Tax Cases - Procedural matters

Tax Cases
Procedural matters
Section 55, Access to Justice Act 1999 provides that no appeal can be made unless the Appeal Court considered that the appeal would raise an important point of principle or practice, or that there was another compelling reason for it to hear it. The Court of Appeal ruled that section 55 applies to tax appeals to the High Court under the case stated procedure, and therefore includes appeals to the High Court on a point of law from a tribunal. Thus for the purposes of section 55, it follows that an appeal from a decision of the High Court should be treated as a second appeal. Any purported grant of permission by a judge of a lower court would therefore be a nullity.
In Clark v Perks, the appellants wanted to appeal against Mr Justice Ferris' judgment in the High Court (reported at [2000] STC 428) in respect of three cases stated by the General Commissioners. At the end of his decision, Mr Justice Ferris gave the taxpayers leave to appeal, as it turns out under the new procedure wrongly. However, the Court of Appeal decided that the proposed appeal did satisfy the requirements of the new procedure and grant permission.
(Clark v Perks and other applications, Court of Appeal, 4 September 2000.)

Computation of profits
The taxpayer company appealed against an estimated assessment for its accounting period ended 30 April 1987. The Revenue subsequently agreed profits, and the appeal was settled. The company later claimed relief from its liability to corporation tax by reason of error or mistake in a return under section 33, Taxes Management Act 1970, on the ground that it should have set interest on a loan in the period ending 30 April 1987 against its Schedule A income, thereby increasing the amount of trading profits chargeable under Schedule D, Case I to offset its terminal losses.
The Revenue refused the claim saying that there had been no error or mistake, but that the company had failed to pursue its right of appeal to the Special Commissioner under section 54, Taxes Management Act 1970. Alternatively, it would be reasonable and just in the circumstances to make no payment.
The Special Commissioner dismissed the company's appeal on the ground that, under established principles, a claim could not be part of the subject matter of a discovery assessment by the Revenue if it had formed part of an agreement made under section 54. In the High Court, the judge dismissed the appeal saying that the appeal was not appealed on a point of law arising in connection with the computation of profits, as it was an appeal against the Special Commissioner's decision that there was no error or mistake because of the section 54 agreement, and had no bearing on the way in which profits were computed.
In the Court of Appeal, the Lord Justices said that the appeal from the Special Commissioner's decision that the treatment of interest was a claim that had been part of the subject matter of the agreement under section 54, Taxes Management Act 1970 was not a question of law in connection with the computation of profits. The words 'in connection with the computation of profits' had to be given their natural meaning, and the fact that a point of law might affect the amount of the profits would not make that a point of law arising in connection with the computation of profits. The judge in the High Court was entitled to conclude that the company's appeal had not raised a question of law in connection with the computation of profits.
However, it was still open to the company to seek a judicial review if the Special Commissioner had failed to consider properly an appeal under section 33(4), Taxes Management Act 1970. The appeal was dismissed.
(Eagerpath Ltd v Edwards, Court of Appeal, 14 December 2000.)