Case No: CO/4331/2016
Neutral Citation Number: [2017] EWHC 2585 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 20/10/2017

Before :

MR JUSTICE CHARLES

- - - - - - - - - - - - - - - - - - - - -

Between :

R (On the application of)

Tony Michael Jimenez

Claimant

v

The First Tier Tribunal (Tax Chamber)

First Respondent

Her Majesty’s Commissioners for Revenue and Customs

Second Respondent

- - - - - - - - - - - - - - - - - - - - -

Rory Mullan and Paul Luckhurst (instructed by Excello Law) for the Claimant
Julie Anderson (instructed by HMRC) for the Second Respondent 

Hearing date: 28 June 2017

- - - - - - - - - - - - - - - - - - - - -

Judgment
Charles J :
Introduction
1.	Permission to bring these proceedings for judicial review was limited to one ground which raises an issue of statutory construction on the jurisdiction of the Second Respondent (the Revenue – who I shall refer to in the singular) to give a notice under Schedule 36 to the Finance Act 2008 (Schedule 36) to the Claimant in Dubai.
2.	The Claimant summarised this ground as follows: “The power to issue notices under Schedule 36 does not extend to subvert the sovereignty of foreign states.  It does not have extra territorial effect.  There was no power to issue a notice against the Claimant who is resident in Dubai”.  In advancing this ground the Claimant refers to and relies on the Masri principle and places particular reliance on a decision of the Supreme Court relating to disclosure notices given pursuant to an order made under the Proceeds of Crime Act 2002 (POCA), namely Perry v SOCA [2012] 4 All ER 795. 
3.	The Revenue complained about the recitation by the Claimant as facts that he was resident in Cyprus for much of the period to which the notice relates, which covers the period 6 April 2004 to 5 April 2013 (although a request about the use of chauffeurs when visiting the UK does not have an end date) and that he is now resident in Dubai.  But the Revenue has not sought to justify the giving of the notice under Schedule 36 to the Claimant by asserting either that he was resident in the UK when it was given, or that he was not resident or did not live in Dubai when the notice was given.
4.	Rather, the Revenue asserts that the Claimant is a taxpayer for the purposes of Schedule 36 and it has the power to give a notice under Schedule 36 to any such taxpayer outside the UK to assist it to establish that taxpayer’s tax position (as defined by Schedule 36).  In other words, the Revenue argues that there is no territorial limit to the giving of a notice to a taxpayer under Schedule 36.  
5.	The underlying disputes on residence and the Claimant’s liability to UK tax and whether that liability could be founded on residence rather than domicile may have been relevant to fairness grounds for which the Claimant was not given permission to bring proceedings for judicial review. But it was not argued that they, or the Claimant’s challenge to the point that the notice was reasonably required for the relevant purpose set out in Schedule 36, were relevant on the jurisdictional issue for which permission to bring this challenge was given.
6.	So, I proceed on the basis that the two underlying contentions of the respective arguments are correct namely that, as the Revenue asserts, the Claimant is a taxpayer (for the purposes of Schedule 36), and that when the notice was given to the Claimant he was, as he asserts, resident in Dubai (or was living there and any issues on his residence are not relevant to the jurisdictional issue).
7.	The First Respondent, the First-tier Tribunal, has taken no part in these proceedings. 
Schedule 36
8.	By Part 1 of Schedule 36, the Revenue is given the power to serve information notices, which are defined by paragraph 6 of Schedule 36 to include notices under paragraphs 1, 2 and 5 thereof.  So, all three types of notice are “information notices” with the result that references to an information notice in the later provisions of Part 7 “Penalties” and Part 8 “Offences” apply to all of them.
9.	By Part 2 of Schedule 36, the Revenue is given the power to enter a person’s business premises and to inspect them and business assets and documents that are on the premises if the inspection is reasonably required for the purpose of checking that person’s tax position.  
10.	The first type of information notice is defined as a “taxpayer notice” and can be given to a person if the information or document is reasonably required for the purpose of checking that person’s (the taxpayer’s) tax position (see paragraph 1 of Schedule 36).
11.	The second type of information notice is defined as a “third party notice” and can be given to a person if the information or document is reasonably required for the purpose of checking the tax position of another person whose identity is known to the Revenue (the taxpayer).  Such a notice must name the taxpayer to whom it relates unless the First-tier Tribunal has approved the giving of the notice and disapplied this requirement.
