NOTICE FOR PRODUCTION – whether the Respondents could reasonably require the provision of specified documents and information for the purposes of determining whether the returns were inaccurate or incomplete – the documents required included the private accounts of the Appellant which had been used to bank rental payments and the proceeds of share transactions – significant gaps in the Appellant’s tax returns despite the additional information discovered by the Respondents and confirmed by the Appellants – satisfied that the Inspector reasonably required the specified documents to complete the enquiries into Appellant’s tax returns – the requirement was limited to two years set of accounts – the requirement did not contravene Article 8 of the Human Rights Convention – Appeal Dismissed – TMA 1970 s 19A.

THE SPECIAL COMMISSIONERS

	MR MOHAMMED IRSHAD AFSAR	Appellant

-	and –

	THE COMMISSIONERS FOR HER MAJESTY’S REVENUE & CUSTOMS 	 Respondents

				Special Commissioner:  MICHAEL TILDESLEY OBE

Sitting in public in London on 13 June 2006

Mahjam Alam assisted by Maggie Lee both of Philip Shaw & Co, Chartered Accountants for the Appellant 

June Kennerley, Her Majesty’s Inspector of Taxes for the Respondents

© CROWN COPYRIGHT 2006

DECISION

The Appeal
1.	The Appellant was appealing against the requirement to produce documents under two Section 19A Notices issued by Adam Clarke.  HM Inspector of Taxes on 23 August 2005.

2.	The two Notices specified the same documents but for different tax years, namely 2000/01 and 2001/02.

3.	The specified documents were

“For the year ended 5 April 2001 (5 April 2002), statements, cheque book stubs, paying in slips and passbooks all for accounts you had the power to operate, whether in the UK or elsewhere, whether in your name or in the name of another person or organisation, including banking accounts, savings accounts, credit card accounts, loan accounts, deposit receipts and safe deposit boxes, Building Society and Co-operative Society accounts”.

4.	The Appellant was required to produce the documents within 30 days from receipt of the Notices.

The Grounds of the Appeal
5.	The Appellant considered that the requirement under the two Notices issued on 23 August 2005 was general not specific, excessive, intrusive and irrelevant.  Further the Respondents already had sufficient information to confirm the accuracy of the returns.  Thus the documents specified in the Notices were not reasonably required for the purpose of determining whether the Appellant’s 2000/01 and 2001/02 tax returns were incorrect or incomplete.

6.	The Appellant also contended that the requirements for production breached his human rights under Article 8, Schedule 1 of the Human Rights Act 1998.

The Legislation
7.	Section 19A of the Taxes Management Act 1970 (hereinafter called the 19700 Act) enables an HM Inspector of Taxes who is enquiring into a taxpayer’s self assessment return to issue a notice requiring the production of such documents as are in the taxpayer’s possession or power and as the Inspector may reasonably require for the purpose of determining whether the return is incorrect or incomplete.

8.	Under section 19(6) of the 1970 Act the taxpayer is given the right to Appeal to the Commissioners against a section 19A Notice.  The powers of the Commissioners are either to confirm the Notice if it appears to them that the production of the documents was reasonably required for the purpose of determining the accuracy of the return or to set aside the notice if the production was not reasonably required.

9.	Under section 19(11) of the 1970 Act the Commissioners’ determination under section 19(6) shall be final and conclusive.

10.	Under Article 8, Schedule 1 of the Human Rights Act 1998 everyone has the right to respect for his private and family life, his home and his correspondence.  The right under Article 8, however, is a qualified right which means that the state may interfere with this right provided that such interference is in accordance with the law, pursues a legitimate aim and is no more than necessary in a democratic society.

The Issues
11.	The two issues in dispute are whether:

(1)	The production of the specified documents was reasonably required for the purposes of determining whether the Appellant’s 2000/01 and 2001/02 tax returns were incorrect or incomplete.

(2)	The requirement to produce specified document infringed the Appellant’s human rights.

Authorities
12.	I was referred to the following authorities and Special Commissioners’ decisions:

Jonas v Bamford [1973] 51 TC 1
Johnson v Scott [1978] 52 TC 383
Regina v Commissioners of Inland Revenue ex parte Ulster Bank Ltd [1997]
69 TC 211
Mother v Inspector of Taxes [1999] SC 279
Accountant v HMIT [2000] SpC 258
G H Guyer v David Walton (HMIT) [2001] SpC 274
Guest House Proprietor v B G Kendal HMIT [2004] SpC 454
Murat v Inland Revenue [2004] EWHC 3123 (Admin)
Taylor v Bratherton [2004] SpC 448
Mehmat Ylimaz Hilmi Murat v Steven Ornoch HMIT [2005] EWCA Civ 406
Paul Low v HMRC [2005] SpC 510
Financial Institution [2005] SpC 517

Evidence
13.	I heard evidence from Adam Clarke, HM Inspector of Taxes, who issued the section 19A Notices.

