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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Derrin Brothers Properties Ltd & Ors, R (on the application of) v A Judge of the First Tier Tribunal (Tax Chamber) & Ors [2016] EWCA Civ 15 (15 January 2016)
URL: http://www.bailii.org/ew/cases/EWCA/Civ/2016/15.html
Cite as: [2016] 4 All ER 203, 18 ITL Rep 472, [2016] WLR(D) 10, [2016] EWCA Civ 15, [2016] STI 209, [2016] STC 1081, [2016] 1 WLR 2423, [2016] WLR 2423, [2016] BTC 10

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Neutral Citation Number: [2016] EWCA Civ 15
Case No: C1/2014/1432

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM HIGH COURT OF JUSTICE ADMINISTRATIVE COURT
Mrs Justice Simler DBE

Royal Courts of Justice
Strand, London, WC2A 2LL
15/01/2016

B e f o r e :

THE CHANCELLOR OF THE HIGH COURT
LORD JUSTICE DAVIS
and
LORD JUSTICE VOS

____________________

THE QUEEN
on the application of
DERRIN BROTHERS PROPERTIES LTD & OTHERS Appellants
v
A JUDGE OF THE FIRST TIER TRIBUNAL (TAX CHAMBER) First Respondent
THE COMMISSIONERS FOR HER MAJESTY'S REVENUE AND CUSTOMS
and HSBC BANK plc Second Respondents
LUBBOCK FINE LLP Interested Parties

____________________

Miss Hui Ling McCarthy (instructed by Kingsley Napley Solicitors) for the Appellants
MissJulie Anderson (instructed by Solicitor and General Counsel to the Commissioners for Her Majesty's Revenue and Customs) for the Second Respondents
Hearing dates : 8th December 2015

____________________

HTML VERSION OF JUDGMENT
____________________

Crown Copyright ©

    The Chancellor (Sir Terence Etherton):

  1. This appeal concerns the powers of the Commissioners for Her Majesty's Customs and Excise ("HMRC") pursuant to schedule 36 to the Finance Act 2008 ("schedule 36") to require a third party to provide information and documents for checking the tax position of a resident or overseas taxpayer by way of assistance to another country, in the present case Australia. It raises issues as to the relationship between those powers and the European Convention on Human Rights ("the Convention").
  2. It is an appeal from the order of Mrs Justice Simler of 15 April 2014 in the Administrative Court dismissing the applications of the appellants for judicial review of (1) the decisions of Judge Roger Berner in the First-tier Tax Chamber ("the FTT") in ex parte hearings on 23 November 2012 and 9 January 2013 pursuant to paragraph 3 of schedule 36 approving the giving of notices by HMRC to third parties, which required the third parties to provide to HMRC documents and information of the 24 appellants, and (2) the giving of those notices.
  3. The legal framework

  4. The United Kingdom was a founder member of the Joint International Tax Shelter Information Centre ("the JITSIC"), together with the USA, Australia and Canada. The purpose of the JITSIC is to facilitate close working between the tax administrations of its members on large and complex issues where tax revenue is at risk.
  5. Article 27 of the UK/Australia Double Taxation Convention ("the DTC"), which sets out the obligations of the UK and Australia relating to the exchange of information, provides as follows so far as relevant:
  6. "Exchange of information
    1. The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant to … the domestic laws of the Contracting States concerning taxes to which this Convention applies insofar as the taxation under those laws is not contrary to this Convention. … Any information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic law of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes to which this Convention applies. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions.
    2. If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall obtain that information in the same manner and to the same extent as if the tax of the first-mentioned State were the tax of that other State and were being imposed by that other State, notwithstanding that the other State may not, at that time, need such information for the purposes of its own tax."
  7. Under UK domestic law powers are conferred on HMRC by schedule 36 to call for information and documents. Paragraphs 2 and 3 of schedule 36 are as follows:
  8. "2. Power to obtain information and documents from third party

    (1) An officer of Revenue and Customs may by notice in writing require a person–

    (a) to provide information, or
    (b) to produce a document,

    if the information or document is reasonably required by the officer for the purpose of checking the tax position of another person whose identity is known to the officer ("the taxpayer").

    (2) A third party notice must name the taxpayer to whom it relates, unless the tribunal has approved the giving of the notice and disapplied this requirement under paragraph 3.

    (3) In this Schedule, "third party notice" means a notice under this paragraph.

    3. Approval etc of taxpayer notices and third party notices

    (1) An officer of Revenue and Customs may not give a third party notice without–

    (a) the agreement of the taxpayer, or

    (b) the approval of the tribunal.

    (2) An officer of Revenue and Customs may ask for the approval of the tribunal to the giving of any taxpayer notice or third party notice
    (2A) An application for approval under this paragraph may be made without notice (except as required under sub-paragraph (3)).

    (3) The tribunal may not approve the giving of a taxpayer notice or third party notice unless–

    (a) an application for approval is made by, or with the agreement of, an authorised officer of Revenue and Customs,

    (b) the tribunal is satisfied that, in the circumstances, the officer giving the notice is justified in doing so,

    (c) the person to whom the notice is to be addressed has been told that the information or documents referred to in the notice are required and given a reasonable opportunity to make representations to an officer of Revenue and Customs,

    (d) the tribunal has been given a summary of any representations made by that person, and

    (e) in the case of a third party notice, the taxpayer has been given a summary of the reasons why an officer of Revenue and Customs requires the information and documents.

    (4) Paragraphs (c) to (e) of sub-paragraph (3) do not apply to the extent that the tribunal is satisfied that taking the action specified in those paragraphs might prejudice the assessment or collection of tax.

    (5) Where the tribunal approves the giving of a third party notice under this paragraph, it may also disapply the requirement to name the taxpayer in the notice if it is satisfied that the officer has reasonable grounds for believing that naming the taxpayer might seriously prejudice the assessment or collection of tax."
  9. An officer who gives a third party notice must give a copy to the taxpayer to whom it relates (para. 4(1) of the schedule).
  10. A third party notice can be enforced only in respect of documents in the possession or power of the recipient of the notice (para.18).
  11. For the purposes of paragraph 2(1), "checking" includes carrying out an investigation or enquiry of any kind (para. 58), and "tax position" includes a person's position as regards past, present and future liability to pay any tax, including relevant foreign tax (paras. 63 and 64). An "authorised officer", for the purposes of paragraphs 2 and 3, is an officer of HMRC who is, or is a member of a class of officers who are, authorised by HMRC for the purpose of that provision (para. 59).
  12. Part 7 of schedule 36 imposes penalties for non-compliance with an information request and for inaccuracies in the information or documentation produced.
  13. It is to be noted, and is material to this appeal, that the third party to whom a third party notice is addressed and the taxpayer to whom the third party notice relates are treated differently in relation to the third party notice. The third party recipient is not only required to be told in the notice the name of the taxpayer being investigated (para. 2(2)), but must also be given advance warning that the documents identified are required and given a reasonable opportunity to make representations (para. 3(3)(c)), and a summary of those representations must be given to the FTT (para. 3(3)(d)). The taxpayer, on the other hand, must be given a copy of the third party notice (para 4(1)) and a summary of the reasons why the information and documents specified in the third party notice are required (para. 3(3)(e)) but is not entitled to be given a reasonable opportunity to make representations to HMRC, and is not entitled to insist that a summary of any representations which the taxpayer does make be given to the FTT. A number of those requirements can be disapplied by the FTT (viz. those in paras. 2(2), 3(3)(c)(d) and (e) and 4(1)) but no such disapplication was ordered in the present case.
  14. Schedule 36 replaced the information powers of HMRC formerly in section 20 of the Taxes Management Act 1970 ("the TMA"). Under the TMA regime a third party notice could not be given except with the consent of a general or special commissioner. In R v Commissioners of Inland Revenue ex parte T C Coombs & Company [1991] 2 AC 283, Lord Lowry, with whom the other members of the Appellate Committee agreed, said (at 300C-F) that there was a strong presumption of regularity in relation to the function of the commissioner. He said that the commissioner was an independent person entrusted by Parliament with the duty of supervising the exercise of an intrusive power, and (quoting Earl of Derby v Bury Improvement Commissioners (1869) LR 4 Exch 222, 226) that, in the absence of any proof to the contrary, credit ought to be given to public officers, who have acted prima facie within the limits of their authority, for having done so with honesty and discretion. He said that, where the commissioner gave his consent, there was a presumption that he reasonably held the opinion that the tax inspector (giving the third party notice) was justified in proceeding under section 20, and that presumption could only be displaced by evidence showing that the inspector could not reasonably have held the opinion (required by section 20(3)) that the documents specified in the third party notice contained or may have contained information relevant to the taxpayer's tax liabilities.
  15. Lord Lowry said (at 302E-F) that Parliament had designated the inspector as the decision-maker and the commissioner as the monitor of the decision, and that a presumption of regularity applied to both. He said that the presumption that the inspector acted within his powers when giving the notice could only be displaced by evidence which could not be reconciled with the inspector's having the required reasonable opinion.
  16. Lord Mackay (at 288F-G) and Lord Jauncey (at 289 E-G) also made the point that the tax inspector making an ex parte application to the commissioner had a duty to make full disclosure to the commissioner of all the facts within his or her knowledge, including any information which could properly influence the commissioner against giving approval to a notice.
  17. It is common ground that, subject to debate about the strength of the presumption of regularity in light of Article 6 of the Convention (right to a fair trial), those observations about the TMA regime in TC Coombs apply with equal force to the statutory regime under schedule 36 and to the respective roles of the officer, as the decision-maker, and the FTT, as the monitor of the decision.
  18. There are limited rights of appeal for recipients and taxpayers affected by third party notices, none of which apply in the circumstances of the present case. The only available avenue of challenge by the appellants is judicial review.
  19. The facts

