West Law Report

Civil standard for tax returns

Posted in Times Law Report by mrkooenglish on October 28, 2008

From The Times
October 20, 2008
Civil standard for tax returns

Chancery Division
Published October 20, 2008
Commissioners of Revenue and Customs v Khawaja

There was no reason in principle why the civil standard of proof should not apply on a challenge to an assessment of penalty for the negligent submission of income tax returns.

Mr Justice Mann so held in the Chancery Division on July 17, 2008, when allowing an appeal by the Commissioners of Revenue and Customs by way of case stated against a decision of the General Commissioners concerning an assessment of penalties against Tahir Iqbal Khawaja.

Section 95(1)(a) of the Taxes Management Act 1970 permitted a notice claiming penalties from a person for the negligent submission of incorrect returns of income tax.

HIS LORDSHIP said there was nothing in section 95, or any binding authority, detailing the standard of proof when challenging an assessment of penalty.

He was assisted by value-added tax cases, particularly Han v Customs and Excise Commissioners ([2001] 1 WLR 2253) concluding that the Keith Report (1983 Cmnd 8822), referred to in Han, assumed that a civil penalty system for dishonest income tax returns would be to the civil standard.

That unchallenged assumption gave strong support that the same standard applied to dishonest tax returns and even more so for negligent tax returns.

His Lordship respectfully suggested that Lord Justice Mance’s reference in Han to burden of proof should be a reference to standard of proof.


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