14.	I was supplied with bundles of documents and authorities.  Each of the parties submitted skeleton arguments.

The Facts
15.	The Appellant had been an Imam with the Muslim Association of Bradford since April 1996 for which he received a salary of £7,800 for tax year 2001/02.  From November 2000 he was also employed as a para-legal with Khan solicitors, receiving an annual salary of £534 for tax year 2001/02/

16.	In January 2002 the Appellant met with Sue Smith of the Respondents to sort out his self assessment returns.  Ms Smith explained to the Appellant that he was brought within the self assessment scheme because he owned a number of properties. Ms Smith pointed out to the Appellant that he had a capital gains tax liability on at least two of the properties and that it might be worth him seeking professional advice.

17.	On 21 March 2003 Mr Kirkaldy, HM Inspector of Taxes, opened an enquiry into the Appellant’s tax returns for six years ended 5 April 2002.  Mr Kirkaldy required information about travel and subsistence claims and the various properties owned by the Appellant.

18.	On 23 April 2003 the Appellant provided a response setting out the details of his travel and subsistence claims.  He also stated that no properties were bought or sold except in 1998/99 and 1999/2000.  He received rent from the letting of 6 Melton Terrace in all the tax years under enquiry except 1997/98.  The Appellant provided no information about other rents received.

19.	On 26 August 2003 Mr Kirkaldy met with the Appellant to further his enquiries.  Mr Kirkaldy identified during the interview that the Appellant owned or received rent from six properties during the six years in question.  The Appellant volunteered that he owned two other properties.  Mr Kirkaldy queried with the Appellant about how he funded the purchases of these properties.  The Appellant replied that he won about £30,000 in a Koran reading competition in Saudi Arabia.  Mr Kirkaldy asked the Appellant if he had sold any shares.  The Appellant stated that he had no evidence that he sold any shares but he would give Mr Kirkaldy the name of his stockbroker.  The Appellant mentioned that he had bank statements showing the payment of a discretionary educational grant.  Mr Kirkaldy requested sight of the Appellant’s bank statements because of his concerns about the expense receipts and the accuracy of the Appellant’s tax returns.

20.	On 10 September 2003 Mr Kirkaldy followed up the 26 August meeting with a letter requesting information about the Appellant’s bank statements, details of share purchases, invoices for the repairs carried out on the properties and a completed statement of assets and liabilities.

21.	Further correspondence ensued between the parties which included

(1)	Section 19A Notices requiring production of certain documents issued on 7 January 2004 and 2 March 2004.

(2)	A Data Protection Act request from the Appellant.

(3)	Appellant’s letter advising that he had instructed Phillip Shaw & Co, Chartered Accountants to deal with the enquiries into his tax returns.

22.	The Appellant appealed against the section 19A Notice dated 7 January 2004 which was confirmed by the General Commissioners on 3 September 2004 in respect of the first requirement dealing with the sale of shares. The second requirement regarding the statement of assets and liabilities was adjourned.

23.	Mr Clarke who had taken over the Appellant’s file on the retirement of Mr Kirkaldy withdrew the section 19A Notice issued on 2 March 2004 requiring production of bank statements.  In its place Mr Clarke sent a letter dated 28 May 2004 requesting information about accounts and documentation to support other income.  On 19 July 2004 the Appellant’s representative responded to the request by stating that the Appellant held no business accounts. He also provided documentation relating to the Appellant’s other income.

24.	On 28 July 2004 Mr Clarke set out his concerns in a letter to the Appellant’s representative about the Appellant’s tax returns.  Mr Clarke indicated that he secured a translation of the certificate from the Koran reading competition which did not mention the prize of £30,000.  In the same letter he requested a range of information and enclosed the outcomes of a means review.

25.	Mr Clarke performed a means review based o the Appellant’s declared income for the six tax years under enquiry which showed that the Appellant’s expenditure exceeded the declared income. The Appellant’s representative sought to cast doubt on the means review arguing that it did not include the Appellant’s student grant of  £3,000.