  20. The following account of the relevant facts is largely taken from the judgment of Simler J, for whose full and careful factual summary I am very grateful.
  21. On 23 November 2011 Mr Philip Pandolfo, an HMRC officer in the Specialist Investigations Section (and authorised to give third party notices), was provided with a copy of a formal request by the Australian Tax Office ("the ATO") under Article 27 of the DTC together with a large body of supporting evidence and information. Neither the request nor the supporting information have been disclosed in these proceedings.
  22. The ATO request indicated that official investigations were being conducted into Mr Vanda Russell Gould, his associates and his clients and that those investigations had revealed that a UK resident firm of accountants, Lubbock Fine LLP ("Lubbock Fine"), was providing nominee directors and shareholders to UK incorporated companies that were beneficially owned by relevant Australian residents. The supporting documents suggested that, by way of a series of complex arrangements involving those companies and other entities and persons in other jurisdictions, the Australian residents had avoided substantial amounts of tax which would have been otherwise payable and had failed to provide documents under formal request that were required for the purposes of establishing beneficial ownership and/or company residence in Australia.
  23. More specifically, the concerns of the ATO were that some or all of the UK registered companies may be considered to be tax resident in Australia as their effective management and control rested with Australian resident taxpayers; interest payments claimed as deductions against profits by various Australian resident taxpayers, who were associated either with Mr Gould and/or John Leaver or with clients of theirs, might not be properly allowable; income properly payable to Australian resident taxpayers and declarable for tax purposes had not been so declared; arrangements had been made by which substantial sums had been artificially diverted from the accounts of Australian resident taxpayers and, in some cases, re-routed through offshore companies controlled by Mr Gould and/or Lubbock Fine leading to a substantial loss of tax; sums remitted from offshore companies controlled by Mr Gould and/or Lubbock Fine represented the taxable income of Mr Gould and clients and associates; sums remitted from offshore companies controlled by Mr Gould and/or Lubbock Fine and paid direct to travel agents and to educational institutions represented taxable emoluments in respect of Mr Gould and clients and associates; clients of Mr Gould had engaged in activities by which "back to back" loan facilities were arranged to disguise the taxable nature of substantial remittances which arose from offshore companies controlled by Mr Gould and/or Lubbock Fine; and several of those companies were trading in shares listed on the Australian Securities Exchange and by falsely claiming non-resident status they took advantage of concessions to exempt profits from capital gains tax.
  24. The ATO provided an analysis that showed estimated tax at risk of about AUD230m of income.
  25. The ATO requested documents and information held by Lubbock Fine and the following UK resident banks: HSBC Bank plc ("HSBC"), Lloyds TSB Bank plc ("Lloyds") and Barclays Bank plc ("Barclays"). The request indicated that the documents were required from Lubbock Fine and the banks for the following reasons, among others: (a) the determination of the beneficial ownership and residence of identified corporate entities and the sources of funds used to conduct transactions, including those mentioned above; (b) the establishment of any false claims to interest relief; and (c) the identification of any undeclared income.
  26. HMRC sent letters under paragraph 3(3)(c) (commonly called "precursor letters") dated 16 May 2012 to all the proposed recipients of third party notices, including Lubbock Fine and HSBC. The letters were all headed "Proposed Notice to you as a third party to provide information and produce documents, under Schedule 36 of the FA 2008" and, although their terms differed slightly, all offered the opportunity to give voluntary disclosure and/or to make representations against approval of the proposed notices. By way of example, the letter to Lubbock Fine stated that, in response to a formal request from the ATO for an exchange of information, Mr Pandolfo needed information and the documents listed in an enclosed schedule. It explained that he would make a legal request for the documents to the FTT unless the documents were provided voluntarily; and that Lubbock Fine could make representations stating why they should not have to give him what he was asking for by way of the proposed notice. Mr Pandolfo explained that a summary of such representations would be given to the FTT.
  27. The schedules attached to the precursor letters identified in total 40 corporate entities (each precursor letter listed a smaller number relevant to that third party). The schedule to the letter to Lubbock Fine specified 28 corporate entities, including UK entities and entities of the BVI, the Bahamas, the Cayman Islands, Gibraltar and Samoa, and sought all documents (widely described as including emails, letters, memoranda and records held on computers, whether in hard or soft drives, and general ledgers, financial statements, cashbooks and other books of account) relating to services provided by Lubbock Fine to or in respect of those entities, including "accounting, managerial, tax advice, company formation, invoicing and expense recording and banking and financial services". Specific periods in relation to each entity were identified; and exclusions were specified so that, for example, Lubbock Fine were not required to provide certain documents in connection with their performance as auditors and tax advisers. Paragraph 6 of the schedule stated that the persons to whom the request for documents related included Mr Gould and Mr Leaver.
  28. Mr Pandolfo made a request to the ATO to be provided with the names and addresses of the parties he considered to be "taxpayers" for the purposes of paragraph 2 of schedule 36. By letters dated 30 July 2012 Mr Pandolfo wrote to a number of "taxpayers" (but not any of the appellants) and gave a summary of reasons for the proposed third party notices.
  29. Although not identical, the letters were in similar terms. By way of example, the letter to Mr Gould stated that Mr Pandolfo was making enquiries into aspects of his tax and financial affairs and those of companies or entities believed to be associated with him. It stated that an application to the FTT would be made seeking approval of notices to, among others, HSBC, Barclays, Lloyds and Lubbock Fine. The letter included the following summary of reasons why the information and documents were required:
  30. "It is my belief that the entities noted above may hold information that is directly relevant to your tax and financial affairs and that, in particular albeit without prejudice to the general nature of the ATO enquiries that:
    (a) sums remitted from companies controlled by or on behalf of yourself may represent taxable income,
    (b) sums remitted from companies controlled by or on behalf of yourself and paid directly to other parties and institutions may represent taxable emoluments and
    (c) companies controlled by or on your behalf may properly be resident in Australia for tax purposes."
  31. By an application letter also dated 30 July 2012 Mr Pandolfo sought approval from the FTT to the giving of the third party notices, including those addressed to Lubbock Fine and HSBC, and a direction that the hearing should be ex parte. He stated in the application that if it were heard in public the case might be prejudiced.
  32. Of the recipients of the precursor letters, only Lubbock Fine made representations in response. They did so initially by letter dated 11 June 2012 enclosing a copy of an Australian judicial review application challenging the exercise by the ATO of powers under Article 27 of the DTC by five of the companies mentioned in the schedule to the precursor notices, including the thirteenth appellant ("Chemical Trustee") and the fifteenth appellant ("Derrin") in the present appeal. Lubbock Fine invited HMRC to await the outcome of those proceedings in Australia. The letter was followed by a letter dated 2 July 2012 from Henry Davis York (solicitors instructed on behalf of the same five companies in the Australian litigation) raising serious concerns about the legitimacy of the ATO request and inviting HMRC to take no further steps to act on the ATO request.
  33. Mr Pandolfo replied to Henry Davis York by letter dated 31 July 2012, in which he stated that he had decided that it was appropriate to proceed to an approval hearing before the FTT, but making it clear that he would put a copy of their letter and any other representations before the FTT.
  34. By letter dated 18 September 2012 Bishop & Sewell LLP, now instructed on behalf of Derrin, Chemical Trustee and the seventeenth appellant ("Indo-Suez"), enclosed written representations for forwarding in full to the FTT at the approval hearing. The document defined and described the three companies as "taxpayers". It contended that HMRC's information powers did not extend to Australian taxes; that the application was premature because of the ongoing litigation in Australia; that "the taxpayers" had not been given a summary of reasons; and that the ex parte procedure would breach their rights under the Human Rights Act 1998 ("the HRA") and the Convention.
  35. Also on 18 September 2012 Lubbock Fine made representations on a number of specific points relating to the 28 entities listed in the documents schedule to the proposed notice. They identified two entities that were not clients of Lubbock Fine. So far as a third entity ("Barleigh Wells") was concerned, they stated that this company acted for over 50 clients, and a review had indicated that there was only one trust for which Barleigh Wells acted as trustee which had dealings with some of the entities mentioned in the schedule. Accordingly, they suggested that the scope of the notice in connection with Barleigh Wells should be restricted to dealings with other entities mentioned in the schedule. More generally, they stated that parties affected by the application would have wished to make representations orally to the FTT and had been denied that right in breach of Article 6. No representations were made that the proposed notices were unduly onerous or too broad in scope.
  36. On 19 September 2012 HMRC's application to the FTT was adjourned, at Mr Pandolfo's request, so that the representations of Bishop & Sewell and of Lubbock Fine could be considered. By an order released on 28 September 2012 the FTT directed that the approval hearing, which had been re-listed for 23 November 2012, should be held in private.
  37. Following the receipt of further information from the ATO Mr Pandolfo decided to treat Derrin, Chemical Trustee and Indo-Suez as "taxpayers" for the purposes of paragraphs 2 and 3 of Schedule 36 because those three companies were beneficially owned by Mr Gould whereas the others companies, about which the ATO had requested information, were beneficially owned by clients of Mr Gould or Mr Leaver or both of them.
  38. The consequence of the treatment of Derrin, Chemical Trustee and Indo-Suez as "taxpayers" for the purposes of paragraph 3(3)(e) of schedule 36 was that Mr Pandolfo sent each of them a letter dated 16 November 2012, in which he stated that, in response to a request from the ATO, he was making enquiries into aspects of their tax and financial affairs and intended to ask the FTT to approve the issue of formal notices to third parties requiring them to provide information and/or documents. Each letter provided a summary of reasons, in more or less identical terms, as to why the information and documents were required from the third parties. He explained that it was his belief that the third parties might hold relevant information and that, without prejudice to the general nature of the ATO enquiries, the recipient of the letter might be liable to tax in Australia in relation to profits derived from the buying and selling of shares, and (in the case of Derrin and Indo-Suez) interest payments, and (in the case of Indo-Suez) underwriting fees.
  39. Those letters were sent by post to Derrin, Chemical Trustee and Indo-Suez four clear working days before the hearing. Copies were not sent to their representatives at that stage.
  40. By email sent on 19 November 2012 at 3.37 pm Mr Pandolfo informed Mr Rahman of Bishop & Sewell that the hearing of the application would take place on 23 November; that Bishop & Sewell's full submission of 18 September 2012 would be placed before the FTT; and that Mr Pandolfo had sent summary reasons letters to Derrin, Chemical Trustee and Indo-Suez as "taxpayers" within paragraph 3(3)(e) of Schedule 36. Mr Rahman responded requesting copies of all such letters. On 22 November 2012, once he had received Mr Rahman's assurance that he would accept responsibility on behalf of his clients in lieu of a formal authority to act form being completed, Mr Pandolfo sent Mr Rahman the three summary reasons letters. He said that Derrin, Chemical Trustee and Indo-Suez Investments (together "the taxpayer appellants") had had sufficient time to raise any further issues, but if Mr Rahman or they wished to raise any issues regarded as sufficiently important to place before the FTT, they could do so. He also pointed out that the proceedings in Australia being taken against the ATO had been discontinued.
  41. As a further consequence of the representations received, Mr Pandolfo reduced the number of entities referred to in the schedule to the proposed Lubbock Fine notices, reflecting the representations made in relation to entities that were not clients and so forth.
  42. The hearing in the FTT for approval of the proposed third party notices took place on 23 November 2012 before Judge Berner. It was attended by Mr Pandolfo, Mr Christopher Orchard, who was the HMRC officer with responsibility for exchanging information under treaty with other member countries, and Mr Brad Edwards, a representative of the ATO. 22 items were sent to the FTT in advance of the hearing, including (a) substantial background information, including diagrammatical and other information provided by the ATO; (b) the ATO's analysis of perceived arrangements and tax consequences; (c) proof that Mr Pandolfo was an authorised officer; (d) letters and representations from all representatives and Lubbock Fine; (e) the ATO's response to procedural issues raised by Henry Davis York; and (f) further communication from the ATO relating to "taxpayers".
  43. Mr Pandolfo expressly raised the specific challenges and objections he had received to the giving of the notices.
  44. Judge Berner approved the giving of the notices on being satisfied that all the relevant statutory conditions were met. He released a written decision on 29 November, which did not record his specific reasons for finding that all the relevant statutory conditions were satisfied, but which dealt with some of the issues raised in the representations by taxpayers where his decision would be of general interest. Those matters included whether the DTC and schedule 36 applied to Australian taxes prior to 2 December 2012; whether there had been a violation of Article 6 (right to a fair trial) and/or Article 13 of the Convention taken in conjunction with Article 8 (right to private life and correspondence) and/or Article 1 of the First Protocol (protection of property) ("A1P1") because the appellants had not had access to an effective remedy to challenge the lawfulness of the proposed third party notices; and who was properly to be identified as a "taxpayer" for the purposes of paragraph 3(3)(e).
  45. By letters dated 27 November 2012 HMRC sent the third party notices to Lubbock Fine, HSBC, Lloyds and Barclays and copies to each "taxpayer". The notices included requests for documents relating to the three taxpayer appellants as summarised above.
  46. Due to an oversight by HMRC certain proposed notices were not signed by Judge Berner on 23 November 2012. They were signed on 9 January 2013 at a further ex parte hearing held in private. The further notices were served by letters dated 14 January 2013, and were copied to, among others, the three taxpayer appellants.
  47. By letter dated 18 December 2012 the three taxpayer appellants requested HMRC to provide a number of documents, including HMRC's submissions to the FTT, a copy of HMRC's note of the hearing and the reasons given by the FTT for approving the first notices. By letter of the same date, HMRC provided a copy of Judge Berner's written decision but refused the remainder of the request.
  48. The judicial review proceedings

