C/01/2660
Neutral Citation Number: [2002] EWCA Civ 563
IN THE SUPREME COURT OF JUDICATURE                           
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
ADMINISTRATIVE COURT
(Mr Justice Moses)
                                    Royal Courts of Justice
                                    Strand
                                    London WC2
 
                          Tuesday, 16th April 2002
B e f o r e :

LORD JUSTICE KEENE

MR. JUSTICE SUMNER

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THE QUEEN ON THE APPLICATION OF
DR. ABUL KALAM MOHAMMED SHAMSUD DOHA

Applicant
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THE INLAND REVENUE

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(Computer Aided Transcript of the Stenograph Notes
of Smith Bernal Reporting Limited
190 Fleet Street, London EC4A 2AG
Telephone No: 0207-421 4040
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Official Shorthand Writers to the Court)
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MR. S. HOCKMAN Q.C. and MR. I. CHOWDHARY (instructed by S. Ali & Co., London, N8) appeared on behalf of the Applicant.
MR. P. JONES (instructed by the Inland Revenue Solicitor) appeared on behalf of the Respondent.
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J U D G M E N T
1.	LORD JUSTICE KEENE: This is a renewed application for permission to appeal from a decision of Moses J in the Administrative Court dated 27th November 2001. By that decision the judge refused permission to seek judicial review of a decision of the Inland Revenue not to exercise their discretion in his favour under the practice known as equitable liability. The taxpayer, Mr. Doha, sought to be relieved of tax liabilities assessed on him in respect of his practice as a doctor over a number of years.
2.	The Revenue has a published policy dealing with equitable liability. The most relevant part states:
“Where the taxpayer has exhausted all other possible remedies, the Inland Revenue may, depending on the circumstances of the particular case, be prepared not to pursue its legal right to recovery for the full amount where it would be unconscionable to insist on collecting the full amount of tax assessed and legally due.” 
3.	It will be observed that under the terms of that policy such a discretion is to be exercised by the Revenue in favour of the taxpayer only where he has exhausted all other possible remedies. In addition, it must be shown, as the judge below put it, that not to relieve a taxpayer of liability may offend the conscience of all right minded people.
4.	The basic facts of the case are that certain evidence persuaded the Revenue that the applicant had under- declared his income over a number of years by a large amount. The matter came before the General Commissioners in May 1997. At that hearing the applicant was represented but he was not himself present because of illness. An application was made for an adjournment but was refused. There had been an earlier hearing fixed which had had to be adjourned because of the illness of the applicant. In any event, there was no subsequent challenge to the decision by the Commissioners not to adjourn the hearing or, indeed, to the substantive decision which they made after that hearing, whereby they found that Mr. Doha had been guilty of fraud, wilful default or neglect, and assessed him in the sum of £984,000. There is of course a right of appeal on a point of law by case stated from the General Commissioners to the High Court under section 56 of the Taxes Management Act 1970.
5.	At a hearing in March 1998, where they were asked to review their earlier decision, the General Commissioners upheld the decision which they had made in May 1997. Again, there was no challenge to that decision. Then in October 2000 there was an appeal, particularly in respect of the penalty and interest determinations that had been made in respect of the applicant, but at the hearing evidence was produced as to the underlying liability as well. That appeal was dismissed. In that particular instance a request was made for a case to be stated for the High Court, and my understanding is that that matter is still pending. Finally, in January 2001 an application was made for equitable liability through the exercise of the policy to which I have already referred. It was refused on 4th June 2001. That is the decision now under challenge. So the broad position is that in respect of two of the General Commissioners' decisions no attempt was made to use the remedies available to take the matter further. In respect of the third of those decisions an attempt is being made by way of case stated but no decision has yet been made on that appeal.
6.	On behalf of Mr. Doha it is said by Mr. Hockman QC that, if one looks at the reasons for the Revenue's rejection of his application for equitable liability as set out in a letter dated 13th July 2001, one can see that the Revenue was in fact making a number of serious mistakes. I do not need for present purposes to read the particular reasons specified there because they are known to both the parties to the present hearing. But Mr. Hockman rightly says that the first three points raised by the Revenue relate to the information presented to the Revenue about Mr. Doha's account, information which came via his bank. Mr. Hockman is particularly critical of reason No 3, whereby it is said in the letter that Dr Doha had the opportunity to summon witnesses from the bank to dispute the information held by them but did not do so. The evidence produced by or on behalf of the applicant is that by the time he became aware of the information the individuals in question were dead or retired. So, says Mr. Hockman, this is precisely the sort of situation where the policy to which I have referred should apply so that justice can be done.
