Cook, R (on the application of) v General Commissioners of Income Tax & Anor

Under section 49(1) of the Taxes Management Act 1970, General Commissioners determining an application for permission to appeal out of time have a broad discretion. Their task is not confined to deciding whether there was a reasonable excuse for delay. They may consider the merits or arguability of the proposed appeal, prejudice, and other relevant circumstances. A decision reached by applying only the inspector’s narrower approach is unlawful. The court may quash the decision, but should not substitute its own decision unless the outcome on reconsideration is inevitable.

The claimant faced substantial PAYE and National Insurance assessments which he had not appealed within the statutory period. After bankruptcy proceedings were begun, he sought permission to bring late appeals. The inspector refused permission, and the General Commissioners rejected the applications, considering only whether the delay was reasonably excused. The claimant sought judicial review, arguing that the Commissioners had failed to exercise the wider discretion required by section 49(1) of the Taxes Management Act 1970. A separate challenge to the Revenue’s enforcement position arose only if the first ground failed.

1. The claim for judicial review succeeded on the first ground. The General Commissioners’ decision of 11 May 2005 refusing permission for late appeals was quashed.
2. Under section 49(1) of the Taxes Management Act 1970, the inspector’s jurisdiction is narrower. The inspector considers whether there was a reasonable excuse for the delay and whether the application was made without unreasonable delay after the excuse ceased.
3. On a reference to them, the General Commissioners have a discretion at large. Following R (Browallia Cal Ltd) v General Commissioners of Income Tax [2004] STC 296, their consideration is not restricted to the existence of a reasonable excuse. Relevant matters include prejudice, the arguability or merits of the proposed appeal, and the circumstances explaining the delay.
4. The Commissioners had been directed by the Revenue’s representative to restrict themselves to the statutory delay questions. Their decision letter addressed only whether the claimant had a reasonable excuse and did not show any balancing of the merits, prejudice or other relevant factors. The Commissioners therefore failed to exercise the jurisdiction conferred by section 49(1).
5. The court declined to substitute an order granting permission. Although the proposed appeal appeared strongly arguable, the claimant’s explanations and the accuracy of the records remained matters for the Commissioners. The issue was remitted for lawful reconsideration. The second defendant agreed to pay the claimant’s costs in the sum of £6,457 inclusive of VAT.