12.	“Taxpayer” in relation to a taxpayer notice and a third party notice is defined by paragraph 58 as having the meaning in paragraph 1(1) or 2(1) as appropriate.  Paragraph 58 also provides that “checking” includes the carrying out of any investigation of any kind and so at least arguably whether a person is a taxpayer.  Paragraph 64 provides that a person’s tax position includes his position as regards past, present and future liability to pay any tax and paragraph 63 defines “tax” by reference to a list of UK taxes and “relevant foreign tax”, which is defined as follows:
(4) In this Schedule “relevant foreign tax” means—
(a) a tax of a member State, other than the United Kingdom, which is covered by the provisions for the exchange of information under the Directive of the Council of the European Communities dated 19 December 1977 No. 77/799/EEC (as amended from time to time), and
(b) any tax or duty which is imposed under the law of a territory in relation to which arrangements having effect by virtue of section 173 of FA 2006 (international tax enforcement arrangements) have been made and which is covered by the arrangement.
13.	The third type of information notice is not given a name and can be given pursuant to paragraph 5 of Schedule 36 to a person if the information or document is reasonably required for the purpose of checking the tax position of a person or class of persons whose identities are not known to the Revenue.
14.	The power to give all three types of information notice is triggered if the relevant reasonable requirement exists. 
15.	A taxpayer notice can be given without the approval of the First-tier Tribunal. So can a third party notice, if the taxpayer has agreed that it can be given (and in some other special cases set out in Part 6)..  
16.	When it can give an information notice without the approval of the First-tier Tribunal, the Revenue can, and I understand often does, seek and obtain the approval of the First-tier Tribunal to the giving of a taxpayer and a third party notice.  That approval has the result that the person who is given the information notice cannot appeal against the notice or any requirement in it.  However, a person given the third type of information notice (that can only be given with the approval of the First-tier Tribunal) can appeal to the First-tier Tribunal on the ground that it would be too onerous to comply with it.
17.	Also, the approval of the First-tier Tribunal is a condition of the offences of concealing etc documents included in Part 8 for which a person can be fined on summary conviction and imprisoned on conviction on indictment.
18.	Pursuant to paragraph 3 of Schedule 36, the Revenue sought the approval of the First Respondent (the First-tier Tribunal) for the giving of the notice to the Claimant that is the subject of these proceedings.  
19.	Paragraphs 3 and 4 of Schedule 36 provide:
Approval etc of taxpayer notices and third party notices
3(1) ---------------- 
(2) An officer of Revenue and Customs may ask for the approval of the First-tier Tribunal to the giving of any taxpayer notice or third party notice (and for the effect of obtaining such approval see paragraphs 29, 30 and 53 (appeals against notices and offence)).
(3)  The First-tier Tribunal may not approve the giving of a taxpayer notice or third party notice unless—
(a) an application for approval is made by, or with the agreement of, an authorised officer of Revenue and Customs,
(b) the Tribunal is satisfied that, in the circumstances, the officer giving the notice is justified in doing so,
(c) the person to whom the notice is addressed has been told that the information or documents referred to in the notice are required and given a reasonable opportunity to make representations to an officer of Revenue and Customs,
(d) the First-tier Tribunal has been given a summary of any representations made by that person, and
(e) in the case of a third party notice, the taxpayer has been given a summary of the reasons why an officer of Revenue and Customs requires the information and documents.
(4)  Paragraphs (c) to (e) of sub-paragraph (3) do not apply to the extent that the First-tier Tribunal is satisfied that taking the action specified in those paragraphs might prejudice the assessment or collection of tax.
(5) Where the First-tier Tribunal approves the giving of a third party notice under this paragraph, it may also disapply the requirement to name the taxpayer in the notice if it is satisfied that the officer has reasonable grounds for believing that naming the taxpayer might seriously prejudice the assessment or collection of tax.
Copying third party notice to taxpayer
4(1) An officer of Revenue and Customs who gives a third party notice must give a copy of the notice to the taxpayer to whom it relates, unless the First-tier Tribunal has disapplied this requirement.
(2) The First-tier Tribunal may not disapply that requirement unless—
(a) an application for approval is made by, or with the agreement of, an authorised officer of Revenue and Customs, and
(b) the Tribunal is satisfied that the officer has reasonable grounds for believing that giving a copy of the notice to the taxpayer might prejudice the assessment or collection of tax.