7.	Secondly, in reference to the remaining two reasons put forward, which relate to Mr. Doha's explanation of money passing through his account, which was in essence that it was not his money but money which he was handling on behalf of somebody else, attention is now drawn by Mr. Hockman to a statement produced by a Mr. Ahmad dated 20th November 2001. That statement does indeed give support to the proposition that some £500,000 was in fact not the applicant's money but was money being handled by the applicant on behalf of Mr. Ahmad who is resident in Bangladesh. The Revenue were not prepared to regard that statement of November 2001 as being of relevance. So, it is submitted on behalf of Mr. Doha, this is in effect a classic case where justice requires that the Revenue should be prepared to exercise its discretion under the policy on equitable liability. It is submitted that the policy must mean not that it will not apply where the taxpayer has not exhausted all his remedies, but that it will apply where there is no longer currently any remedy available.
8.	Finally, Mr. Hockman notes that the Revenue took no point about the non-exhaustion of remedies in the letter of 13th July 2001 which sets out the Revenue's reasons for not acceding to the application for equitable liability.
9.	I am bound to say that other than Mr. Ahmed's statement, I can see nothing new in the matters which are now being raised on his behalf, any more than did Moses J. There was a detailed report by an accountant, Mr. Tunney, on Mr. Doha's behalf which was before the General Commissioners at the hearing in October 2000. Indeed, it is plain from the documents before this court that at that hearing the very arguments which have been advanced this morning were advanced to the General Commissioners and rejected by them. The Commissioners in their decision letter of 12th October 2000 refer, first of all, to the £500,000 passing through the appellant's bank account. They say that there is no satisfactory explanation for the source or sources of those monies:
“We find the appellant's explanation for those monies in the absence of corroborative evidence unconvincing.” 
10.	The letter goes on to indicate that the Commissioners rejected Mr Doha's evidence to the effect that the records submitted by Barclays Bank and by Midland Bank were in part fictitious.
11.	In those circumstances, it is very difficult to see how it can be held to be unconscionable for the Revenue to have exercised its discretion in the way that it has. The rejection of those arguments by the General Commissioners, if that is something which is in some way vitiated, is presumably the subject matter of the appeal by way of case stated to which I have referred. If it is said that that decision by the Commissioners fell outside the range of permissible responses, then no doubt that is a point which the legal advisers to the applicant will have taken. If it has not been taken, then it can only be said that it should have been taken and that the applicant has failed to exhaust that particular remedy.
12.	That takes me on to a further point which I have to stress. I cannot see that it can properly be argued that the Inland Revenue has misapplied its policy. There has been no exhaustion of alternative remedies in this case. The interpretation which Mr. Hockman seeks to put on the opening words of the paragraph of the policy which I quoted earlier does not seem to me to be sustainable. The policy quite clearly deals with a failure to exhaust alternative remedies. That failure can occur by not pursuing an alternative remedy. When the time for that has passed, it cannot then be argued that the policy is satisfied in the way in which it has been submitted. The policy does not say that it operates where there is no longer any remedy available in the current circumstances. The situation is that there were statutory remedies available to the applicant which he did not use in the case of the first two decisions by the General Commissioners. In any event, as a matter of general principle judicial review is to be seen as something which will apply when other remedies are no longer available to the applicant.
13.	I quite accept that the letter of 13th July 2001 may not take this point. It seems to me that if this matter were to go back to the Inland Revenue as a result of a successful challenge by way of judicial review to reconsider its decision under the policy, at that stage and in the light of the decision of Moses J, the Revenue would undoubtedly take the point that alternative remedies were not exhausted. But, as I say, on liability there have been decisions by the General Commissioners by which these points have been heard and determined. The Revenue's decision under challenge was as to its policy. I fail to see how it can be said to be unconscionable for the Revenue to seek the sums in question when the issues currently raised have been already aired before the Commissioners and the Revenue's position upheld. The only new material which has been put before this court, which has not been dealt with by the Commissioners, is the statement by Dr. Ahmad. I have to say that no convincing explanation for the lateness of that witness statement has been put forward. It post dates the decision under challenge which was of course 4th June 2001. That letter cannot vitiate the decision by the Revenue in June 2001 because it was not available to them. Whether the applicant would wish to bring some further challenge to the Revenue's refusal to take on board that letter is a matter for him. This does not seem to me to be a case where it is appropriate before the Court of Appeal to amend the judicial review challenge so as to embrace that, when the material before the court all related to the original decision in June of that year. I can see no prospect of any successful appeal in this case. For those reasons I would dismiss this renewed application.
14.	MR. JUSTICE SUMNER: I agree.
Order: Application refused.