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Cite as: [2000] EWCA Civ 328

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Case No: CHANF 99/0862/A3

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF

JUSTICE CHANCERY DIVISION, REVENUE

LIST (ARDEN J)

Royal Courts of Justice

Strand, London, WC2A 2LL

Thursday 14 December 2000

B e f o r e :

LORD JUSTICE WARD

LORD JUSTICE BROOKE

and

LORD JUSTICE ROBERT WALKER

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EAGERPATH LTD

Appellant


- and -



EDWARDS (HM INSPECTOR OF TAXES)

Respondent

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(Transcript of the Handed Down Judgment of

Smith Bernal Reporting Limited, 190 Fleet Street

London EC4A 2AG

Tel No: 020 7421 4040, Fax No: 020 7831 8838

Official Shorthand Writers to the Court)

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Mr C J F Sokol (instructed by Jerrard Saunders Donn for the appellant)

Mr T Brennan (instructed by the Solicitor of Inland Revenue for the respondent)

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Judgment

As Approved by the Court

Crown Copyright ©

LORD JUSTICE ROBERT WALKER:

1. This is an appeal with the permission of Aldous LJ from an order of Arden J made on 13 May 1999. Her judgment is reported at [1999] STC 771. Her order dismissed an appeal by a taxpayer company, Eagerpath Ltd ("Eagerpath") from a decision of a single Special Commissioner, the late Mr David Shirley, made on 13 August 1998. The Special Commissioner had dismissed Eagerpath's appeal from the rejection by the Board of Inland Revenue of its claim for relief under s.33 of the Taxes Management Act 1970 ("the Management Act"). The claim related to Eagerpath's liability for corporation tax for its accounting period ending as long ago as 30 April 1987, when the principal statute containing the substantive law as to corporation tax was the Income and Corporation Taxes Act 1970 ("the Taxes Act"). References in this judgment to provisions of the Management Act and the Taxes Act are to the provisions in the form in which they were in force at the relevant time.

2. This appeal is concerned largely with the procedural provisions of the Management Act, although it will be necessary to refer to a few substantive provisions of the Taxes Act. It is best to begin with some very basic points.

3. A company resident in the United Kingdom pays corporation tax on its profits as computed for the purposes of that tax: that is, in broad terms, on its taxable income and chargeable gains computed on the same general lines as for an individual resident in the United Kingdom. The management of all those taxes is regulated by the Management Act, and before the introduction of self-assessment the making of a return by the taxpayer and the making of an assessment by an inspector of taxes were important parts of the process by which tax liability was determined.

4. A taxpayer who objects to an assessment can appeal against it to the General or Special Commissioners. They are the fact-finding tribunal from whom an appeal lies only on a point of law. On an appeal to the Commissioners the burden of proof is on the appellant taxpayer, because the taxpayer can be expected to know all about his own financial affairs, whereas the inspector may have little or no knowledge about them apart from the taxpayer's return.

5. Apart from the provisions about `discovery' and `error or mistake' which will be mentioned shortly, an assessment becomes conclusive either when the taxpayer fails to appeal within the permitted time limit, or when the Commissioners determine the appeal (subject to any further appeal on a point of law which may be open to either side), or when the appeal is abandoned by the taxpayer or is settled by agreement. Section 46(2) of the Management Act provides as follows:

"Save as otherwise provided in the Taxes Acts, the determination of the General Commissioners or the Special Commissioners in any proceedings under the Taxes Acts shall be final and conclusive."

6. The settling of appeals by agreement is provided for in s.54 of the Management Act, subsection (1) of which is as follows:

"Subject to the provisions of this section, where a person gives notice of appeal and, before the appeal is determined by the Commissioners, the inspector or other proper officer of the Crown and the appellant come to an agreement, whether in writing or otherwise, that the assessment or decision under appeal should be treated as upheld without variation, or as varied in a particular manner or as discharged or cancelled, the like consequences shall ensue for all purposes as would have ensued if, at the time when the agreement was come to, the Commissioners had determined the appeal and had upheld the assessment or decision without variation, had varied it in that manner or had discharged or cancelled it, as the case may be."