  49. The judicial review proceedings were commenced by the 24 appellants by the issue of the claim form on 14 March 2013. HSBC and Lubbock Fine were joined as Interested Parties. The claim form sought an order quashing the notices given by HMRC and an order prohibiting HMRC from issuing any further notices in reliance on the decision of the FTT or in reliance on any approvals given pursuant to that decision.
  50. The grounds of challenge raised the following broad issues for the court: (1) whether, on a proper interpretation of schedule 36, there was any breach of the requirements of that schedule so as to invalidate the giving of the notices by HMRC; and (2) whether the FTT acted in breach of Article 6 the Convention when taken in conjunction with Article 8 and/or A1P1.
  51. As to the first broad issue, the appellants contended that the approvals (and therefore the notices) were invalid because the 21 appellants who were not treated as "taxpayers" for the purposes of paragraphs 2 and 3 of Schedule 36 ought to have been.
  52. Simler J rejected that argument. She said (at [54]) that it had not been plainly and obviously shown that those 21 appellants were taxpayers for the purposes of paragraph 3(3)(e) and, accordingly, there was no requirement to provide them with a summary of reasons.
  53. Simler J rejected the appellants' alternative argument that the third party notices which included those 21 companies were too broadly drafted since a request for all documents relating to each entity would inevitably include documents that have nothing at all to do with the named taxpayers' positions. The Judge said that she was unable simply to assume that it was inevitable that each entity would have documents that have nothing whatever to do with the named taxpayers in the circumstances of this case where it is suggested that there was a scheme involving those entities and it is common ground that the appellants are linked to the taxpayers under investigation. She said that the appellants' submission on this point also ignored the presumption of regularity which applied both to Mr Pandolfo's conclusion that the documents are reasonably required for checking the taxpayers' tax positions, and also to Judge Berner's conclusion that he was satisfied in the circumstances that Mr Pandolfo, as the officer giving the notice, was justified in doing so.
  54. Simler J also rejected the taxpayer appellants' contention that the letters of 16 November 2012 were an inadequate summary of reasons because they failed to identify which documents were being sought, and they did not provide in a timely manner sufficient information to enable the taxpayers to make representations objecting to the proposed notices.
  55. Finally, Simler J rejected the appellants' argument on the alternative broad issue that there had been a breach of Article 6 when read in conjunction with Article 8 and/or A1P1 because they had been precluded from challenging the third party notices since they had not been given reasons, the right to make representations or the right to be present at the FTT hearing. The Judge held that, against the background of a limited and proportionate interference with their civil rights, the appellants had been able to pursue the application for judicial review challenging that interference, and they had been afforded an adequate and effective remedy in consequence.
  56. The appeal