26.	Mr Clarke did not receive a full response to his request dated 28 July 2004.  On 20 September 2004 Mr Clarke issued section 19A Notices for each of the six tax years under enquiry requiring production of 43 sets of information within 30 days from receipt of the Notice.  On 15 October 2004 the Appellant’s representative lodged a Notice of Appeal against the section 19A Notices.

27.	On 8 November 2004 Mr Clarke responded to the Appellant’s correspondence dated 15 October 2004.  Mr Clarke intimated that he had reviewed the case as a whole and wished to progress it to a conclusion as soon as possible. In this respect he was limiting his requests for information to statements, cheque book stubs, paying-in slips and passbooks for all accounts that the Appellant had power to operate, whether in the UK or elsewhere. Mr Clarke also enclosed a stencil for the Appellant to complete with details of his accounts. Mr Clarke explained that he had set aside the section 19A Notices issued on 20 September 2004 and that he intended to approach third parties for information.

28.	On 8 December 2004 the Appellant’s representative replied restating that the Appellant held no business bank accounts. He enclosed details of the discretionary educational account which indicated that the Appellant had received a discretionary award of £3,000 per annum from Bradford Local Education Authority for the period 1989 to 1994. The Appellant also provided two letters. The first showed that he received a conditional award of a grant for 1995/96. The second confirmed the transfer of the Appellant’s studies to the second year of a three year BA Arabic and Islamic Studies for which the grant was available until July 1998.

29.	Mr Clarke pointed out in a letter of 13 December 2004 that he requested details of all the Appellant’s accounts not just his business accounts. On 22 December 2004 Mr Clarke issued section 19A Notices requiring production of information regarding his accounts for the six tax years under enquiry.  On the 19 January 2005 the Appellant appealed against the section 19A Notices dated 22 December 2004.  On the 20 January 2005 Mr Clarke opened an enquiry into the Appellant’s 2002/03 tax return.

30.	On 10 May 2005 Mr Clarke withdrew the section 19A Notices but indicated that the Respondents may exercise their powers under section 20 of the 1970 Act.

31.	Mr Clarke met with the Appellant’s representative on 14 July 2005 to explain where he was with his enquiries, share his concerns about the Appellant’s tax returns and suggest ways forward to settle the matter.

32.	Mr Clarke told the representative that the Appellant’s employers confirmed that they reimbursed travel and subsistence incurred by their employees which contradicted the Appellant’s claim that they did not reimburse him. Further Mr Clarke disclosed details of his enquiries with two stockbrokers TD Waterhouse and Barclays which showed that the Appellant had been involved in a significant number of share transactions. The enquiries with the stockbrokers also revealed that the Appellant held an account with First Direct and that Barclays had made payments to the Appellant by cheque.  Mr Clarke then shared information on the various properties owned by the Appellant including details of rents received and housing benefit payments made in respect of those properties.

33.	Mr Clarke identified his concerns arising from the information disclosed to the Appellant’s representative, namely:

(1)	The Appellant’s means to purchase his property portfolio.
(2)	The Appellant’s means to purchase shares.
(3)	The Appellant had not declared in full his property income.
(4)	The Appellant had not declared capital gains arising from the property and share sales.

34.	Mr Clarke told the representative that he would like a meeting with the Appellant, and in the meantime requested bank statements for 2000/01 and 2001/02.  He advised the representative that it appeared likely that the Appellant would be liable to pay additional tax and tax geared penalties. He requested the representative to prepare capital gains tax computations for the property and share transactions disclosed in the meeting. The Appellant’s representative indicated that they would be appealing against any requests for bank statements to the Special Commissioners quoting the Human Rights Act.

35.	On the 23 August 2005 Mr Clarke issued the two section 19A Notices which were the subject of the Appeal. The Appellant formally appealed against those Notices on 17 September 2005. On 2 May 2006 the Appellant’s representative provided Mr Clarke with a capital gains tax computation, rental income schedule land property schedule.

36.	The Appellant’s tax returns for 2000/01 and 2001/02 revealed that the Appellant declared employment income from his positions with the Muslim Association of Bradford and Khan Solicitors and rental income from Melton Terrace.  The Appellant did not declare capital gains for those two tax years.