20.	The approval of the First-tier Tribunal can also be sought and given to an inspection of premises under Part 2. 
21.	The First-tier Tribunal gave an anonymised judgment on the points that had been raised by the Claimant on whether the hearing relating to its approval of the taxpayer notice should be in public, his ability to make representations at the hearing and the territorial limits of Schedule 36.  Permission to bring judicial review proceedings in respect to those issues (and so in effect on whether notice of the hearing should have been given so that it took place inter partes) was refused, as I understand it, in reliance on the decision of the Court of Appeal in R (Derrin Bros. Properties Ltd) v First-tier Tribunal (Tax Chamber) [2016] EWCA Civ 15. 
22.	I have referred to the power of the First-tier Tribunal to give approval to various matters and cited provisions relating to it because the hearing before the First-tier Tribunal in this case was held in the absence of the Claimant and so was an ex parte and in effect a closed hearing (unless a full record of what happened at that hearing was provided to the Claimant and my understanding is that this was not done).
23.	As to this practice, I was also referred to a non-anonymised decision of the First-tier Tribunal that it has no discretion to order an inter partes hearing of a Schedule 36 application (Re An application by HMRC: ex parte John Ariel [2017] UKFTT 87 (TC)).  That decision helpfully sets out s. 20 of the Taxes Management Act 1970 (the TMA) in an annex.  It refers to and does not follow a view expressed by Mann J about participation in a hearing of an application made under Schedule 36 (Revenue and Customs Commissioners v Ariel [2016] EWHC 1674 (Ch); [2017] 1WLR 319) and it discusses, and effectively applies, the decision of the Court of Appeal in (R) Morgan Grenfell v Special Commissioners of Income Tax [2001] EWCA Civ 329 on the power of the Special Commissioner to hold an inter partes hearing of an application under s. 20 of the TMA. 
24.	As appears later under the heading “Miscellaneous”, and notwithstanding the limitation of the grounds on which the Claimant was given permission to bring these proceedings it seems to me that the Revenue and the First-tier Tribunal may wish to address whether the Ariel decision, and more generally their approach to the determination of applications under Schedule 36, merit reconsideration having regard to basic principles of fairness and the general approach taken by courts to ex parte hearings and the application of the principle of open justice.   For my part, there is force in the approach of Mann J that was rejected in Ariel. 
25.	As already mentioned, Part 7 (Penalties) and Part 8 (Offences) apply to all information notices. There are standard (£300) and daily default (up to £60 a day) penalties and a tax related penalty in an amount determined by the Upper Tribunal.  A person on whom an information notice has been served, and a person who has been told that a document is or is likely to be subject of an information notice, who conceals, destroys or otherwise disposes of the relevant document or arranges for that to happen can, subject to other conditions and exemptions, be guilty of an offence for which he can be fined or imprisoned.
Territorial limits – introduction – the Masri principle
26.	Schedule 36 is silent as to its territorial limits and so the following passages in the speeches of Lord Scarman and Lord Wilberforce in Clark v Oceanic Contractors Inc [1983] 2 AC 130 are relevant.  At 144E to 145G Lord Scarman said:
The principle of construction
It is well settled law that English legislation is primarily territorial: ------------ . The principle was recognised and formulated (admittedly in language which now has echoes of the world which has departed) by the Court of Appeal in Ex parte Blain and was commented on with the approval of the Earl of Halsbury LC, in Cooke v Charles A. Vogeler Co  [1901] AC 107.  Two passages from the judgements in Blain’s case, 12 Ch.D. 522 are directly relevant to the issue in this case. First, a passage from the judgment of James LJ.  At p. 526, he referred to the
“broad, general, universal principle that English legislation, unless the contrary is expressly enacted or so plainly implied as to make it the duty of an English court to give effect to an English statute, is applicable only to English subjects or to foreigners who by coming into this country, whether for a long or a short time, have made themselves during that time subject to English jurisdiction ---- But, if a foreigner remains abroad, if he has never come into this country at all, it seems to me impossible to imagine that the English legislature could have ever intended to make such a man subject to particular English legislation.”
And secondly, a passage from the judgment of Cotton LJ at pp 531-532:
“ all laws of the English Parliament must be territorial - territorial in this sense, that they apply to and bind all subjects of the Crown who come within the fair interpretation of them, and also all aliens who come to this country, and who, during the time they are here, do any act which, on a fair interpretation of the statute as regards them, comes within its provisions ---- If he is resident here temporarily, and does an act which comes within the intent and purview of a statute, he, as regards that statute, as does every alien who comes here in regard to all the laws of this realm, submits himself to the law, and must be dealt with accordingly. As regards an Englishman, a subject of the British Crown, it is not necessary that he should be here, if he has done that which the Act of Parliament says shall give jurisdiction because he is bound by the Act by reason of his being a British subject, though, of course, in the case of a British subject not resident here, it may be a question on the construction of the Act of Parliament whether that which, if he had been resident here, would have brought him within the Act has that effect when he is not resident here.”
Put into the language of today, the general principle being there stated is simply that, unless the contrary is expressly enacted or so plainly implied that the courts must give effect to it, United Kingdom legislation is applicable only to British subjects or to foreigners who by coming into the United Kingdom, whether for a short or a long time, have made themselves subject to British jurisdiction. Two points would seem to be clear: first, that the principle is a rule of construction only, and secondly, that it contemplates mere presence within the jurisdiction as sufficient to attract the application of British legislation. Certainly there is no general principle that the legislation of the United Kingdom is applicable only to British subjects, or persons resident here, merely to state such a proposition is to manifest its absurdity. Presence, not residence, is the test.
But, of course, the Income Tax Acts impose their own territorial limits. Parliament recognises the almost universally accepted principle that fiscal legislation is not enforceable outside the limits of the territorial sovereignty of the kingdom. Fiscal legislation is, no doubt, drafted in the knowledge that it is the practice of nations not to enforce the fiscal legislation of other nations. But, in the absence of any clear indications the contrary, it does not necessarily follow that Parliament has in its fiscal legislation intended any territorial limitation other than that imposed by such unenforceability: see Government of India v Taylor [1955] AC 492, 503. Indeed, British tax liability has never been exclusively limited to British subjects and foreigners resident within the jurisdiction.  ------------------------
Lord Wilberforce said at 152 C/D
[The territorial principle], which is really a rule of construction of statutes expressed in general terms, and which as James L.J. said a “broad principle”, requires an enquiry to be made as to the person with respect to whom Parliament is presumed, in the particular case, to be legislating.
Who, it is to be asked, is within the legislative grasp, or intendment of the statute under consideration? ----
27.	This approach was adopted in Masri v Consolidated Contractors [2009] UKHL 43; [2009] 4 All ER 847 which is why it is often referred to as the Masri principle.  In Masri, Lord Mance expressed the conclusion of a unanimous House of Lords at paragraphs 10 and 19 as follows:
10. ---------------------- The principle relied upon is one of construction, underpinned by consideration of international comity and law. It is that “Unless the contrary intention appears ---- an enactment applies to all persons on matters within the territory to which it extends, not to any other persons and matters” : Bennion Statutory Interpretation (4th edn, 2002) p 282, section 106, cited with approval, along with considerable case law, by Lord Bingham in R (on the application of Al-Skeini v Secretary of State for Defence ------------------- [2008] 1 AC 153.  The principle may not apply, at any rate with the same force, to English subjects ----------------------------- , but that is presently irrelevant. Whether and to what extent it applies in relation to foreigners outside the jurisdiction depends ultimately as Lord Wilberforce said in Clark (Inspector of Taxes) v Oceanic Contractors Inc --------------- upon who is “within the legislative grasp, or intendment” of the relevant provision. To this a nuanced answer may be given, as in that case where United Kingdom PAYE legislation was held to apply to a foreign company employing workers to work in North Sea operations -----------------
19 	I accept that the existence of a close connection between a subject matter over which this country and its courts have jurisdiction and another person or subject over which it is suggested that they have taken jurisdiction will be relevant in determining whether the further jurisdiction has been taken. It will be a factor in construing, or ascertaining the grasp and intendment of, the relevant legislation or rule. ---------------- 
28.	Unsurprisingly, the application of this principle of statutory construction has resulted in decisions going both ways (e.g. the decision in Masri was that the relevant rule did not allow an order for examination to be made against officers of a company abroad and it distinguished Re Seagull Manufacturing Co ltd (in liq) [1993] 2 All ER 980; [1993] Ch 345 in which it was held that an order for the examination of officers who were abroad of a company in liquidation could be made under the relevant section). 