  57. The appellants' written grounds of appeal to this court, reflecting the way the matter had been argued in the High Court and addressed in Simler J's judgment, stated that the notices were wrongly approved by the FTT and issued by HMRC, and were therefore ultra vires and invalid, on two grounds: (1) a breach of the requirements of schedule 36; and/or (b) a violation of Article 6 when taken in conjunction with Article 8 and/or A1P1.
  58. Consistently with that approach, the skeleton argument of Miss Hui Ling McCarthy, for the appellants, addressed those two grounds in that order. On the hearing of the appeal, however, Miss McCarthy structured her submissions into the following five parts: (1) the appellants had an absolute right to a fair hearing under Article 6 but the proceedings as a whole, including the judicial review, had not satisfied that right; (2) schedule 36 should be interpreted so as to avoid that unfairness, either on a purposive approach to construction or by reading it in accordance with section 3 of the HRA so as to make it Convention compliant; (3) on that interpretation, all the appellants ought to have been told, in sufficient time and detail prior to the hearing before the FTT to be able to make representations, who were the taxpayers under investigation and why the documents were reasonably required to establish the tax situation of those taxpayers; and, furthermore, to avoid unfairness the FTT ought to have stated in its written decision the substantive reasons and factual basis for its decision in sufficient detail to enable that to be examined on judicial review; (4) since none of that was done and the judicial review proceedings did not remove the unfairness, the order of Simler J should be set aside, the notices should be quashed and HMRC should be prohibited from issuing further notices in reliance on the FTT's decision; (5) in any event, all 24 appellants ought to have been treated as "taxpayers" and not just three of them, and so there was non-compliance with schedule 36 on any footing.
  59. The difference of approach between the appellants' skeleton argument and Miss McCarthy's oral submissions has in some respects made the analysis of the appellants' case more difficult.
  60. Discussion

