ALLISON PLAGER reports two Special Commissioners' decisions
ALLISON PLAGER reports two Special Commissioners' decisions
Unreasonable behaviour?
A recent hearing before the Special Commissioners was a sequel to the case of J K Robertson SpC 309 (see Taxation 23 May 2002, pages 199 to 201. The taxpayer, Mr Robertson (a solicitor) sought the expenses relating to the summons laid before the Commissioners, after having been exonerated by them from the allegations of negligently submitting an incorrect inheritance tax account because it contained estimated figures. In essence, he felt he was entitled to the expenses of the proceedings. The Revenue relied on Regulation 21 of the Special Commissioners (Jurisdiction and Procedure) Regulations 1994 which stated that expenses might be awarded if a party has behaved 'wholly unreasonably' in connection with the hearing.
The Commissioner said that previous Commissioners' decisions had no bearing on the instant case, which was different in any event as the Revenue had served a summons on him, which he had to defend. Most cases before the Commissioners were taxpayer appeals against Revenue decisions.
He said that the proceedings should not have been set in motion against the taxpayer. The Revenue had not considered matters fully or properly and, in raising a question of Australian shares in the hearing which had not been mentioned in the summons, had acted wholly unreasonably. In the Commissioner's view, Mr Robertson was entitled to the expenses of and incidental to the hearing, including all work incurred at least from the presentation of the summons to the Special Commissioners.
The result is a victory for common-sense, and a definite warning shot against the Revenue. If the Revenue decides to put a taxpayer to the expense of a court hearing, then it should ensure that it is in full possession of the facts and has made its full arguments clear to the taxpayer beforehand. Furthermore, the Commissioner's decision in this instance, shows that it is not acceptable for the Revenue to raise a matter out of the blue during the hearing.
(James Keith Robertson (SpC 313).)
Intestacy complication
A husband died in 1994 intestate, and no application was made for a grant of letters of administration. His wife died in 2000. The Revenue said that her interest in her husband's estate formed part of her estate immediately before her death, as it was property to which she was beneficially entitled. The applicant argued that because there were no letters of administration, the wife had not been entitled to the property.
The Commissioner said that immediately before her death, the wife had a statutory right to apply for a grant of letters of administration of her husband's estate. If someone else applied, the wife had the right to require that person to administer her husband's estate. She also had a statutory right to receive such part of the whole of her husband's estate. Thus immediately before her death, the wife was beneficially entitled to receive that part of the whole of the estate that existed, and thus, under section 5(1), Inheritance Tax Act 1984, that formed part of her estate.
The wife's interest in her husband's estate did form part of her estate immediately before her death. The applicant's appeal was dismissed.
(AB Daffodil (administrator of DE Daffodil deceased) (SpC 311).)