Subsection (2) gives the taxpayer a 30-day period during which he may resile from an agreement, and subsection (3) requires written notice to be given confirming an oral agreement. In practice a very large number of appeals are settled by agreement, and the agreement is often of a very informal character. It may (as in this case) amount to no more than the inspector, after making some inquiries, writing to say that he accepts the taxpayer's computations.

7. All these procedural provisions are intended to achieve finality in the determination of tax liabilities, but Parliament has since the early days of income tax recognised that in some circumstances fairness may require either the Revenue or the taxpayer to be given the opportunity of reopening an assessment which has in other respects become conclusive. The Revenue's power is to make a `discovery' assessment under s.29(3) of the Management Act, which provides as follows:

"If an inspector or the Board discover -

(a) that any profits which ought to have been assessed to tax have not been assessed, or

(b) that an assessment to tax is or has become insufficient, or

(c) that any relief which has been given is or has become excessive, the inspector or, as the case may be, the Board may make an assessment in the amount, or the further amount, which ought in his or their opinion to be charged."

The taxpayer's power is to make an `error or mistake' claim under s.33, which provides as follows:

"(1) If any person who has paid tax charged under an assessment alleges that the assessment was excessive by reason of some error or mistake in a return, he may by notice in writing at any time not later than six years after the end of the year of assessment (or, if the assessment is to corporation tax, the end of the accounting period) in which the assessment was made, make a claim to the Board for relief.

(2) On receiving the claim the Board shall inquire into the matter and shall, subject to the provisions of this section, give by way of repayment such relief ... in respect of the error or mistake as is reasonable and just:

Provided that no relief shall be given under this section in respect of an error or mistake as to the basis on which the liability of the claimant ought to have been computed where the return was in fact made on the basis or in accordance with the practice generally prevailing at the time when the return was made.

(3) In determining the claim the Board shall have regard to all the relevant circumstances of the case, and in particular shall consider whether the granting of relief would result in the exclusion from charge to tax of any part of the profits of the claimant, and for this purpose the Board may take into consideration the liability of the claimant and assessments made on him in respect of chargeable periods other than that to which the claim relates.

(4) If any appeal is brought from the decision of the Board on the claim the Special Commissioners shall hear and determine the appeal in accordance with the principles to be followed by the Board in determining claims under this section: and neither the appellant nor the Board shall be entitled to require a case to be stated under section 56 of this Act otherwise than on a point of law arising in connection with the computation of profits.

(5) In this section "profits" -

(a) in relation to income tax, means income,

(b) in relation to capital gains tax, means chargeable gains,

(c) in relation to corporation tax, means profits as computed for the purposes of that tax."

8. The fact that there are two separate statutory provisions expressed in different language might possibly have been supposed to reflect the notion that an inspector may come across new factual information about a taxpayer's affairs and should be allowed to make use of it; whereas a taxpayer ought to know about his own affairs but may make some error of law or computation which is more venial on his part than it would be on the part of the inspector. In practice, however, the court has interpreted s.29(3) and its predecessors very widely, so as to cover (in the words of Viscount Simonds in Cenlon Finance Co Ltd v Ellwood [1962] AC 782, 794) "any case in which for any reason it newly appears that the taxpayer has been undercharged". This has narrowed the apparent difference between the scope of a `discovery' assessment and that of an `error or mistake' claim.

9. Neither s.29(3) nor s.33 refers in terms to the question of an undercharge or an overcharge being raised after an appeal against an assessment has been determined by the Commissioners or has been settled by agreement. However the issue arose in relation to a `discovery' assessment in Cenlon Finance Co Ltd v Ellwood (at first instance [1961] Ch 50 and in the Court of Appeal [1961] Ch 634; the House of Lords was concerned only with the wider question of whether the view of an inspector who had recently taken over the file could amount to a discovery) and at every level up to the House of Lords in Scorer v Olin Energy Systems Ltd (1985) 58 TC 592. The issue turns on whether the point must be taken to have been in the mind of the inspector who later seeks to use it as the basis of a `discovery' assessment. In the latter case Lord Keith stated the principle as follows (at p.638),

"The situation must be viewed objectively, from the point of view of whether the inspector's agreement to the relevant computation, having regard to the surrounding circumstances including all the material known to be in his possession, was such as to lead a reasonable man to the conclusion that he had decided to admit the claim which had been made."