  61. In addressing her first and overarching submission that the proceedings as a whole were not fair, Miss McCarthy conceded that the appellants are not contending that schedule 36 itself or any part of it is incompatible with the Convention. They have not claimed a declaration of incompatibility pursuant to section 4 of the HRA. The appellants' case is that, as it has been applied to them, schedule 36 operated unfairly and in breach of their Article 6 rights.
  62. In view of that concession, it is necessary, first, to interpret the relevant provisions of schedule 36; second, to see whether the provisions, as properly interpreted, were correctly followed in the present case; and then, third, to consider whether, even if schedule 36 was applied in accordance with its terms, there has nevertheless been a breach of any of the appellants' Convention rights.
  63. The normal approach to statutory interpretation applies in the present case. The task is to ascertain and give effect to the intention of Parliament, in the light of the terms of the statute and admissible evidence, giving the statutory provisions a purposive interpretation where appropriate; and also, as required by section 3 of the HRA where Convention rights are engaged, to read and give effect to the statute, so far as it is possible, in a way which is compatible with the Convention rights.
  64. The Convention rights of the appellants under Article 8 were engaged by the notices, and it is to be assumed for the purposes of this appeal that the appellants' rights under Article 6 were also engaged .
  65. Simler J accepted that Article 8 was engaged because the notices interfered with the appellants' privacy and confidentiality rights in respect of their business documents. There is no respondent's notice challenging that finding.
  66. Simler J said that the engagement of A1P1 was less clear, given the ability to provide copy documents and that physical records could be duplicated. She said that, in any event, A1P1 rights added nothing to the analysis if Article 8 was engaged. I do not consider that the Judge expressed any final view as to whether A1P1 was engaged in the present case. It does not matter because Miss McCarthy expressly conceded in her oral submissions that the appellants place no reliance on A1P1 on this appeal. In that connection, it is convenient to note at this point that Miss McCarthy submitted that the third party notices in the present case requested the production of original documents. I do not agree. There is nothing in them which precludes the handing over of copies in accordance with paragraph 8 of schedule 36.
  67. Both before the Judge and on this appeal the appellants submitted that their Article 8 rights amounted to "civil rights and obligations" for the purposes of Article 6 and relied, in that regard, on the decision of the European Court of Human Rights ("ECtHR") in Ravon v France (18497/03) 21.5.2008.
  68. In that case the French tax authorities, suspecting the individual applicant and two companies controlled by him of tax fraud, obtained and executed two orders from French courts to search the individual's residences and the companies' premises for information and documents. The individual and the companies were not notified in advance of the application for the order or of the intention to carry out the searches. They wished to challenge the lawfulness of the orders and of the searches and seizures of documents, which they believed had been conducted irregularly. The orders could only be appealed on a point of law. Further, once the searches had been completed, the judges granting the orders no longer had any jurisdiction to set aside the orders or to exercise any supervisory function in relation to their execution. Challenges on the grounds of irregularity in the execution of the orders could only be raised in subsequent substantive proceedings, if any, relating to a tax claim based on the documents and information obtained through the searches.
  69. The ECtHR rejected the argument of the French Government that Article 6(1) did not apply because, although there was a "dispute" within the meaning of Article 6(1), it did not relate to rights or obligations that were "civil" in character. The Court distinguished Ferrazzini v Italy (2002) 34 EHRR 45, in which it had been held that the concept of "civil rights and obligations" in Article 6 is an autonomous concept, and tax disputes fall outside its scope because they "form part of the hard core of public-authority prerogatives, with the public nature of the relationship between the taxpayer and the tax authority remaining predominant": paragraph [29]. In Ravon (at paragraph [24]) the Court said that, by contrast, Article 6(1) was engaged on the facts of the case because:
  70. "the dispute currently at issue is not a dispute of this kind. … [I]t relates to the lawfulness of the searches of the premises and the seizures to which the Appellants were subject: at its heart is the question of disregard or otherwise by the authorities of their right to respect for the home. The "civil" character of this right is clear, as is its recognition in domestic law, which results not only from article 9 of the Civil Code … but also from the fact that the Convention, consecrated by article 8, applies directly in the French legal system."
  71. The Court held that there had been a breach of Article 6(1) because the right to a fair trial required that persons whose premises had been searched could obtain an "effective judicial review, in fact and in law, of the lawfulness of the decision ordering the search as well as any measures taken on that basis": paragraph [28]. Following completion of the search of the applicants' premises, however, the only challenge they could make was to appeal on a point of law or to raise the issue of irregularities in the conduct of the search and seizure in any proceedings which might subsequently be brought on the basis of the documents and information obtained on the search.
  72. The Court observed in the course of its judgment (at paragraph [31]) that "access by the persons concerned to the judge seems to be more theoretical than practical". It noted that the person affected by the planned search would be unaware of the proceedings being brought against him. There was no legal obligation on those carrying out the search to tell the interested parties of the right to submit any difficulties to the judge (and they had not in fact so informed the applicants in Ravon itself). The judge authorising the search was not required to mention in the authorisation order either the possibility or the methods of applying to him for a suspension or stoppage of the search. The interested parties were not required to be present at the search. They had no right to call a lawyer "or have contacts with the outside". In Ravon itself the contact details of the judge who made the order were not stated on the order and were not given to the applicants by the agents who carried out the searches. After the search and seizure operation was completed the interested parties no longer had the right to apply to the judge for any relief.
  73. There are several obvious grounds on which the facts of the present case and the legal scheme of schedule 36 differ from those under consideration in Ravon, not least that Ravon concerned the sanctity of the home which is a core value at the heart of Article 8. I shall refer to some other important differences in due course, but it is sufficient at this point merely to say that there appears to be no express acceptance by Simler J in her judgment that the appellants' Article 8 rights in the present case amounted to "civil rights and obligations" for the purposes of Article 6. The appellants contend that the Judge did so in paragraph [74] of her judgment. I do not read paragraph [74] in that way. Rather, the Judge, without deciding that point, nevertheless proceeded to analyse and to dismiss the appellants' case for judicial review even if their Article 8 rights did fall within Article 6. There has been no respondent's notice putting that part of the appellants' case in issue and it has not been argued by HMRC on this appeal that the appellants' Article 8 rights do not fall within Article 6.
  74. Miss McCarthy submitted that, whether the relevant provisions of schedule 36 are given a standard purposive interpretation or one which involves reading them down in accordance with the HRA so as to make them Convention compliant, schedule 36 required that (1) all 24 appellants, whether taxpayers or non-taxpayers, had to be told prior to the FTT hearing who the taxpayers were and why the documents were reasonably required to establish the taxpayers' tax position, and (2) that had to be done in sufficient time and in sufficient detail to enable the appellants to make representations to be taken into account by the FTT. She accepted that the appellants did not have a right to insist on attending the FTT hearing itself but she submitted that, on the proper interpretation of schedule 36, all the appellants had the right to make representations to HMRC which HMRC would have been obliged to place before the FTT, and so reasons should have been given to them which were sufficiently full and timely to enable them to exercise that right effectively. I do not accept those submissions on the proper interpretation of schedule 36.
  75. In considering the proper interpretation of schedule 36, it is important to have in mind its background and its purpose. Mr Pandolfo explained in his first witness statement that schedule 36 was enacted after extensive public consultation. We were told on the hearing of the appeal that it was subject to Parliamentary pre-legislative scrutiny.
  76. As Ms Julie Anderson, for HMRC, said, schedule 36, like its predecessor scheme in section 20 of the TMA, represents a balance between the interests of individuals and the interests of the wider community. So far as concerns the interests of the wider community, the statutory scheme is intended to assist HMRC in its investigation of tax avoidance and tax evasion. Complex and sophisticated corporate and international arrangements are often the hallmark of schemes to avoid or evade tax and are often intended to throw a veil of obscurity over the reality of underlying transactions. Such complex arrangements feature in the present case, which concerns an investigation into suspected cross-border corporate tax avoidance and evasion under which tax has been wrongly claimed on interest on "loans" made through a web of onshore and offshore companies.
  77. The purpose of the statutory scheme is to assist HMRC at the investigatory stage to obtain documents and information without providing an opportunity for those involved in potentially fraudulent or otherwise unlawful arrangements to delay or frustrate the investigation by lengthy or complex adversarial proceedings or otherwise. It is inevitable in many cases, particularly where there are complex arrangements designed to evade tax, that at the investigatory stage it will be difficult, if not impossible, for HMRC to be definitive as to the precise way in which particular documents will establish tax liability. It is also clear that in many cases disclosure of HMRC's emerging analysis and strategy and of sources of information to the taxpayer or those associated with the taxpayer may endanger the investigation by forewarning them.
  78. Those considerations explain the principal features of schedule 36 relating to the service of third party notices. In the first place, Parliament has deliberately chosen a judicial monitoring scheme rather than a system of adversarial appeals from third party notices, which could take years to resolve. Secondly, paragraphs 2 and 3 of schedule 36 make a clear distinction between the rights and obligations of (1) the taxpayer whose tax position HMRC wish to check, (2) the third party, and (3) any entity ("the non-taxpayer entity") whose documents or copies of whose documents are required to be produced by the third party or about whom information is sought from the third party. Common to the statutory treatment of all of them, however, is the very limited scope for objection by them to the request for production of the documents and information specified in the third party notice.
