Eagerpath Ltd v HM Inspector Of Taxes

The statutory restriction in section 33(4) of the Taxes Management Act 1970 permits an appeal from the Special Commissioners only on a point of law arising in connection with the computation of profits. A point concerning whether an earlier settlement prevents an error-or-mistake claim does not fall within that description merely because its resolution may affect the taxpayer’s liability. The restriction is therefore capable of excluding appeals on issues central to the statutory claim, although judicial review may remain available for errors of law.

Eagerpath Ltd appealed against the dismissal of its appeal from a Special Commissioner’s decision concerning a claim under section 33 of the Taxes Management Act 1970. The claim arose from the treatment of bank interest in corporation tax computations for the period ending 30 April 1987. The Special Commissioner had applied the principles governing the interaction between settlements under section 54 and discovery assessments to the error-or-mistake claim.

Arden J dismissed Eagerpath’s appeal, holding that the issue was not a point of law arising in connection with the computation of profits for the purposes of section 33(4). The central issue before the Court of Appeal was whether that interpretation was correct.

1. The appeal was dismissed with costs.
2. Section 33(4) of the Taxes Management Act 1970 restricts an appeal from the Special Commissioners to a point of law arising in connection with the computation of profits. The restriction is narrower than the ordinary right of appeal on a point of law.
3. The authorities, including Carrimore Six Wheelers Ltd v IRC (1944) 26 TC 301 and Arranmore Investment Co Ltd v IRC (1973) 48 TC 623, support giving those words their natural meaning. A point is not within section 33(4) merely because its determination may ultimately affect the amount of profits or the taxpayer’s liability. It must itself relate to the method of computing profits.
4. The question whether the principles concerning section 54 settlements and discovery assessments also apply to an error-or-mistake claim was a question of law, but it was not a question of law arising in connection with the computation of profits. Arden J was therefore right to dismiss the appeal on the preliminary jurisdictional point.
5. The court expressed no final view on whether the concession made before the Special Commissioner was correct or whether the same test should govern discovery assessments and error-or-mistake claims. Robert Walker LJ’s provisional view was that substantially similar principles should apply, subject to possible marginal differences.
6. Judicial review may provide a remedy where the Special Commissioners commit an error of law outside the statutory appeal route. A tax appeal of this kind does not involve the determination of civil rights and obligations for the purposes of Article 6 of the Convention.

• Special Commissioners: dismissed Eagerpath’s appeal against the rejection of its section 33 claim.
• High Court, Chancery Division, Revenue List: Arden J dismissed the appeal on the preliminary jurisdictional issue: [1999] STC 771.
• Court of Appeal (Civil Division): dismissed the appeal and ordered Eagerpath to pay the costs.