One of the issues in this appeal, if it gets that far, is whether the same test is applicable to a taxpayer making an `error or mistake' claim.

10. The facts of the present case were not in dispute, and are fairly simple. They are set out with great clarity in the written decision of the Special Commissioner ([1999] STC 771, 773-9). What follows is a brief summary.

11. Eagerpath commenced trading as a property developer and investor on 1 July 1986 and made up its first accounts for a ten-month period to 30 April 1987. It then prepared accounts for twelve-month periods to 30 April 1988 and 30 April 1989 and ceased trading on 30 June 1990. Its accounts for the final 14-month period disclosed terminal losses.

12. During its first accounting period Eagerpath acquired a majority holding of shares in a French company called International Yacht Club d'Antibes SA ("IYCA"). It financed this acquisition by borrowing about 34.3m Swiss francs from a British bank, and in the course of this transaction it made a notional currency exchange profit or gain of about £700,000.

13. On 28 June 1988 Eagerpath's accountants sent to the inspector of taxes accounts and corporation tax computations for its accounting period ending on 30 April 1987. The accounts showed the IYCA shares as a fixed asset. The computations showed the company's main sources of taxable income as rental income (taxable under Schedule A), trading profit (taxable under Schedule D Case I) and interest received (taxable under Schedule D Case III). They made clear that the exchange gain (described as an exceptional item) was not included in the trading profit, but also made clear (at any rate if read with the accounts) that the interest paid to the bank had been deducted in computing the trading profit. It is now common ground that this treatment was indefensibly inconsistent, but that it did not affect the quantum of tax payable by Eagerpath, since if the interest was not deductible (under s.130 of the Taxes Act) in computing its trading profit, it was allowable (under s.248 of the Taxes Act) by way of interest relief as a charge on income. The technical reason why the interest reduced Eagerpath's taxable income became critically important only when it wished to obtain terminal loss relief, which (under s.394 of the Income and Corporation Taxes Act 1988, replacing s.178 of the Taxes Act) was available only against trading profits of earlier years.

14. There was some rather desultory correspondence between the accountants and the inspector. It ended with a letter dated 22 February 1989 from the inspector stating simply that he accepted the computations. The correspondence was mainly concerned with the exchange gain, but some reference was made to the interest paid to the bank. The Special Commissioner found as a fact that "the question with regard to interest was raised with the inspector". He said that the question of its proper treatment had been "at least aired albeit incidentally to the main issue".

15. During 1988 Eagerpath changed its accountants and the anomaly in its first accounts and computations was not repeated, at any rate in that form. But after it ceased trading in 1990 the question of terminal loss relief arose and on 4 February 1992 the new accountants made a claim for relief under s.33 of the Management Act.

16. The claim was rejected by the Board of Inland Revenue on 11 June 1997 (there is no explanation of this extraordinary lapse of time). The Board rejected the claim principally on the ground that there had been "no error or mistake in a return, rather a failure to pursue [Eagerpath's] right to appeal to the Commissioners". The Board relied on the alternative ground that in all the circumstances it would be "reasonable and just" to make no repayment. They also corrected an obvious misunderstanding on the part of the accountants as to the purpose and effect of the proviso to s.33(2). Eagerpath exercised its right of appeal to the Special Commissioners under s.33(4).