37.	Mr Clarke in his evidence before me acknowledged that his earlier section 19A Notices covering six years of tax returns were onerous, which was why he withdrew them. He considered that the Notices issued on 23 August 2005 were reasonable. They related to just two years of the enquiry and were aimed specifically at the Appellant’s bank and building society accounts. Depending upon the outcome of the Appeal, Mr Clarke accepted that it may be necessary at some future date to examine the bank accounts for the periods covered by the other tax returns.

38.	Mr Clarke was concerned that the Appellant had not been open with the Respondents. The Appellant supplied rental information for just one of his properties.  The Appellant had only supplied information about the other properties and the shares after being told of the information held by the Respondents.

39.	Mr Clarke prepared the means review which excluded personal living expenses and water rates to provide an indication of whether the Appellant’s income and expenditure tallied, which it did not with basic expenditure exceeding his declared means. He also prepared a draft capital statement which demonstrated a substantial deficit for tax years ending 2001 and 2002 if all properties were included in the statement. If, however, the value of the properties held on “trust” were excluded from the calculation, the end result was a small positive balance in favour of the Appellant. Mr Clarke, however, had not been supplied with documentary evidence to support the Appellant’s assertions about the trust status of specific properties.

40.	The Appellant’s representatives queried the relevance of the capital statement, arguing that combining two years of capital transactions with income distorted the true picture about the income available to the Appellant to live on. Further the statement dealt with capital movements which had no relevance to the accuracy of the returns unless capital gains were realised from those movements.

41.	Mr Clark was also not satisfied with the blank denials of the Appellant regarding ownership of properties at 13 Greaves Street, 18 Mannville Terrace and 21 All Saints Road.

42.	Mr Clarke pointed out errors with the capital gains tax computations on share sales prepared by the Appellant’s representative. He identified that shares for Stagecoach Group and Total Systems had not been included in the computations.

43.	Mr Clarke stated that the information returns obtained from the Appellant’s stockbrokers only provided a snapshot of his shareholdings at a point in time.  The returns did not provide a comprehensive account of the Appellant’s shareholdings and dealings during the period under enquiry.  The return from Barclays stockbrokers only went back to January 2001 despite the account being opened on 25 February 1998.

44.	Mr Clarke’s concerns about the Appellant’s tax affairs had not been resolved by the production of schedules of property and shareholdings and capital gains tax computations by the Appellant’s representative, which had been based on information supplied by Mr Clarke.

45.	Mr Clarke considered that the bank statements, cheque book stubs, paying in slips and passbooks required in the section 19A Notices would provide details of rent received from properties, dividends earned from shares, property purchases and sales, and share transactions.

Findings of Fact
46.	The Appellant’s representatives raised in their skeleton argument that I should exclude from the Appeal the information, documentation and the Respondents’ arguments prior to and subsequent to 2000/01 and 2001/02 on the grounds that I was only considering these two tax years for the purpose of this Appeal.  At the hearing it appeared that the Appellant’s representative was not pursuing his contention.  However, for the avoidance of doubt, I hold that his contention has no substance.  Under Regulation 17(6) of the Special Commissioners (Jurisdiction and Procedure) Regulations 1994 I may receive evidence of any fact which appears to me to be relevant to the subject matter of the proceedings.  I consider that the whole of the Appellant’s dealings with the Respondents are relevant for determining whether the issue of the section 19A Notices dated 23 August 2005 should be confirmed or not.

47.	I find the following facts:

(1)	The Appellant’s tax returns submitted for 2000/01 and 2001/02 were incomplete and inaccurate.  The Appellant’s representative’s computations of 2 May 2006 confirmed the inadequacies of the returns in respect of rental income and capital gains.

(2)	I conclude from the Appellant’s dealings with the Respondents that he has not been forthcoming with them about his shares transactions, property dealings and other income. His explanation about the £30,000 prize for the Koran reading competition was not supported by the contents of the certificate he produced in aid of his explanation. The Appellant has only supplied information when the Respondents have uncovered matters from their enquiries with third parties.

(3)	The Appellant has not complied with his legal duty to make a full declaration of his income and chargeable gains.

(4)	I attach weight to the outcomes of the means review and capital statement performed by Mr Clarke insofar as they indicate that the Appellant has not disclosed his sources of income in their entirety.  I consider the submissions of the Appellant’s representative about the means review and the capital statement misplaced.  First the Appellant produced no documentary evidence to show that he received a grant of £3,000 for the tax years under enquiry.  Second the Respondents were relying on the draft capital statement and the means review to confirm their concerns about undisclosed sources of income.  They were not relying on them to establish the correct amount of income received by the Appellant.

