Fox v McKay (HMIT) & Anor

Permission for a second appeal is governed by the threshold in CPR 52.13, reflecting Access to Justice Act 1999, section 55(1). The Court must identify an important point of principle or practice, or another compelling reason for hearing the appeal. A challenge to a penalty for failing to produce documents under section 20(3) of the Taxes Management Act 1970 raised no such point where the Commissioners had made a factual finding, supported by the evidence, that documents remained within the accountant’s possession or control. Stored documents may remain within a person’s power even if they have not been located. A procedural challenge concerning the need to appeal before receiving the Commissioners’ reasons did raise an important point of principle.

An accountant appealed to the General Commissioners against a penalty imposed under section 98(1) of the Taxes Management Act 1970 for failing to comply with a notice under section 20(3) requiring production or inspection of clients’ working papers and related documents. The Commissioners imposed a £300 penalty. Jacob J dismissed the appeal on the statutory question of law, holding that the Commissioners had made no error of law. The applicant then sought permission for a second appeal and an extension of time. The central issues were whether the first ground raised an important point of principle or practice, and whether the statutory and procedural appeal route was unfair because the appellant’s notice had to be served before the Commissioners’ findings and reasons were available.

1. Ground 1. Permission for a second appeal was refused. The documents sought under section 20(3) of the Taxes Management Act 1970 were documents which the accountant had generated in performing his professional role and which had therefore been in his possession and power. Whether documents once held remained in his possession or power was a question of fact for the Commissioners. Documents destroyed in the boiler explosion could be accepted as no longer existing. Documents transferred to storage remained within his control unless a proper search established otherwise. The Commissioners’ finding that no papers whatsoever could be accepted as unavailable was open to them and disclosed no error of law.
2. Ground 2. Permission was granted on the procedural fairness issue. The application concerned the interaction between section 100C(4) of the Taxes Management Act 1970 and paragraph 23.4 of the Practice Direction issued under CPR 52. The appellant had to serve an appellant’s notice before knowing the Commissioners’ findings and reasons. Chadwick LJ doubted that this caused practical difficulty because an appellant would likely be permitted to amend the notice and serve a supplemental skeleton argument if new matters emerged. Nevertheless, the issue was an important point of principle. CPR 52.13 did not require a real prospect of success before permission could be granted on that basis.
3. The application for an extension of time was granted. The proposed appeal was limited to ground 2. Permission under ground 1 was refused.

• General Commissioners for the Division of Uxbridge: imposed a £300 penalty under section 98(1) of the Taxes Management Act 1970 for failure to comply with the notice under section 20(3).
• Chancery Division (Revenue), Jacob J: dismissed the appeal under section 100C(4), finding no error of law in the Commissioners’ decision.
• Court of Appeal (Civil Division): refused permission for a second appeal on ground 1, granted permission on ground 2, and granted an extension of time.