  79. Paragraph 3(3)(e) of schedule 36 requires that the taxpayer has been given a summary of the reasons why HMRC's officer requires the information and documents. In contrast to the position of the third party, schedule 36 does not, however, require the taxpayer to be given any opportunity to make representations to HMRC opposing the request in the third party notice.
  80. Consistently with the legislative objectives I have described, the giving of summary reasons to the taxpayer is not for the purpose of enabling the taxpayer to make representations directly or indirectly to the FTT. It was already established in R v A Special Commissioner ex parte Morgan Grenfell & Co Ltd [2002] TC 74 TC 511 in relation to the former scheme under section 20 of the TMA that, in the case of a notice to the taxpayer for production of documents, the fact the notice came at the investigatory stage as well as the need to avoid frustrating the intention of the legislation led to the conclusion that the taxpayer had no right to demand an inter partes oral hearing.
  81. The reason for the giving of summary reasons to the taxpayer under schedule 36 is purely to guard against arbitrary conduct by the tax authority and to provide the context for any application to the FTT for approval of the third party notice, approval which cannot be given unless the FTT is satisfied pursuant to paragraph 3(3)(b) that the officer giving the notice is justified in so doing.
  82. Miss McCarthy relied on various statements of Tucker J in R v IRC, ex parte Continental Shipping Ltd SA [1996] STC 813 and of Carnwath J in R v Macdonald and IRC, ex parte Hutchinson & Co Ltd [1998] STC 680 (both of which concerned the provisions of section 20 of the TMA relating to third party notices) as supporting the conclusion that the summary is for the benefit of the taxpayer and not HMRC. Those statements emphasised the importance of complying with the requirement to provide a summary of reasons, bearing in mind the strong and intrusive powers of HMRC and the heavy responsibility on those exercising the powers. It is not necessary to set out those statements. I do not regard any of them as incompatible with the conclusion that the summary is not intended to facilitate the making of representations by the taxpayer as to why the documents and information in the possession or power of the third party should not be disclosed but rather is intended to avoid arbitrary conduct by the executive.
  83. Paragraph 3(3)(c) provides that the third party must be told that the information or documents referred to in the notice are required and be given a reasonable opportunity to make representations to the officer. Schedule 36 does not, however, require that the third party is given any explanation of the reasons why the officer requires the information and documents. It does not expressly confer on the third party a right to make representations directly to the FTT or a right to appear before the FTT.
  84. It seems fairly clear that the reason the third party is to be told that the information or documents are required and be given a reasonable opportunity to make representations to HMRC is to enable it to state any practical difficulties with compliance. That is consistent with paragraph 30 of schedule 36, which provides that a person given a third party notice may appeal on the ground that it would be unduly onerous to comply with the notice or any requirement in it. It is equally clear that the reason the third party does not have to be given any explanation as to why the officer requires the information and documents is because it is not for the third party to argue any case for the taxpayer as to the width or nature of the investigation. It does not need to know confidential information relating to the affairs of the taxpayer. The third party is not given any right to appear before the FTT because, consistently with the judicial monitoring scheme rather than an adversarial one and with the limited right of objection by the third party, it is sufficient that the third party is given a right to make representations to the officer, and the officer is obliged to provide the FTT with a summary of those representations.
  85. Schedule 36 does not require that any information at all be given to the non-taxpayer entity, whose documents or copies of whose documents are required to be produced by the third party or about whom information is sought from the third party. Nor does it require that any opportunity be given to the non-taxpayer entity to make representations to the officer or to the FTT. The reasons are clear enough. As in the case of the third party, it is not for the non-taxpayer entity to argue any case for the taxpayer as to the width or nature of the investigation, and so the non-taxpayer entity does not need to know confidential information relating to the affairs of the taxpayer. Furthermore, a requirement that HMRC send reasons letters to all non-taxpayer entities is plainly impractical. Some tax evasion and avoidance schemes involve numerous foreign-based entities, whose contact details may not be readily available or, at any event, with whom contact may not easily be made.
  86. The non-taxpayer entity itself is not required by the third party notice to do anything. Any documents and information relating to the non-taxpayer entity delivered to HMRC by the third party can be used only by HMRC for its statutory purposes (or, in the present case, the ATO pursuant to the DTC) in connection with the collection of tax properly due and management and enforcement functions. If the documents or information support the tax liability of the taxpayer, the entity cannot complain about the confidentiality of the documents and information If the documents do not support the tax liability of the taxpayer, there is no reason to think that HMRC (or the ATO) would deploy any confidential information or documents in an improper way or for an improper purpose in excess of their powers
  87. The fact that the documents and information of, or relating to, the non-taxpayer entity may incidentally disclose an unsatisfied tax liability of some person, including the non-taxpayer entity, other than the taxpayer in relation to whose affairs the third party notice is served, is not a justifiable ground for complaint by the non-taxpayer entity. It is sufficient that the documentation and information specified in the third party notice are reasonably required for the investigation of the named taxpayer. It is the fulfilment of that condition which is monitored by the FTT.
  88. At one point in her submissions it seemed that Miss McCarthy was contending that the appellants should have been treated in the same way as third parties served with a third party notice because, she contended, the appellants could have been served with third party notices even though they were not. Even if it were true that the appellants could have been served with third party notices, I do not see how that can affect the proper interpretation of paragraphs 2 and 3 of schedule 36 as to the rights and obligations of a person who has not been served with such a notice.
  89. Parliament has balanced those extensive rights of HMRC to obtain documents and information from third parties, at the investigatory stage of checking possible tax avoidance or evasion, with a number of protections against abuse and excessive intrusion by the executive. In addition to the need to obtain approval of the FTT for the service of a third party notice (in the absence of the taxpayer's agreement), such protections include, for example, that copies may be provided unless otherwise specified (para 8 of schedule 36), a person is only required to produce a document if it is in that person's possession or power (para.18), information and documents containing information relating to the conduct of a pending tax appeal, or relating to journalistic and certain personal records, need not be produced (para.19), and privileged information is not required to be produced (para. 23). A number of other limitations are contained in Part 4 of schedule 36.
  90. In the light of what I have said about the scheme and purpose of schedule 36, and particularly the clear distinction made by Parliament between the taxpayer, the third party and the non-taxpayer entity, there is no scope on ordinary principles of construction for a purposive interpretation of schedule 36 which (1) requires, in the case of third party notices, that in every case all of those persons be told the reasons why the documents are required and that they be given a reasonable opportunity to make representations to HMRC or the FTT, and (2) precludes the FTT approving such notices unless that is done. Such an interpretation is quite simply inconsistent not merely with the literal wording of schedule 36 but also with the manifest intention of Parliament.
  91. That leaves Miss McCarthy's submission that section 3 of the HRA nevertheless requires that schedule 36 be so interpreted because there would otherwise be a breach of the appellants' Convention rights, namely their Article 6 rights read with Article 8. In her oral submissions on this point Miss McCarthy appeared to make no distinction between the 3 taxpayer appellants, on the one hand, and the remaining 21 appellants, on the other hand.
  92. There are a number of reasons why I do not accept that section 3 of the HRA enables schedule 36 to be interpreted in the way for which the appellants contend. The starting point on this issue is that, as I have already said, the appellants are not challenging schedule 36 itself, or any relevant part of it, as being incompatible with the Convention. Their case is only that, as applied to the appellants, schedule 36 was operated in a way that infringed their Convention rights. The absence of a challenge to schedule 36 itself on Convention grounds is understandable since there is nothing in the schedule itself which, in the case of a third party notice, expressly prohibits a taxpayer or third party or non-taxpayer entity from making representations to HMRC or the FTT.
  93. It is difficult to understand the legal basis for a submission that schedule 36 should be interpreted in the way for which the appellants contend pursuant to HRA section 3 merely because, in this particular case, so the appellants contend, it has been applied in an unfair manner contrary to the appellants' Convention rights. Schedule 36 has been applied in an entirely standard way in the present case in accordance with its terms.
  94. In any event, I do not accept that the appellants have shown that schedule 36 was applied unfairly and in breach of the appellants' Convention rights. All the appellants and the third parties knew of the third party notices and what was required to be produced pursuant to those notices in sufficient time to make any representations they wished to HMRC, bearing in mind that the FTT hearings took place on 23 November 2012 and 9 January 2013.
  95. Two of the taxpayer appellants were involved in the Australian litigation and so must have been fully aware at all relevant times of the background to the third party notices and the FTT hearing.
  96. On 16 May 2012 precursor letters were sent by HMRC to all the proposed recipients of third party notices, including Lubbock Fine. Miss McCarthy accepted that Lubbock Fine, as agents, would have informed all the appellants of the notices. I have described the letters and their contents in paragraphs 22 and 23 above.