(5)	The Respondents have not been able to build a complete picture of the Appellants’ sources of income and capital gains from the third party disclosures.  For example the return from Barclays Stockbrokers did not include the transactions from April 2000 to January 2001.

(6)	The “additional” information supplied by the Appellant’s representative on 2 May 2006 was not derived from fresh disclosures from the Appellant. The information was compiled from the results of the Respondents’ investigations into the Appellant’s tax returns.

(7)	The Appellant held at least one bank account if not two.  The Appellant told Mr Kirkcaldy that he paid the rent from Melton Terrace into a bank account.  TD Waterhouse, stockbrokers, transferred monies to the Appellant’s bank account with First Direct.

(8)	The Respondents have been patient with the Appellant.  They have given him every opportunity to supply voluntarily details of his bank accounts.

(9)	Mr Clarke withdrew a series of section 19A Notices because he considered them onerous for the Appellant.  The Notices issued on 23 August 2003 were restricted to information about the Applicant’s accounts for just two of the seven years¹ under enquiry.

Reasons for My Decision
Section 19A Requirements
48.	The Appellant’s challenged the legality of the requirements to produce documents under the section 19A Notices on the grounds that the requirement was general not specific, excessive, intrusive and irrelevant, and that the Respondents already have sufficient information to confirm the accuracy of the returns.  My duty, however, is to consider the legality of the Notices against the provisions of section 19A of the 1970 Act.  I will, therefore, evaluate the Appellant’s challenge within the context of the wording of section 19A(2) which provides that

“(2)	For the purpose of enquiring into the return the officer may at the same or any subsequent time by notice in writing require the taxpayer, within such time (which shall not be less than 30 days) as shall be specified in the notice.

__________________

¹ The Respondents’ skeleton argument mentioned eight years under enquiry.  In the bundle I could only find reference to one additional enquiry namely for 2002/03.

(a)	to produce to the officer such documents as are in the taxpayer’s possession or power and as the officer may reasonably require for the purpose of determining whether and, if so, the extent to which the return is incorrect or incomplete.”

49.	The first condition under section 19A which has to be satisfied is that the Notice can only be issued if the Respondents are conducting an enquiry under section 9A(1) or section 12AC(1) into the taxpayer’s returns.  On 21 March 2003 the Respondents opened an enquiry into the Appellant’s tax returns for the six years ended 5 April 2002 which was still ongoing at 23 August 2005.  Thus I am satisfied that the first condition has been met.

50.	The second condition under section 19A is the production of such documents which are in the taxpayer’s possession or power.  Mr Clarke in his Notices of 23 August 2005 required the Appellant to produce the following:

“For the years ended 5 April 2001 and 5 April 2002, statements, cheque book stubs, paying in slips and passbooks all for accounts you had the power to operate, whether in the UK or elsewhere, whether in your name or in the name of another person or organisation, including banking accounts, savings accounts, credit card accounts, loan accounts, deposit receipts and safe deposit boxes, Building Society and co-operative Society accounts”.

51.	Previous Special Commissioners’ decisions, Mother v Inspector of Taxes  STC [1999] (SCD) 279 and Accountant v HMIT [2000] SpC 258 at paragraph 38 confirmed that an inspector has authority under section 19A enabling him to request bank paying-in books and cheque book stubs within the taxpayer’s possession or power.

52.	The Court of Appeal in Regina v Commissioners of Inland Revenue ex parte Ulster Bank Ltd [1997] 69 TC 211 considered the legal requirements of a section 20(3) Notice to a third party, in particular whether the Notice was confined to documents known to exist, Morritt LJ at 225C stated that

“In my view, it cannot have been the intention of parliament, in those circumstances, to restrict the description permissible in a notice under subs (3) or (8A) to one which excludes classes or categories of document or documents which are not known to exist or to be in possession or power of the recipient of the notice and which are to that extent conjectural.  Such restrictions would restrict the efficacy of the statutory power so greatly as to leave the Revenue with little more than the ability to obtain the original of a document which they have already seen.”

53.	I consider that the reasoning of Morritt LJ applies equally to section 19A Notices.  The facts that the Appellant may not have in his power or possession the documents specified and does not operate certain types of accounts named in the section 19A Notice do not invalidate the requirement to produce. The Appellant meets the requirement of production by declaring that those accounts and associated documents do not exist.