17. Before the Special Commissioner Eagerpath was represented by an accountant who conceded (rightly, in the Special Commissioner's view) that the established principles as to the interaction between s.54 and a `discovery' assessment applied equally to the interaction between s.54 and an `error or mistake' claim. In other words it was conceded that such a claim could not be made if the subject-matter of the error or mistake had formed part of the subject-matter of the earlier agreement. It is not clear whether counsel instructed on the appeal to Arden J sought to withdraw the concession, because the appeal to Arden J foundered on a preliminary point. In this court Mr Christopher Sokol (who did not appear below) has sought to withdraw the concession.

18. The preliminary point taken on behalf of the inspector before Arden J was that the appeal from the Special Commissioner was not permitted by s.33(4) of the Management Act, since it was not an appeal "on a point of law arising in connection with the computation of profits". She held that it was not, and dismissed the appeal on that ground. Eagerpath's amended notice of appeal contends that the judge erred in law in dismissing the appeal on the preliminary point. A respondent's notice on behalf of the inspector contends that there was no relevant `error or mistake' and that the appeal should have been dismissed on that ground also.

19. The special restriction on the right of appeal under s.33(4) of the Management Act has had a long history, going back at latest to s.24 of the Finance Act 1923, and it has been considered by the court on a number of occasions. Apart from authority, it might be thought that the likely purpose of the restriction was to exclude any appeal on either of two points which were regarded as peculiarly within the expertise and judgment of the Special Commissioners: first, whether a return was made "on the basis or in accordance with the practice generally prevailing at the time when the return was made"; and second, what relief was in all the circumstances "reasonable and just". That is indeed the submission made on behalf of the taxpayer as to the purpose of the restriction. But it might be objected that the ascertainment of "the practice generally prevailing" is a question of fact, not a question of law (a point discussed by Finlay J in Rose Smith & Co Ltd v IRC (1933) 17 TC 586 and by the Court of Appeal of Northern Ireland in Arranmore Investment Co Ltd v IRC (1973) 48 TC 623, pointing out that it was a question of law whether there was any evidence to support such a finding of fact). It might also be objected that permitting appeals on issues falling within the rather imprecise expression "in connection with the computation of profits" would be a surprising way of going about it if Parliament's real intention was to forbid appeals on two particular issues which could be described with a reasonable degree of precision.

20. Arden J referred to Rose Smith & Co Ltd v IRC, to the decision of this court in Carrimore Six Wheelers Ltd v IRC (1944) 26 TC 301 and to Arranmore Investment Co Ltd v IRC. None of these authorities provides much assistance as to the legislative purpose of the restriction in s.33(4), apart from a brief reference by Lord Greene MR in Carrimore (at p.306) to the Special Commissioners' powers having "a certain discretionary element". In each case the court seems to have given to the words "in connection with the computation of profits" what it took to be their natural meaning. In Carrimore the Master of the Rolls said (at p.307)

"The question has nothing to do with the computation of profits or income. There was no dispute as to the proper method of computation of profits or income with regard to this item at all."

Lord Lowry CJ took a similar approach in Arranmore. After referring to Carrimore he said (at p.633)

"Quite independently of authority, I must state that the mere fact that a point of law will or may, when decided, affect the amount of profits which a taxpayer is found, or deemed, to have earned does not, to my mind, turn that point into a point of law arising in connection with the computation of profits. For this to happen, the point for decision must itself relate to the method of computation. One would naturally expect, as Curran LJ put it in the course of argument, that the decision of a point of law `arising in connection with the computation of profits' would affect the computation of these profits. I do not think that a point of law can be said to arise in connection with the computation of profits, merely because its decision will ultimately affect the existence or extent of the taxpayer's liability. One may concede that the words "in connection with" are in most contexts, and possibly in the context of s 33(4), of wider range than the words "in" or "on", but it requires a further step to justify the proposition that either of the points of law arising in these cases is a point arising in connection with the computation of profits."

These decisions were cited and followed, although without being mentioned in his judgment, by Buxton J in Regina v Commissioners of Inland Revenue ex parte Tracy (1995) 67 TC 547.

