Shamash v Inland Revenue

A tax liability determined by the General Commissioners becomes final and conclusive when the statutory appeal process is not completed. Bankruptcy proceedings cannot be used to reopen the underlying assessment, and the unpaid debt may found a bankruptcy order. Permission to appeal requires an important point of principle or practice, or another compelling reason for the appeal to be heard. An annulment application under the Insolvency Act 1986, section 282(1)(a), concerns grounds existing when the bankruptcy order was made. A later payment or securing of the debt is addressed under section 282(1)(b).

Mrs Lena Shamash sought permission to appeal from an order of His Honour Judge Rich QC, sitting in the High Court in bankruptcy. He had dismissed her appeals against a bankruptcy order made on the Inland Revenue’s petition and against refusal to annul that order. The petition concerned unpaid tax and interest following an unsuccessful challenge to an assessment. Her case stated was transmitted out of time under regulation 22(4)(a) of the General and Special Commissioners (Amendment of Enactments) Regulations 1994, so the tax determination had become final and conclusive under section 46(2) of the Taxes Management Act 1970. The central issue was whether the proposed appeal met the statutory permission threshold.

Application for permission to appeal refused. Lord Justice Chadwick applied section 55(1) of the Access to Justice Act 1999. The application raised neither an important point of principle or practice nor any other compelling reason for an appeal to be heard.

1. The applicant’s tax liability had been determined by the General Commissioners. She failed to transmit the case stated within the prescribed 30-day period, and the High Court refused an extension. The determination therefore became final and conclusive under section 46(2) of the Taxes Management Act 1970. The bankruptcy court had no jurisdiction to reconsider whether the assessment was correct. The resulting unpaid debt could properly found the bankruptcy order.
2. There was no basis for interfering with the Registrar’s exercise of his powers or discretion. Given the statutory finality of the assessment, it would have been perverse for the Registrar to proceed otherwise.
3. An application under section 282(1)(a) of the Insolvency Act 1986 is concerned with grounds existing when the bankruptcy order was made. The annulment application was therefore properly confined to that issue.
4. Lord Justice Chadwick identified, without deciding, the separate route under section 282(1)(b) of the Insolvency Act 1986, where the debt has since been paid or secured to the court’s satisfaction. That application had not been made and would not be determined by the Court of Appeal.

The order was: application for permission to appeal refused.

• Court of Appeal (Civil Division): In [2001] EWCA Civ 1546, permission to appeal was refused.
• High Court (Chancery Division, in bankruptcy): On 13 March 2001, His Honour Judge Rich QC dismissed appeals against the Registrar’s bankruptcy and annulment orders.
• Registrar: A bankruptcy order was made on 16 November 2000, and an application to annul it under section 282(1)(a) of the Insolvency Act 1986 was dismissed on 20 December 2000.