ is acknowledged by you as not being on the statute books it is not clear how or why you expect this to be addressed.  Perhaps you would clarify your thinking and motives.”  Finally, Messrs Charltons returned a copy of the hearing notice issued by the Office of the Special Commissioners with this written at the bottom: “Please note that our ‘fundamental issue’ has been accepted by an Inspector of Taxes.  The ‘fundamental issue’ has a bearing on this case.”
3.	As I understand the position, Messrs Charltons consider that the tax system should be reformed in some way; they consider, but have not explained why, that their objection to the tax system has a bearing on this case; they accept (and I agree) that the issue cannot be addressed by the Special Commissioners; and, although they made this appeal on behalf of their client, they told the Revenue, though they did not have the courtesy to tell the Tribunal, that they “have no intention of attending any meeting by Special Commissioners…”.  The question therefore arises: why did they make this appeal on behalf of their client?  It seems to me that a chartered accountant must know that this is an abuse of the appeal process.  I suspect (but in their absence do not make any finding) that it is a delaying tactic by which information requested on 19 November 2003 is still outstanding a year later.  I do not have power to investigate this, but I direct the Clerk to the Special Commissioners to send a copy of this decision to the Institute of Chartered Accountants in England and Wales in case they wish to do so.
4.	So far as the appeal against the notice is concerned, section 19A(9) provides:
“On an appeal under subsection (6) above section 50(6) to (8) of this Act shall not apply but the Commissioners may—
(a)	if it appears to them that the production of the document or the furnishing of the accounts or particulars was reasonably required by the officer of the board for the purpose mentioned in subsection (2) or (2A) above [that is, for the purpose of determining whether and, if so, the extent to which the return is incomplete or inaccurate], confirm the notice under that subsection so far as relating to the requirement; or
(b)	if it does not so appear to them, set aside that notice so far as so relating.” 
Mr Mitchell contends that the documents are required to satisfy the Board that the return is correct; that they are no more than those that they would expect any taxpayer to maintain; that they must be in the Appellant’s possession or power; and there is no reason why they cannot be produced.  There is no suggestion that the notice is unreasonable, or that the documents are not in the Appellant’s possession or power.  The ‘fundamental issue’ seems to be a proposal for changing the law that is wholly irrelevant to the appeal.  I agree with Mr Mitchell’s contentions, and dismiss the appeal and confirm the notice.
5.	I seriously considered inviting the Appellant to make representations against my making an order for costs in favour of the Revenue on the basis that the Appellant had behaved wholly unreasonably in connection with the hearing (regulation 21(1) and (2) of the Special Commissioners (Jurisdiction and Procedure) Regulations 1994).  The only reason I do not do so is that the burden of the costs would fall on the Appellant whereas the persons appearing to be behaving wholly unreasonably are Messrs Charltons, and I do not have power to make a wasted costs order.

JOHN F. AVERY JONES

SPECIAL COMMISSIONER
RELEASE DATE: 25 November 2004

SC 3100/04

Authorities referred to in skeletons and not referred to in the decision:
Williams v Trustees of WW Grundy deceased 18 TC 271