29.	Also, and again unsurprisingly for present purposes the application of the principle in the cases to which I was referred provides guidance but no binding authority on its application in this case.
The relevance of nationality 
30.	In the Grounds, Detailed Grounds of Opposition and the skeleton arguments no mention was made of the Claimant’s nationality.
31.	As I have already mentioned, the Claimant placed significant reliance on the unanimous decision of the Supreme Court in Perry in respect of disclosure notices given pursuant to an order made under POCA.  That case also covered the extent of a freezing order made under POCA on which a majority decision was reached. 
32.	The disclosure notices were given to Mr Perry (who had been convicted in Israel of a number of offences in relation to a pension scheme), his wife and two daughters.  None of them were British nationals (see paragraph 6 of the judgment of Foskett J [2010] 1 WLR 910). Their nationality is not mentioned in the judgments of the Supreme Court.  The main reasoning is given by Lord Phillips who said:
The DO appeal
84.	 	This appeal challenges the validity of information notices addressed to Mr Perry and his daughters by SOCA pursuant to the disclosure order issued by Judge Kay QC on 8 August 2008: see para 6 above. The disclosure order was issued under Part 8 of POCA, which deals with "Investigations". Part 8 applies to both confiscation proceedings under Parts 2, 3 and 4 of POCA and civil recovery proceedings under Part 5. In relation to Part 5 a disclosure order can be made only if property specified in the application for the order is subject to a civil recovery investigation and the order is sought for the purposes of the investigation: see section 357(3)(b). A civil recovery investigation is defined by section 341(2): 
"For the purposes of this Part a civil recovery investigation is an investigation into— 
(a) whether property is recoverable property or associated property, 
(b) who holds the property, or 
(c) its extent or whereabouts."
85.	 	Section 357 defines a disclosure order as follows: 
"(4) A disclosure order is an order authorising an appropriate officer to give to any person the appropriate officer considers has relevant information notice in writing requiring him to do, with respect to any matter relevant to the investigation for the purposes of which the order is sought, any or all of the following— 
(a) answer questions, either at a time specified in the notice or at once, at a place so specified;
(b) provide information specified in the notice, by a time and in a manner so specified;
(c) produce documents, or documents of a description, specified in the notice, either at or by a time so specified or at once, and in a manner so specified.
(5) Relevant information is information (whether or not contained in a document) which the appropriate officer concerned considers to be relevant to the investigation."
86.	 	Section 358 sets out the requirements for making a "disclosure order": 
"(1) These are the requirements for the making of a disclosure order.
(2) There must be reasonable grounds for suspecting that— 
…
(b) in the case of a civil recovery investigation, the property specified in the application for the order is recoverable property or associated property….
(3) There must be reasonable grounds for believing that information which may be provided in compliance with a requirement imposed under the order is likely to be of substantial value (whether or not by itself) to the investigation for the purposes of which the order is sought.
(4) There must be reasonable grounds for believing that it is in the public interest for the information to be provided, having regard to the benefit likely to accrue to the investigation if the information is obtained."
87.	 	Section 359(1) provides that a person commits an offence if without reasonable excuse he fails to comply with a requirement imposed on him under a disclosure order. The offence carries a maximum sentence on summary conviction of imprisonment for six months. Section 359(3) provides for the more serious offence of knowingly or recklessly making a false statement in purported compliance with a requirement imposed under a disclosure order. This carries a maximum sentence of two years imprisonment in respect of a conviction after a trial on indictment. 
88.	 	---------------------------------------
94.	 	The point is a very short one. No authority is required under English law for a person to request information from another person anywhere in the world. But section 357 authorises orders for requests for information with which the recipient is obliged to comply, subject to penal sanction. Subject to limited exceptions, it is contrary to international law for country A to purport to make criminal conduct in country B committed by persons who are not citizens of country A. Section 357, read with section 359, does not simply make proscribed conduct a criminal offence. It confers on a United Kingdom public authority the power to impose on persons positive obligations to provide information subject to criminal sanction in the event of non-compliance. To confer such authority in respect of persons outside the jurisdiction would be a particularly startling breach of international law. For this reason alone I consider it implicit that the authority given under section 357 can only be exercised in respect of persons who are within the jurisdiction. 
