Harvard Sharkey v Revenue & Customs

A fixed penalty under section 97AA(1)(a) of the Taxes Management Act 1970 for failing to produce documents under section 19A is not necessarily a criminal charge under Article 6. The court must apply the autonomous Convention test, considering the nature of the offence and the severity and purpose of the penalty.

A modest penalty imposed independently of any criminal investigation, primarily to secure production of tax documents, is civil in character. The privilege against self-incrimination is not engaged where no criminal proceedings are pending or anticipated. PACE codes are also inapplicable absent a duty to investigate offences or charge offenders.

The taxpayer appealed from the Special Commissioner’s dismissal of his appeal against a £50 penalty imposed under section 97AA(1)(a) of the Taxes Management Act 1970 for failing to comply with a notice under section 19A requiring documents and information for an enquiry into his tax return.

He argued that the penalty was a criminal charge under Article 6, that compulsory disclosure infringed the privilege against self-incrimination, that the inspector was required to comply with PACE Code C, that he had been denied funding, and that the Special Commissioner had been biased.

1. Appeal dismissed. The £50 fixed penalty under section 97AA(1)(a) of the Taxes Management Act 1970 was not a criminal charge within Article 6.
2. The domestic classification of the penalty as civil was only the starting point. Applying the second and third Engel criteria, the penalty did not depend on dishonest or criminal conduct, was imposed independently of any prosecution or criminal investigation, and was modest. Its primary purpose was to secure production of documents. Section 97AA(4), which prevents imposition after the failure has been remedied, supported that conclusion.
3. The fixed penalty had to be considered separately from any later daily penalty. A further daily penalty required a new and independent exercise of the Revenue’s powers and did not arise inevitably from continued non-compliance.
4. Because the penalty was not a criminal charge, the complaint based on the privilege against self-incrimination failed. In any event, no criminal proceedings were pending or anticipated, so the case fell outside the categories identified in Shannon.
5. The Police and Criminal Evidence Act 1984 and Code C did not assist the taxpayer. There was no evidence that prosecution or evasion penalties were under consideration, or that HMRC possessed information showing that the return was incorrect.
6. The funding issue was a new ground of appeal and could not fairly be raised without further evidence and an opportunity for HMRC to respond. The bias allegation was hopeless. Costs followed the event and were summarily assessed at £4,488.91, payable within 28 days.

• High Court (Chancery Division): appeal from the Special Commissioner’s decision of 26 January 2005 dismissed; costs awarded against the appellant.