54.	The issue of the existence of the specified documents was somewhat academic in relation to this Appeal.  The facts found established that the Appellant has at least one bank account, if not two.  That being so he will have in his power or possession statements, paying in books, cheque books and passbooks for those accounts.  The terms of the section 19A Notices issued on 23 August 2005 were specific not general.  The Notices were issued to a named person.  The description of the documents clearly identified the type of document required for production.  The second condition of section 19A is, therefore, met.

55.	~The third condition under section 19A is those documents as the officer may reasonably require for the purpose of determining whether and, if so, the extent to which the return is incorrect or incomplete.  The section places emphasis upon what documents the Officer reasonably requires not what the taxpayer considers to be appropriate or relevant.

56.	Mr Clarke required the statements cheque book stubs, paying in slips and passbooks to resolve his concerns about the Appellant’s rental income, property purchases and sales, share dealings and dividends received.  He considered that the statements and passbooks would assist with the identification of additional rental income and capital accretions.  The annotations on the cheque stubs and the paying in books would supply details of the individual transactions, such as the name of the person paying rent for one of the Appellant’s properties.

57.	The Appellant’s representative argued that Mr Clarke had not demonstrated the need for bank statements. The representative was of the view that the bank statements recorded historic transactions which would not assist with the assessment of the Appellant’s tax liability.

58.	As explained earlier the criterion laid down by section 19A is what the Officer reasonably requires  not what the taxpayer deems relevant.  The facts found provided ample justification for Mr Clarke’s concerns about the Appellant’s sources of income and capital gains.  The production of the specified documents would supply relevant information to assuage his concerns.

59.	The Appellant’s representative submitted that Mr Clarke now had sufficient information to confirm the accuracy of the Appellant’s returns. The submission, however, was not supported by the facts found. The capital gains tax computations supplied by the representatives were inaccurate. The Appellant’s ownership of specific properties was unresolved because the Appellant did not produce documentary evidence to substantiate the trust ownership for some properties or that he was not the person named in the Land Registry documents. The Barclays Stockbroker’s return did not cover the period April 2000 to January 2001.  Moreover I am satisfied on the facts found that the Appellant has not fully disclosed his sources of income and capital gains for 2000/01 and 2001/02. I am, therefore, satisfied that the returns with the additional information discovered by the Respondents and confirmed by the Appellant remain incomplete and inaccurate.

60.	For the reasons set out above I hold that the documents specified in the section 19A Notices issued on 23 August 2005 were reasonably required for the purposes of determining whether the Appellant’s returns for 2000/01 and 2001/02 were incorrect or incomplete.

61.	As an aside Ms Kennerley made an interesting point that I was required to judge the reasonableness of Mr Clarke’s decision to require the production of specified documents at the time of the issue of the Notices.  Had I done so the Respondents’ case would have been stronger because I would have had to exclude from consideration the additional information supplied by the Appellant’s representative on 2 May 2006.

62.	I take a different stance from Ms Kennerley.  My powers under section 19 of the 1970 Act are either to confirm or set aside the Notice and my decision is final.  I have no explicit power to require the Officer to carry out a review of the issue of the Notice.  I consider the potential for injustice is significant if I am not entitled to take account of relevant circumstances that have arisen between the issue of the Notice and the hearing, particularly as my decision is final.

63.	I find that

(1)	The Respondents were conducting an ongoing enquiry into the Appellant’s tax returns for 2000/01 and 2001/02 under section 9A of the 1970 Act at the time when the section 19A Notices were issued on 23 August 2005.

(2)	The Notices were in writing and required production of the documents within the specified time limit of not less than 30 days.

(3)	The Notices were directed at a named individual, the Appellant.

(4)	The documents required for production were clearly identified and met the legal requirement of being in the possession or power of the Appellant.

(5)	The specified documents were reasonably required for the purposes of determining whether the Appellant’s 2000/01 and 2001/02 tax returns were inaccurate or incomplete.

64.	Thus I decide that the two Section 19A Notices issued by Adam Clarke on 23 August 2005 requiring the Appellant to produce specified documents met the provisions of section 19A of the 1970 Act.

Human Rights
65.	The Appellant’s representative contended that the requirement to produce the specified documents contravened the Appellant’s human rights, in particular Article 8, his right to respect for his private and family life, his home and his correspondence.

66.	The representative suggested that the requirement to produce all accounts was intrusive because it would involve the disclosure of the Appellant’s private bank accounts and accounts operated by the Appellant in a trustee capacity for third parties.  No evidence was given to support the statement that the Appellant operated some accounts in a trustee capacity.

