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Articles 13.11.18 Author: Robert Maas

In the interests of justice

Articles 13.11.2018 Author: Robert Maas

CBW's Robert Maas, one of the UK’s leading tax experts, discusses the First-tier Tribunal decision in Colin Rogers, and whether he was provided with a fair opportunity to defend himself.

Was enough done to allow an appellant to defend himself before the First-tier Tribunal even though he admitted filing false information, asks Robert Maas.

I have no sympathy for dishonest accountants and hope that no Taxation readers do either. However, having read the First-tier Tribunal decision in Colin Rodgers (TC6617) (tinyurl.com/ycs6wdze) I admit to being left with a feeling that he has been unjustly treated by the system. It is clear that Mr Rodgers created false invoices on behalf of one of his clients and submitted figures to HMRC based on those figures. We are told that he admitted this to HMRC. Deliberately submitting false information to HMRC is, on the face of it, fraudulent. So what is my concern?

“My concern is that Mr Rodgers was not given a reasonable opportunity to defend himself before the tribunal.”

Lack of opportunity My concern is that Mr Rodgers was not given a reasonable opportunity to defend himself before the tribunal. Worse, the tribunal hearing drew adverse inferences from the fact that he did not do so. HMRC issued Mr Rodgers with a conduct notice under FA 2012, Sch 38 (tax agents: dishonest conduct). For an agent this is a serious matter. After the tribunal confirms the notice, two serious consequences follow:

● HMRC can impose a minimum penalty of £5,000 rising to a maximum of £50,000.

● HMRC can also (and undoubtedly will) ‘name and shame’ the individual.

● HMRC can ask the tribunal to grant it access to all of the agent’s client files. This will in effect destroy the agent’s business. His clients are unlikely to be happy with their affairs, including perhaps personal information that has no relevance whatsoever to tax, being made fully available to HMRC.

With such serious consequences for the agent, one might expect the tribunal to lean over backwards to ensure that the agent had every opportunity to put his side of the story at the hearing. I do not think that Mr Rodgers was given such opportunity. I should make clear that I do not know Mr Rodgers. I know nothing about him or his activities other than what is in the report of the tribunal decision. I do, however, know from that decision that he denies having been dishonest. I do not know the basis for that denial but, since dishonesty requires, among other things, an intention, I find it hard to see how it can be just to find him dishonest without having heard from him what his intention was.

Tribunal’s letter

The tribunal hearing was listed for one and a half days on 24 and 25 April 2018. On 19 April, Mr Rodgers sent a letter to the tribunal saying he could not attend because of his caring responsibilities for his sick wife and his inability to pay for a substitute carer to allow him to attend.

The tribunal replied on 23 April, the day before the hearing, saying that ‘he should attend the hearing and reasonable allowances would be allowed to assist him giving evidence’. I do not have a clue what this means. Was he expected to leave his wife helpless and unattended because her welfare was less important to the state than inconveniencing the tribunal? What allowances could reasonably have been made? Mr Rodgers’ problem was not that he needed assistance in giving evidence, rather he could not leave his wife without a carer so could not come to a tribunal hearing. The only reasonable allowance would surely have been for the tribunal to hold the hearing at his home, but there is no indication that it suggested that.

It did offer him an alternative. He was given a designated tele-conferencing phone number so he could participate by telephone. Unfortunately the tribunal hearing was due to start at 9.30am the next morning and the recorded delivery letter was not delivered to Mr Rodgers until midday, so he was unaware of the letter at 9.30am.

At 9.30am, in the absence of Mr Rodgers, the tribunal called the conferencing number and ascertained that he had not phoned. The tribunal knew Mr Rodgers was aware of the hearing date because he had written to it explaining that, due to his wife’s need for care, he could not attend. The tribunal was accordingly ‘satisfied it was in the interests of justice to proceed’. After all, Mr Rodgers had not asked for an adjournment; he had simply said he could not attend. The judge said: ‘The tribunal had given the appellant reasonable opportunity to attend in person or participate in the hearing by telephone. He had chosen not to take up these opportunities [albeit of course that he was unaware of the offer to participate by telephone]. The case was already of some age [the conduct notice was issued in September 2016, a mere 18 months earlier] and there was a public interest in the speedy conclusion and efficient conduct of the hearing. HMRC’s witnesses were present and ready to proceed.’

During the hearing, the tribunal was informed that the letter would not be delivered to Mr Rodgers until about midday, and he in fact received it at noon. What should it do? The tribunal decided the best action would be to adjourn the hearing until 2pm ‘so as to give the appellant time to consider its contents and either attend by phone or in person’. At 2pm the tribunal again called the conferencing number and, after ascertaining that Mr Rodgers was not on the line, carried on without him.

What choice?

What would readers have done in Mr Rodgers’s circumstances? You had written to the tribunal explaining that you could not leave your sick wife and probably expected the tribunal to adjourn the hearing. At midday you receive a letter suggesting you abandon your wife and go to the hearing or phone in to it.

I would have probably phoned the tribunal service headquarters in Birmingham. But I suspect that would not
have achieved much because no one there would have known that the hearing had been postponed until after lunch. I would have been very worried that the tribunal would have got underway without me but would have assumed there was nothing I could do at that stage. I would certainly not have called the conference call number on the off-chance that the tribunal would call in again at 2pm.

Another chance

The tribunal did give Mr Rodgers another opportunity to make written submissions after the conclusion of the hearing at 4pm the same day – allowing the tribunal to lop off onethird from the estimated hearing time by dispensing with Mr Rodgers’s case.

Mr Rodgers responded to the tribunal’s opportunity to provide further written representations but the tribunal recites simply that his letter ‘did not further substantially advance his case beyond what he had previously stated in correspondence on his appeal grounds’, so I have no idea what his justification was.

“It would surely have been fairer to say that … he was unable to give evidence because of his wife’s illness, and the tribunal was not prepared to wait”

To add insult to injury, in paragraph 71 of the decision, the tribunal states: ‘The appellant gave no oral evidence or no explanation as to how his conduct could be conceived of as honest or not deliberate.’

It would surely have been fairer to say that, in the interests of justice, he was unable to give oral evidence because of his wife’s illness, and the tribunal was not prepared to wait until he could give such evidence about these matters.

To be fair, from the tribunal’s outline of HMRC’s one-sided explanation of the facts, including that – like all well-advised clients – Mr Rodgers had not been prepared to sign its meeting notes, it is difficult to conceive that he would have succeeded in setting aside the conduct notice. So I suspect that justice has been done.

My concern is that, by denying Mr Rodgers the opportunity to defend himself, I do not think that it can be seen to have been done. And surely the public perception of justice ought to be as important as the reality of justice.

This article was written for and first published on Taxation, November 2018.

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Robert Maas

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