21. The facts of Carrimore are of some interest. The taxpayer company owned business premises at Finchley, and the cost of maintaining the premises was deductible in computing its trading profit. On the premises was an advertising hoarding for which the company received an annual rent of £90. The rent should properly have been returned separately as taxable under Schedule A, but in order to avoid detailed apportionments of outgoings the company's accounts included it in their Schedule D, Case I computations. Later the company made an `error or mistake' claim which was rejected. On an appeal from the Special Commissioners to Macnaghten J, the Crown was not called on and for that reason the preliminary jurisdictional point was not taken. In this court the Master of the Rolls rejected the argument that the taxpayer could have made an error or mistake when they (p.306) "took this course deliberately with their eyes open, knowing that it was not a correct course to take". He also held, for the reasons already mentioned, that the appeal from the Special Commissioners had been inadmissible. Finlay and Morton LJJ agreed.

22. The Special Commissioner dismissed Eagerpath's appeal by application of the principle in Cenlon Finance and Scorer, it having been conceded that the same principle applied to an `error or mistake' claim. Whether that concession was rightly made is a question of law, but in the light of Carrimore and Arranmore it cannot possibly be regarded as a question of law in connection with the computation of profits. That is the conclusion which the judge reached, and in my judgment she was clearly right to do so.

23. Mr Sokol has in his clear and thoughtful submissions argued that this interpretation of the law produces a most unattractive result, in that the taking of a purely preliminary point before the Special Commissioners might lead to an appellant taxpayer being permanently deprived of a hearing of his substantive claim. However that is true of many preliminary points, for instance an objection that an appeal has been brought out of time. Moreover I cannot regard the objection based on s.54 of the Management Act as being a purely preliminary point. On the contrary, it goes close to the heart of the `error or mistake' claim.

24. In considering Mr Sokol's hypothetical objections it is also material to note that the possibility of an application for judicial review adds to the taxpayer's range of resources. There has been no such application in this case but it would no doubt be available in any case in which the Special Commissioners unaccountably failed to give proper consideration to an appeal under s.33(4). I respectfully agree with Brooke LJ's observations on this aspect of the case.

25. Reference was made to Article 6 of the European Convention on Human Rights, but Mr Sokol rightly conceded that a tax appeal of this sort does not amount to the determination of civil rights and obligations within the autonomous meaning of Article 6. The position would be different if the court were concerned with a private law claim against the Revenue based on unjust enrichment: see Schouten and Meldrum v Netherlands (1994) 19 EHRR 432, 454-5; National & Provincial BS v United Kingdom [1997] STC 1466, 1490.

26. As this court did not hear full argument we ought not to express any final view as to whether the concession made before the Special Commissioner was, as he thought, rightly made, or whether he applied the right test to the facts which he found. My provisional view is that very similar principles should apply, even if there are some marginal differences between the circumstances justifying `discovery' assessments and `error or mistake' claims respectively.

27. I would therefore dismiss this appeal.

LORD JUSTICE BROOKE:

28. Mistakes are made from time to time while our tax laws are being administered. Sometimes the citizen makes mistakes. Sometimes even the Inland Revenue nods. If the citizen makes a mistake of law in a return which is not spotted by the tax inspector, he was believed, until very recently, to have no legal right to recover any overpaid tax. On the other hand it was thought to be unconscionable for the Inland Revenue to take advantage of such a mistake in every case. For the representatives of a state to behave in this way is the stuff on which revolutions are founded.

29. Section 33 of the Taxes Management Act 1970 contains a statutory scheme, first seen in its earlier incarnation in Section 24 of the Finance Act 1923, whereby a benevolent state set out to mitigate this potential source of hardship. The essence of the scheme is that the citizen is allowed six years after the end of the relevant year of assessment to discover the mistake and make a claim to the Board of Inland Revenue for relief (S 33(1)). The Board is then afforded a very wide discretionary power, after inquiring into the matter, to give such relief by way of repayment "as is reasonable and just", subject to the proviso in Section 33(2), which is set out in full in paragraph 7 of Robert Walker LJ's judgment. Section 33(3) imposes on the Board a duty to have regard to all the relevant circumstances of the case, which are widened to include the other matters relating to the taxpayer's affairs which are mentioned in that sub-section.