  97. Of the third parties, only Lubbock Fine made representations in response to the letters, and in consequence of their representations the number of entities mentioned in the schedule to the proposed Lubbock Fine letters were reduced. Lubbock Fine made no representations about any practical difficulty in complying with the third party notices.
  98. None of the appellants made any attempt to make representations to HMRC or the FTT about the irrelevance of the requested documents and information to the tax affairs of the taxpayers or as to any confidentiality attaching to the requested documents and information. There is no reason to think that, if any such representations had been made, they would not, in accordance with the usual practice of HMRC, have been disclosed by HMRC to the FTT.
  99. A summary of reasons why the documents and information were required was sent to the three taxpayer appellants on 16 November 2012 four clear working days before the FTT hearing. Simler J summarised (at [64]) the information provided in those letters as follows: (1) that HMRC had received a request from the ATO and that, under the provisions of the DTC, HMRC was making enquiries into aspects of the taxpayer's tax affairs; (2) that third parties were to be given formal notices requiring information and documents subject to approval by the FTT; (3) that Mr Pandolfo believed that the third parties might hold information that was directly relevant to the taxpayer's affairs and in particular that the taxpayer might be liable to tax; (4) that liability to tax in the case of Derrin was in respect of buying and selling shares and interest payments and that it might be resident in Australia for tax purposes; (5) that liability to tax in the case of Indo-Suez was in respect of buying and selling shares, interest payments and underwriting fees; and (6) that liability to tax in the case of Chemical Trustee was in relation to profits derived from buying and selling shares.
  100. None of the taxpayer appellants sought to make any representations to HMRC or to the FTT in respect of those letters. Once again, there is no reason to think that, if any such representations had been made, they would not, in accordance with the usual practice of HMRC, have been disclosed by HMRC to the FTT.
  101. None of the appellants has provided any evidence that anyone at HMRC prevented them from making representations to HMRC or to the FTT.
  102. None of the appellants, the taxpayers or the third parties have sought to challenge the decision of Judge Berner that the hearings should be ex parte and in private.
  103. None of the appellants has provided any evidence that the handing to, or disclosure to, HMRC of any specific document or information required to be produced pursuant to the third party notices would breach their rights of confidentiality under Article 8.
  104. Those facts are not consistent with a breach of the appellants' Convention rights.
  105. Finally, and in any event, it is not possible to interpret paragraphs 2 and 3 of schedule 36 pursuant to section 3 of the HRA in the manner for which the appellants contend in the light of the clear intention of Parliament to distinguish between the different conditions required to be fulfilled (for FTT approval) in respect of the taxpayer, the third party and the non-taxpayer entity respectively. To interpret schedule 36 in the way for which the appellants contend would not be compatible with the statutory scheme but rather would undermine its core features.
  106. Having addressed the proper interpretation and meaning of schedule 36, particularly paragraphs 2 and 3, I turn to the next issue, which is whether the requirements of paragraph 3(3) of schedule 36, being pre-conditions of FTT approval of third party notices, were satisfied in the present case. The appellants submit, in that regard, that the condition in paragraph 3(3)(e) was not satisfied because (1) only the three taxpayer appellants received the summary of reasons why the information and documents were required whereas all 24 appellants should have been treated as taxpayers; and (2) the summary of reasons was inadequate and served with insufficient time to make representations.
  107. On the first matter, the appellants' starting point is that, in accordance with paragraph 2(1) and paragraph 58 of schedule 36, in the case of a third party notice the "taxpayer" is the person whose tax position is being checked and for which purpose the information or document is reasonably required. The appellants' contentions are that (1) whether a person is a taxpayer for the purposes of paragraph 2(1) is a question of objective fact, for the court itself to determine on the balance of probabilities and without any presumption of regularity; and (2) the first witness statement of Mr Pandolfo makes it clear that the ATO was investigating the tax residence of all 24 appellants because it was concerned that some or all of them were tax resident in Australia; and so (3) it inevitably follows that all 24 appellants were taxpayers within paragraph 2(1) and 3(3)(e) of schedule 36.
  108. Simler J rejected those and other arguments in paragraphs [48] to [54] of her judgment. I agree with her reasons for doing so. It is sufficient to mention the following points. It was for HMRC to decide who should be regarded as the taxpayer for the purposes of the third party notices served pursuant to schedule 36, that is to say the person for the checking of whose tax affairs the documents and information are required. The mere fact that the documents and information relating to non-taxpayer entities are also relevant to their tax affairs does not mean that they too were taxpayers within paragraphs 2 and 3 of schedule 36. It is clear from Mr Pandolfo's evidence that HMRC made a conscious and justifiable decision as to why only the three taxpayer appellants were to be regarded as taxpayers for the purposes of the third party notices and not the rest of the appellants. In particular, that evidence makes it clear that HMRC was largely motivated to distinguish the three from the others because they were beneficially owned by Mr Gould, who was the principal focus of the ATO enquiries, and for that reason it was the checking of their tax affairs that was the direct concern of the third party notices.
  109. In her written skeleton argument Miss McCarthy contended that, properly interpreted, the precursor letter to Lubbock Fine identified each of the entities named in the schedule to the letter as the taxpayer because the letter stated that the persons to whom the letter related "include" (as opposed to "are") Mr Gould and Mr Leaver. That argument was not repeated in Miss McCarthy's oral submissions and is plainly wrong. I agree with Simler J that it is not a fair reading of the letter, which made a plain distinction between Mr Gould and Mr Leaver, on the one hand, and the 28 corporate entities in the schedule, on the other hand.
  110. So far as concerns their contention that the summary of reasons in the letters of 16 November 2012 to the three taxpayer appellants explaining why HMRC required the information and documents was so inadequate as not to comply with paragraph 3(3)(e) of schedule 36, the appellants advance a general criticism and a particular one. The general criticism is that HMRC did not set out in sufficient detail the reasons as to why the ATO required the documents. Miss McCarthy relied particularly on Hutchinson.
  111. In that case HMRC conducted an investigation into the activities of Mr Hutchinson and two companies, of which he was the controlling shareholder and a director. They carried on business in the time-share industry, acting as "stakeholder", accepting payments from customers in their role as trustee completion agents and ensuring that the purchase price was paid and distributed to the relevant persons, including the developers and marketers. Pursuant to section 20 of the TMA, HMRC requested the companies, as taxpayers, to provide records of, among other things, their clients' bank accounts. The companies' representative expressed the view in correspondence that the request was unlawful because the clients' accounts held assets for the customer beneficiaries and not the companies. The tax inspector explained in correspondence his reasons for wishing to see the client accounts. Neither the precursor notices nor the section 20 notices, which were issued with the consent of the commissioner, addressed the issue of whether the client accounts were relevant to the tax liability of the companies. On judicial review of the notices Carnwath J held, among other things, that the notices were defective because they failed to deal with the issue of the relevance of the client accounts. He said that, even though the inspector had provided a perfectly sensible explanation of the need for the client accounts in earlier correspondence, the statute entitled the applicant to a statement of the reasons at the time the notices were issued.
  112. In reliance on that authority, Miss McCarthy said that it was irrelevant that two of the taxpayer appellants (Chemical Trustee and Derrin) had been parties to the Australian proceedings and knew all about the background to the tax investigation by the ATO and HMRC.
  113. I do not agree that, in the light of Hutchinson or for any other reason, the summary of reasons in the notices of 16 November 2012 was inadequate. I have already explained the important but limited purpose of the requirement to serve a summary of reasons pursuant to paragraph 3(3)(e) of schedule 36. What is a sufficient summary in any particular case will plainly depend on the particular facts. The information contained in the letters of 16 November 2012 is set out in paragraph 33 above. Among other things, it referred to the request from the ATO and it specified the particular activities carried on by each of the three taxpayer appellants giving rise to potential tax liability. Unlike the situation in Hutchinson the taxpayer appellants have not identified any specific information which was wrongly omitted from the notices. Each of the 16 November 2012 letters invited the recipient, once it had read the letter, to call Mr Pandolfo on the telephone number at the head of the letter. None of the recipients did so.
  114. In addition to their general complaint as to adequacy of the summary of reasons in the letters of 16 November 2012, the appellants have advanced a particular criticism that the letters failed to identify which documents were being sought. I do not agree with that criticism. Identification of specific documents is not an express requirement of paragraph 3(3)(e) of schedule 36 and, for the reasons I have given in paragraph 68 above, it cannot be implicit. Furthermore, as Simler J observed (at [65]) each of the taxpayer appellants received copies of the relevant third party notices when they were served on 14 January 2013, and those notices set out the documents required and from whom they were required.
  115. The next criticism of the letters of 16 November 2012 is that they were delivered too late to enable the recipients to make representations. I do not agree. As I have already said, the evidence is that they were sent to the three taxpayer appellants, all of whom are UK companies, at their London addresses four clear working days before the FTT hearing. There was no evidence that they were not received. As I have also said, it was conceded that, following service of the precursor letters dated 16 May 2012, the scheduled entities would have received notification from Lubbock Fine that HMRC was seeking production of documents and information relating to them.
  116. The taxpayer appellants complain that their legal representatives did not receive copies of the letters of 16 November 2012 until the day before the first FTT hearing. There was, however, no obligation on HMRC to send copies to the legal representatives and, in any event, for the reasons I have mentioned, neither the taxpayer appellants nor their representatives can have been caught by surprise.