67.	Previous Special Commissioners’ decisions have ruled that where the facts merit it section 19A Notices can require the production of documents relating to private bank accounts including accounts which might reveal information about other taxpayers (see Mother (1999) STC 279 and Accountant SpC 258, paragraph 51).

68.	The right under Article 8 is a qualified right which means that the state may interfere with this right provided that such interference is in accordance with the law, pursues a legitimate aim and is no more than necessary in a democratic society.

69.	Sections 9A and 19A TMA 1970 respectively provide the Respondents with the lawful authority to enquire into the Appellant’s tax return and require the provision of documents and information in connection with his tax return.  The Respondents’ powers to enquire and require production of documents pursues the legitimate aim of verifying the accuracy of self assessment tax returns for the purpose of protecting the United Kingdom’s taxation system and revenue.

70.	The Appellant acknowledged that he held no business accounts.  He informed Mr Kirkaldy that rent was paid into his bank account. His stockbrokers made payments to the Appellant’s bank account with First Direct.  The evidence demonstrated that the Appellant was using his private bank accounts for a variety of transactions, the verification of which were necessary to confirm the accuracy of the Appellant’s tax returns.

71.	The Appellant’s representative’s assertions about trustee accounts were not backed up by evidence.  There was no evidence that they even existed.  If they did exist it was incumbent upon the representative to demonstrate that the notice of requirement to produce them to only interfered with the rights of third parties but also they were not relevant to the Respondents’ enquiry into the Appellant’s tax returns.  In this respect the representative failed to discharge the evidential burden placed on the Appellant to substantiate that production of the documents relating to the “trustee” accounts constituted an unjustifiable interference with the human rights of the Appellant and third parties.

72,	The Appellant’s representative cited the Special Commissioner decision in Taylor v Bratherton [2004] SpC 448 as authority for setting aside a section 19A Notice on the ground that a requirement to divulge details of the taxpayer’s personal expenditure was intrusive.  The facts of Taylor were different from the facts in this case.  In Taylor, the Inspector admitted that the documents relating to the taxpayer’s expenditure:

“had been requested principally in case the documents relating to income did not provide sufficient and reliable evidence of the taxpayer’s income and allowable expenditure”.

73.	The Special Commissioner decided.

“that the Inspector’s request was intrusive and that the taxpayer should not be required to divulge details of his personal expenditure if that could be avoided … If the inspector is satisfied with the documentation relating to his income and deductible expenditure which the taxpayer has provided or provides following this decision, the matter need go no further.  If he is not so satisfied, I grant him permission to restore the Appeal for further argument”.

74.	In Taylor, the Special Commissioner decided in effect that the production of the personal expenditure documents was unnecessary because the Inspector admitted that he should be able to complete his enquiries from the information provided in the income documents.  If that did not prove to be so, the Special Commissioner was prepared to hear further argument.

75.	In this Appeal Mr Clarke denied that he had sufficient information to complete his enquiries.  The evidence indicated that the documents required by Mr Clarke would disclose details of the Appellant’s taxable income which may include undeclared sources of income. Mr Clarke was not requiring the documents to corroborate information already in his possession. The fact that the documents requested may contain personal information not relevant to the enquiries into the Appellant’s tax returns did not prevent their production under section 19A. Whether the requirement to produce such documents was lawful would depend upon an evaluation of the competing rights of the Appellant’s respect for his private life with the public interest in the prompt, fair and complete collection of public revenue.

76.	The Appellant’s representative submitted that the requirements for production was excessive which related to the third aspect of the qualification to Article 8, namely, no more than necessary in a democratic society.  Essentially, the submission was about whether the requirements for production in the 23 August 2005 Notices were proportionate.

77.	The representative’s contention on excessiveness appeared to derive from his submissions about the Respondents already having sufficient information to complete their enquiries.  As stated in paragraph 59 I am satisfied that the Appellant’s 2000/01 and 2001/02 tax returns remained incomplete and inaccurate even with the additional information discovered by the Respondents and confirmed by the Appellant.

78.	Mr Clarke gave evidence that he carefully considered the issue of proportionality in his decision making process for the issue of the section 19A Notices.  He withdrew previous section 19A Notices because in his opinion they were onerous.  He confined the requirements for production in the 23 August 2005 Notices to documents relating to the accounts operated by the Appellant and restricted the period to two out of the seven tax years under enquiry.  Mr Clarke indicated that the two years chosen would cover the gap in the stockbrokers’ returns and address his concerns highlighted in the draft capital statements.