30. To ensure that the Board did not exercise its discretion in an arbitrary way, Parliament included in Section 33(4) a right of appeal to the Special Commissioners. Such an appeal was designed to be final, unless a point of law arose in connection with the computation of profits. If it did, both the taxpayer and the Board had the right to require a case to be stated for the opinion of the High Court.

31. There are two very obvious features of this long established scheme. The first is that if the citizen made a mistake of law in filling up his tax return which the Inspector did not spot, and if he paid too much tax as a consequence, he had no legal rights in the matter other than those which Parliament was willing to allow him through the scheme. The second is that it had its origin in days long before modern developments in the field of judicial review. These developments have enabled the High Court to exercise supervisory jurisdiction over errors of law made by inferior tribunals without getting entangled in the restrictive rules that embraced the availability of the prerogative writ of certiorari in 1923, the year in which this scheme was born.

32. Against this background, four years before his famous judgment in the Wednesbury Corporation case, Lord Greene MR described this scheme in the following terms in Carrimore Six Wheelers Ltd v Commissioners of Inland Revenue (1944) 26 TC 301 at p 306:

"The Section in question is Section 24 of the Finance Act 1923. That was a Section which granted an indulgence to a taxpayer in the way of return of tax which had lawfully been demanded from him and had been paid, but which in justice the Legislature thought should be repaid in whole or in part.

The circumstances in which such repayment may be made are briefly these. The taxpayer is entitled to make a claim on the ground that an assessment upon him was excessive by reason of some error or mistake in the return or statement made by him for the purposes of the assessment. By the Finance Act of 1926 he has now six years in which to make the application. The application is made to the Commissioners of Inland Revenue who are to inquire into the matter.

Now the Section is rather specially framed. One might perhaps have expected that an indulgence of this kind might have been made effective by means of purely executive action on the part of the Commissioners, but the Legislature did not deal with the matter in that way. The Commissioners of Inland Revenue are to inquire and they are directed to give by way of repayment, if they are satisfied, such relief in respect of the error or mistake as is reasonable and just, and they are to have regard to all the relevant circumstances of the case. In those respects the power of the Commissioners has a certain discretionary element; but the matter is not left with them as the final resort because the taxpayer is given a right to appeal to the Special Commissioners, and they, in dealing with the application, are to deal with it on the same principles, and subject to the same statutory provisions, as the Commissioners of Inland Revenue themselves.

Even there, however, the Legislature did not stop, because it gave a right of appeal from the Special Commissioners by way of Stated Case on a point of law. But here comes the important matter for our purposes. The right to require a Case to be stated on a point of law is not the same right as is given under the ordinary provisions of the Income Tax legislation under which any point of law can be raised; it is strictly circumscribed. That is to be found in the proviso to Sub-section (5), which says this:

`Provided that neither the appellant nor the Commissioners of Inland Revenue shall be entitled to require a case to be stated for the opinion of the High Court otherwise than on a point of law arising in connection with the computation of profits or income.'"

33. The continued existence of a statutory scheme of this kind, founded on executive and legislative benevolence, is strangely inconsistent with modern rights-based law and the ability of the High Court to correct all manner of errors of law, whether or not Parliament has created a statutory avenue to that court by appeal or case stated. Given that the House of Lords has now recognised that the citizen has a right to recover money paid under a mistake of law (Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349) it is odd to find a statutory scheme lingering on which denies that right after six years even when the citizen was unaware of the mistake and could not have discovered it with reasonable diligence (see Lord Goff of Chieveley in the Kleinwort Benson case at p 389A-C on the effect of Section 32(1)(c) of the Limitation Act 1980 in these cases).

34. In his ground-breaking speech in Woolwich Equitable Building Society v IRC [1993] AC 70 Lord Goff of Chieveley spoke at p 204 of the way in which the recognition by the House of Lords of a right of recovery of wrongly paid taxes at common law (at that time limited to payments made in response to ultra vires demands) afforded "an immediate opportunity for the authorities concerned to reformulate, in collaboration with the Law Commission, the appropriate limits to recovery, on a coherent system of principles suitable for modern society".