  117. For all those reasons, I consider that the requirements of paragraphs 2 and 3 of schedule 36 were properly satisfied in the case of the third party notices in issue in these proceedings. I also consider that those provisions were not applied in the present case in a way which infringed the appellants' Convention rights.
  118. The final issue is whether, as contended before Simler J and on this appeal, the appellants' rights under Article 6 in conjunction with Article 8 were infringed because judicial review does not allow the appellants access to a court able to determine questions of fact, that is to say, in the present context, whether the documents which are the subject of the third party notices are "reasonably required … for the purposes of checking the tax position of another person" (within paragraph 2(1) of schedule 36).
  119. In making that submission, the appellants have relied heavily on Ravon. Miss McCarthy also relied on the decision of the ECtHR in Tsfayo v United Kingdom (2009) 48 EHRR 18. In that case, the applicant had failed to apply to the local authority in time to renew her housing and council tax benefit. The local authority refused to grant her application for backdated benefit on the ground that she had failed to show "good cause" why she had not claimed the benefits earlier. The local authority's Housing Benefit and Council Tax Benefit Review Board ("HBRB"), which comprised councillors from the local authority and was advised by a barrister from the local authority's legal department, rejected her appeal because it rejected her evidence that she had not received the relevant correspondence concerning the renewal of claims. Her application for judicial review was dismissed on the ground that the Convention had not yet been incorporated into English law and the HBRB's decision was neither unreasonable nor irrational. She applied to the ECtHR, which held that there had been a violation of Article 6(1).
  120. It was accepted by the UK government that Article 6 was engaged and that the HBRB was not an independent and impartial tribunal since it included elected councillors of the same local authority that would be paying the benefit. The court accepted that, even where an adjudicatory body determining disputes over "civil rights and obligations" does not comply with Article 6(1) in some respects, no violation can be found if the proceedings are "subject to subsequent control by a judicial body that has full jurisdiction and does provide the guarantees of Article 6(1)". The court rejected the UK government's argument that the High Court on judicial review satisfied that requirement. The court did so because the HBRB was deciding a simple question of fact, namely whether there was "good cause" for the applicant's delay in making a claim, as to which they rejected her evidence as unconvincing and lacking credibility; but the High Court on judicial review did not have jurisdiction to rehear the evidence or substitute its own views as to the applicant's credibility. The court said (at [48]) that in those circumstances there was never the possibility that the central issue would be determined by a tribunal that was independent of one of the parties to the dispute.
  121. I have already explained why paragraph 3 of schedule 36 cannot be interpreted in the way for which the appellants contend, and why the statutory pre-conditions for the FTT's approval of the third party notices were satisfied in the present case. I have also explained in paragraphs 85 to 95 above why schedule 36 was not applied, on the facts of the present case, in a way that infringed the appellants' Article 8 or Article 6 rights, irrespective of judicial review.
  122. In view of the appellants' express disclaimer of any argument that schedule 36 is incompatible with the Convention and the fact that schedule 36 was applied in the present case in a perfectly standard way in accordance with its terms, it is difficult to see what scope is left for an argument that the appellants' rights under Article 6 combined with Article 8 have been infringed. That is so, whether or not HMRC technically has a defence under section 6(2)(a) of the HRA (where a public authority could not have acted differently because of the terms of primary legislation).
  123. In any event, I cannot see any good reason why the judicial monitoring scheme in schedule 36 combined with judicial review should not be sufficient to satisfy the appellants' Article 6 rights combined with Article 8. For the reasons I have given in paragraphs 67, 68 and 80 above, Parliament has laid down a scheme in schedule 36 which serves a legitimate economic public purpose, and which balances in a proportionate way in accordance with Article 8(2) the interests of the wider community and private interests. Moreover, on the facts of the present case, the taxpayers, the third parties and the 21 non-taxpayer appellants all had the opportunity, even though not an express right (except in the case of third parties), to make representations indirectly or directly to the FTT. In all those respects, neither Ravon nor Tsayfo bears any relevant comparison to the present case.
  124. Miss McCarthy expressly disclaimed any suggestion that judicial monitoring under schedule 36 is mere "rubber stamping" as seems to have been the view of the ECtHR about the French judicial process in Ravon. The combination of judicial monitoring and judicial review provides, in the context of schedule 36, proportionate access for the adjudication of any claim that the Article 8 rights of a non-taxpayer entity have been infringed: comp. the decisions of the ECtHR in Stanev v Bulgaria (2012) 55 EHRR 22 (esp. at paras. 229-248) and Ali v United Kingdom (Application No. 40378/10) [2015] HLR 46 (esp. at paras. 75-85), neither of which were cited argument.  In Stanev v Bulgaria the ECtHR said as follows about the proportionality of a right of access to a court or tribunal consistent with Article 6: …"
  125. "[229] The Court reiterates that art.6(1) secures to everyone the right to have any claim relating to his or her civil rights and obligations brought before a court or tribunal. This "right to a court", of which the right of access is an aspect, may be relied on by anyone who considers on arguable grounds that an interference with the exercise of his or her civil rights is unlawful and complains that no possibility was afforded to submit that claim to a court meeting the requirements of art.6(1) .
    [230] The right of access to the courts is not absolute but may be subject to limitations; these are permitted by implication since the right of access:
    "[B]y its very nature calls for regulation by the state, regulation which may vary in time and in place according to the needs and resources of the community and of individuals." [See Ashingdane v United Kingdom (1985) 7 EHRR 528 at [57]]
    In laying down regulation [on the right of access], the contracting states enjoy a certain margin of appreciation. Whilst the final decision as to observance of the Convention's requirements rests with the Court, it is no part of the Court's function to substitute for the assessment of the national authorities any other assessment of what might be the best policy in this field. Nonetheless, the limitations applied must not restrict the access left to the individual in such a way or to such an extent that the very essence of the right is impaired. Furthermore, a limitation will not be compatible with art.6(1) if it does not pursue a legitimate aim and if there is not a reasonable relationship of proportionality between the means employed and the aim sought to be achieved."
  126. Judicial review enables an independent and impartial tribunal to review compliance with the statutory pre-conditions for judicial approval of third party notices under schedule 36, both in relation to law and fact.
  127. That is disputed by the appellants on the ground that the only written judgment released by Judge Berner did not explain why he was satisfied that Mr Pandolfo reasonably required the appellants' documents for the purpose of checking the tax position of the taxpayers. They say that the combination of the absence of such an explanation, the ex parte nature of the hearing before Judge Berner and the presumption of regularity, which according to T.C. Coombs applies to the decision of Judge Berner, means that neither the appellants nor the court on judicial review have been able to investigate whether the central requirement in paragraphs 1(1) and 2(1) of schedule 36 has been satisfied. Indeed, at one point in her submissions Miss McCarthy appeared to be suggesting that the procedure is unfair if neither the taxpayer, nor the third party nor the non-taxpayer entities are able to challenge whether tax is due from the taxpayer.
  128. Those submissions, however, are simply an attack on the whole model of a judicial monitoring scheme rather than one based on inter partes adversarial litigation. The judicial monitoring model was approved by the House of Lords in both T.C. Coombs and Morgan Grenfell, and there has been no decision of the ECtHR, including Ravon, which has held that such a scheme is inherently inconsistent with the Convention. Miss McCarthy said that it was no part of the appellants' case that there was no opportunity for the appellants to participate in an oral hearing. She also said that the appellants do not challenge the decision to hear the application ex parte. Those concessions disguise, but do not detract from, the fact that what the appellants advance is something more akin to adversarial litigation than a judicial monitoring model in which applications are normally made ex parte and heard in private, with very limited rights of participation by those to whom information notices under schedule 36 are sent or who are affected by them.
  129. Judge Berner, as is usual in these cases, ordered that the proceedings be heard in private. There has never been an attack on that case management decision. Restrictions on the release and the content of any published judgment inevitably followed.
  130. In assessing, for Article 6 purposes, the adequacy of the monitoring model in schedule 36 combined with judicial review, it is to be borne in mind that in the present case, as is normally to be expected, the witness statements on behalf of HMRC on the judicial review set out in considerable detail the background to the third party notices and the various steps taken in relation to them, leading up to the hearing before the FTT, and exhibited copies of the application letter to the FTT (which set out the factual, procedural and legal basis for the application) and HMRC's note of the hearing on 23 November 2012. Further, as Simler J observed (at [78]), the appellants have seen the third party notices to Lubbock Fine and must know which documents are in the possession of Lubbock Fine (and others) and how and in what way they are admittedly connected with the taxpayers (many of them sharing the same addresses as the taxpayers under investigation). The reality is that the appellants are therefore well placed to know what factual basis there is, if any, for opposing the third party notices but none has ever been put forward by them.
  131. Finally, if the issue is simply whether the schedule 36 powers have been applied in a proportionate way, then judicial review is a perfectly apt process for carrying out that judicial assessment.
  132. Miss McCarthy made several references to R (Smith) v North Eastern Derbyshire Primary Care Trust [2006] EWCA Civ 1291, [2006] 1 WLR 315, in the course of her submissions but I do not consider it has any relevance.
  133. Conclusion

  134. For the above reasons I would dismiss this appeal.
  135. Lord Justice Davis:

  136. I agree.
  137. Lord Justice Vos:

  138. I also agree.


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