A special commissioner decided that an objection that there had been no discovery made in accordance with TMA 1970, s. 29 could only be heard as part of an appeal against assessment to tax, and not in isolation.

Facts

The Revenue applied for a preliminary ruling on the jurisdiction of the special commissioners in an appeal against a discovery assessment raised against the taxpayer for the year ended 5 April 2001 under TMA 1970, s. 29.

The taxpayer's primary case was that there was in fact no discovery and that in consequence the assessment should not have been raised. An urgent request for the hearing of the discovery point was delivered to the Clerk to the general commissioners and a hearing was scheduled for 23 May 2007. On 14 May 2007 the Revenue applied to the special commissioners for a preliminary ruling on jurisdiction in the light of the provisions of TMA 1970, s. 29 and their interpretation of s. 46B(4).

The Revenue argued that under s. 29 an objection to the discovery point could only be taken as an appeal against the whole of the assessment, rather than in isolation, and that it was regulated entirely by s. 46B(4).

Issue

Whether the special commissioners had exclusive jurisdiction to hear all matters in the case or whether the discovery point could be decided in isolation by the general commissioners.

Decision

The special commissioner (Adrian Shipwright) (ruling that the appeal should be heard by the special commissioners) said that the special commissioners' jurisdiction to hear a case was limited by statute. There was no inherent jurisdiction, merely a statutory jurisdiction. Section 31(1)(d) provided that an appeal might be brought against any assessment to tax which was not a self-assessment. Accordingly, a taxpayer might appeal against an assessment.

Section 29 allowed an assessment to be made where there was a discovery subject to two conditions at least one of which needed to be fulfilled where the taxpayer had made and delivered a return for the relevant year of assessment. Section 29(8) provided that: ‘an objection to the making of an assessment under this section on the grounds that neither of the two conditions mentioned above are fulfilled shall not be made otherwise than on an appeal against the assessment.’

In essence, the taxpayer was seeking to say that neither of the two conditions were fulfilled in his particular circumstances such that the assessment should not have been raised. Accordingly, s. 29(8) was engaged. However, the taxpayer could only object to the validity of the assessment on the grounds that neither of the two conditions were fulfilled by appealing against the assessment. Accordingly, there was no separate ground of appeal against the discovery assessment. The taxpayer could only appeal against an assessment and raise the issue of the non-fulfilment of the two conditions on an appeal against the relevant assessment before the commissioners. Accordingly, there was no statutory provision allowing an appeal against the making of the discovery assessment other than by appealing against the assessment.

The assessment was an assessment that related to ICTA 1988, s. 660A (Part XV) which had to be heard by the special commissioners. The effect of the provisions in TMA 1907, s. 29(8) was that the issue whether the conditions for making the discovery assessment were fulfilled was to be heard as part of the determination of the assessment. Whilst it was arguable that the question of the discovery assessment was not an issue to be decided by the special commissioners that heard the appeal, that did not seem to be the better interpretation. From a purposive approach, what was intended by Parliament was that the special commissioners should hear all aspects of the appeal against the Part XV case. An appeal was only possible against an assessment or determination and Part XV appeals were to be heard by the special commissioners which included the validity of the discovery assessment.

In any event, as a matter of convenience, the whole of the issues relating to the case should be heard together. The special commissioners had no power to direct what the general commissioners should or should not do. However, for administrative convenience and saving of costs one hearing was preferable to several different hearings at which different views and conclusions on the same facts and matters could be reached. Accordingly, there was no statutory jurisdiction for a separate hearing of the discovery point on its own since that should be heard at a determination of the appeal which could only be heard by the special commissioners.

(2007) Sp C 626.
Decision released 8 August 2007.