35. The Law Commission published its proposals in response to Lord Goff's invitation in its report Restitution; Mistakes of Law and Ultra Vires Public Authority Receipts and Payments (1994) Law Com No 227. In its report the Commission was sharply critical (see pp 96-100) of certain features of Section 33 of the 1970 Act. Its preferred solution can be seen in the draft tax clauses set out on pages 202 and 204 of its report. This solution, however, has been rejected by the Government, and Section 33 still remains on the statute book very much in its original form.

36. Since 1994 the need for the reform of Section 33 has quickened, for three main reasons. The first is the decision of the House of Lords in the Kleinwort Benson case. The second is the judgment of the European Court of Human Rights in National and Provincial Building Society v United Kingdom [1997] STC 1466. In that case the court at Strasbourg held that restitution proceedings for taxes paid under regulations later declared invalid involved the determination of the applicant's civil rights within the meaning of Article 6(1) of the European Convention of Human Rights. The third is the coming into force of the Human Rights Act 1998 which bars public authorities (an expression which includes the Commissioners of Inland Revenue as well as the courts) from acting in a way which is incompatible with a Convention right (S 6(1)).

37. In the rights-based culture in which we now live, it is with something resembling the curiosity of an antiquary that I examine the features of Section 33 of the 1970 Act that are in issue in the proceedings. Although the scheme bears none of the features of modern rights-based law that are so evident in the Law Commission's draft clauses, this does not necessarily mean that the court can avoid giving effect to them on this occasion. It goes without saying that if Arden J is right, the scheme provides no facility at all for express recourse to the High Court on a point of law of a preliminary kind such as exercised the mind of the Special Commissioner in this case. During the course of argument other examples were given of possible errors of law which did not fall within the rubric of Section 33(4), as interpreted by the judge.

38. On the interpretation of Section 33(4), however, I have read the judgment of Robert Walker LJ and I have nothing to add to his reasons for upholding the decision of the judge, with which I agree. This does not mean that an aggrieved taxpayer has no potential right of redress. One of the reasons for the overhaul in the procedures for judicial review was to facilitate access to the supervisory jurisdiction of the High Court in cases where inferior tribunals, such as the Special Commissioners, were said to have made errors of law in relation to which no statutory rights of redress were available. The judges of the Administrative Court now adopt a benevolent approach to the interpretation of the time limits for judicial review applications in cases where the taxpayer was concerned first with exhausting his statutory remedies. There is also, as I have made clear, a private law action available through the ordinary courts, although this seems a less than ideal forum for complicated disputes about tax law.

39. One or two judges of the Chancery Division are now assigned to the Administrative Court to assist with judicial review applications in tax cases. Mr Sokol, however, evinced none of the enthusiasm attributed by the poet to Senor Cortez staring with eagle eyes at the uncharted waters of the Pacific Ocean when I suggested to him that recourse to judicial review, if adopted in time, would have provided his clients with a remedy not afforded by Section 33(4). Apart from evincing an understandable reluctance to appear in a division of the High Court whose culture may be unfamiliar to a tax lawyer, he expressed concern about the limited powers of the High Court in judicial review proceedings, at any rate before 2nd October 2000, to interfere on "irrationality" grounds with the decision of inferior tribunals.

40. Whatever may the position in the type of case where the only detectable error of law is founded on allegations of irrationality, this should provide no reasonable grounds for inhibition where the error of law complained of is a pure error of law, as it is in the present case which turns on the correct legal interpretation of the settlement reached between Mr Sokol's clients and the Inland Revenue in February 1989.

41. For these reasons, while I do not anticipate a very long span of future happy life for Section 33 of the 1970 Act, now that it is well past pensionable age in a new rights-based legal culture, I agree that this appeal should be dismissed.

LORD JUTSICE WARD:

42. I agree with both judgments.

ORDER: Dismissed with costs

(Order does not form part of approved Judgment)


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