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Inland Revenue, R (on the application of) v Income Tax, Court of Appeal - Administrative Court, June 14, 2000, [2000] EWHC Admin 354

22

Case No: CO/2745/99 and CO/2979/99

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
CROWN OFFICE LIST
Royal Courts of Justice
Strand, London, WC2A 2LL

Wednesday14 June 2000

B e f o r e :
THE HON MR JUSTICE DYSON

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(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 180 Fleet Street
London EC4A 2HD
Tel No: 0171 421 4040 0171 421 4040, Fax No: 0171 831 8838
Official Shorthand Writers to the Court)
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Mr D GOLDBERG QC and Clive LEWIS (instructed by Messrs Travers Smith Braithwaite for the Ulster Bank Ltd.)
Mr T. BRENNAN (instructed by the Solicitor of Inland Revenue for the Commissioners of Inland Revenue)
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Judgment
As Approved by the Court

Crown Copyright ©




Mr Justice Dyson:
Introduction

1. These two applications concern section 20 of the Taxes Management Act 1970 (TMA). Under section 20, inspectors of taxes have power to call for documents from, amongst others, third parties to an investigation. In order to exercise that power, an inspector must first give a notice to the person from whom he wants the documents. Section 20(8) and (8A) provide that he can only give such notice without naming the taxpayer with whose liability he is concerned if a Special Commissioner gives his consent. One of the issues that arises for determination is whether, upon the true construction of section 20(8A) of TMA, an application to a Special Commissioner for consent may be made by an inspector only if it has been authorised by an order of the Board of the Inland Revenue itself, or whether it is sufficient that the application be authorised by an officer to whom the Board has delegated the requisite power. But before I come to the issues in more detail, I need to set the scene.

2. Ulster Bank Limited ("UBL") is a wholly owned subsidiary of National Westminster Bank Plc. Its principal activity is that of deposit-taking. As part of its internal accounting mechanism, a "Sundry Parties' Account" was operated at each of its branches. This is an account through which may be passed isolated transactions with parties who may or may not be customers of the bank, or who may or may not have accounts at the branch. All branches of the bank will have a Sundry Parties' Account to record transactions which are not or cannot be dealt with through specific named accounts. UBL is not under investigation itself, and the Revenue is seeking information about other taxpayers whose transactions were passed through Sundry Parties' Accounts. It is accepted by the Revenue that such accounts can have entirely proper banking purposes. They can, however, be used as a means of facilitating fraud. This is because it is difficult to trace money transactions that pass through such accounts. The Revenue does not suggest that UBL has been complicit in a tax fraud. But it is of the opinion that sundry parties' accounts have been used by individuals for the purpose of serious fraud. The investigation which is the subject of these proceedings has the aim of unravelling these frauds.
3. The history of the attempts by the Revenue to extract documents from UBL under section 20 of TMA is complex. It is unnecessary to examine it in detail. The relevant investigations started in 1995. In November 1997, the Revenue gave UBL a notice in relation to 6 named branches. That notice was challenged in judicial review proceedings on the grounds that it was oppressive. These proceedings were compromised and settlement agreements were reached. The first of these agreements dealt with the existing notice in relation to the 6 branches. The second, the so-called "New Notice Agreement" dated 18 September 1998, dealt with the procedure to be followed if the Revenue wished to give UBL a new notice ...
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