79.	Ms Kennerley in her skeleton argument explored various aspects of excessiveness.  She pointed out that the Appellant’s representative in his skeleton argument made a bald statement that the Notices were excessive. Ms Kennerley contended that the requirement to produce bank statements, pass books, paying in slips and cheque books was not onerous upon the Appellant. He did not have to search through his records to find out what accounts he held. The costs of providing the documents associated with the held accounts were minimal. The Appellant either had them in his possession or could request them from his bank or building society.

80.	I am satisfied that the requirements for production in the 23 August 2005 Notices were proportionate. The requirements dealt with specific documents which could be easily identified by the Appellant. The documents wee either in the Appellant’s possession or could be obtained without considerable difficulty from the Appellant’s bank and or building society. The requirements were time limited to two tax years. Mr Clarke’s selection of 2000/01 and 2001/02 was based on rational grounds, directed at resolving his concerns with the inadequacy of the Appellant’s tax returns.

81.	The Appellant’s representative’s final submission on human rights concerned Article 1 of the First Protocol: the right to property.  Article 1 deals with the persons right to peaceful enjoyment of his possessions.  No persons shall be deprived of their possessions except in the public interest and in accordance with the law.

82.	The representative did not explain how this right was engaged by the issue of the section 19A Notices. The requirements for production under those Notices wee not seeking to deprive the Appellant of his possessions. They were directing the Appellant to provide information and supporting documentation.

83.	The representative stated that the Respondents could only interfere with the Appellant’s human rights if they were seeking to secure payment of taxes which referred to a specific exclusion in Article 1 of the First Protocol.  The representative appeared to be saying that the requirement for production had nothing to do with the securing of the payment of taxes, and, therefore, automatically breached the Appellant’s right to respect for his private life under Article 8.

84.	I consider the representative’s argument misconceived. The issue to be determined for an alleged breach of Article 8 is whether such interference is in accordance with the law, pursues a legitimate aim and is no more than necessary in a democratic society.

85.	I am not persuaded by the Appellant’s argument that the requirements for production in the 23 August 2005 Notices breached his human rights. The Appellant’s arguments consisted of a series of assertions which were not substantiated by evidence of how his human rights would be compromised. The Special Commissioner decision in Taylor did not assist his argument as the facts in that case were different from the facts of the Appellant’s Appeal.  His representative’s analysis of Article 1 of the First Protocol did not advance the Appellant’s cause.

86.	The Appellant’s argument at its highest comprised the proposition that production of the documents stipulated in the Notices would give the Respondents access to details of the Appellant’s private expenditure which was intrusive and excessive.  I found on the evidence that such interference by the Respondents with the Appellant’s private life was lawful.  The Respondents had lawful authority to enquire into the Appellant’s tax returns and require production of documents to verify the accuracy of the returns by virtue of sections 9A and 19A of the 1970 Act.  The evidence demonstrated that the Appellant was using his private bank accounts for a variety of transactions, the verification of which were necessary to confirm the accuracy or otherwise of the Appellant’s tax returns.  In requiring those documents the Respondents pursued the lawful aim of confirming the accuracy of self assessment tax returns.  The requirements wee proportionate and necessary for the purpose of protecting the taxation system and revenue.

87.	I conclude that the requirements for production of the documents as specified for all accounts operated by the Appellant in the 23 August 2005 Notices did not contravene the Appellant’s human rights.

Decision
88.	I decide that that the two Section 19A Notices issued by Adam Clarke on 23 August 2005 requiring the Appellant to produce specified documents met the provisions of section 19A of the 1970 Act and did not contravene the Appellant’s human rights.

89.	I, therefore, dismiss the Appellant’s Appeal.  I make no order for costs.

90.	Under section 19A(9)(a) TMA 1970 I confirm the section 19A Notices issued on 23 August 2005.

91.	Under section 19A(10) TMA 1970 the section 19A Notices issued on 23 August 2005 shall have effect as if they specified 30 days beginning with determination of this Appeal.  My determination is final and conclusive in relation to the matters covered by the section 19A Notices issued on 23 August 2005.

MICHAEL TILDESLEY OBE
SPECIAL COMMISSIONER

RELEASED: 31 July 2006

SC 3314/2005