95.	 	Mr Jones referred to a number of other provisions of POCA which, so he submitted, indicated that notices under a disclosure order could only be given to persons within the jurisdiction. He pointed out that Part 8 applies to confiscation as well as to civil recovery. Section 376 as originally drafted included provision for the issue by the judge of a letter of request for the purpose of obtaining information relevant to a confiscation order. He submitted that this provision would have been superfluous if the authority conferred by section 357 extended to persons beyond the United Kingdom. 
96.	 	Part 8 gives other investigatory powers, including the power to make a production order in relation to specified material, the power to issue search and seizure warrants and the power to make a customer information order. Mr Jones submitted that the provisions conferring these powers, either as a matter of language or because of the presumption against extraterritoriality, could only be exercised within the United Kingdom. 
97.	 	These submissions have some merit and reinforce my view of the limited ambit of section 357.
33.	The minority on the freezing order appeal (Lords Judge and Clarke) said:
184.	A core feature of our analysis of Part 5 is that recovery orders take effect in personam subject to the local law, or lex situs. In other words, they have no legal consequences outside the United Kingdom except those positively prescribed by local law. For this reason, recovery orders do not impinge upon the sovereignty of foreign states. By contrast, an information notice given to someone outside the United Kingdom has the potential to criminalise acts and omissions committed abroad by foreign citizens who are outside the jurisdiction of the United Kingdom courts. There is no scope for reading the relevant provisions of Part 8 as taking effect subject to the local law or lex situs. The statutory language is clear and unequivocal – unless the recipient of an information notice has a "reasonable excuse" he is guilty of an offence if he fails to comply with an information notice. 
185.	Further, Part 5 clearly contemplates service on persons anywhere in the world. Section 243(2) states that the claim form must be served on the respondent "wherever domiciled, resident or present". If Parliament intended SOCA to have authority to give information notices anywhere in the world, one would expect to see an equivalent provision in Part 8. However Part 8 contains no such provision. Section 357(4) defines a disclosure order as an order authorising SOCA "to give" information notices "to any person the appropriate officer considers has relevant information". There is nothing in this language to suggest that SOCA's power may be exercised extra-territorially.
34.	Having regard to the Masri principle it seemed to me that these passages may not apply to British nationals and so I enquired whether the Claimant was a British national and was told that he was.  Accordingly, I asked for further submissions on the relevance of that and whether it might render the arguments as presented to me academic or warrant changes in them.  These submissions were not made orally and so I directed that written submissions should be exchanged to cover this point. 
35.	By those further submissions the Revenue argues that:
(i)	 the Claimant’s nationality is determinative, but in line with its earlier submissions  
(ii)	the information notice (taxpayer notice) served on the Claimant would have been valid if he was not a British national and that there is no territorial limit on who can be given a taxpayer notice (provided they are a taxpayer or as I understand it someone whose tax position the Revenue can reasonably check).
36.	By those further submissions the Claimant argues that the fact that he is a British national does not render the information notice valid because such an extra-territorial interpretation and application of Schedule 36 would be inconsistent with the approach to the interpretation of domestic legislation against the relevant background of international law.  In particular, the Claimant relies on the distinction between (i) an enforcement provision or jurisdiction, and (ii) a prescriptive (also called a legislative or substantive) jurisdiction.  He argues that an information notice is an enforcement provision and so cannot be given to a British national outside the jurisdiction.
37.	The issue of whether an information notice can be validly given to a British national who is resident abroad when he is within the jurisdiction of England and Wales does not arise and was not argued in this case, save that the Revenue’s argument clearly supports the view that it could be.  And I repeat the points made in paragraphs 3 to 6 of the “Introduction”.
38.	Also, the issue of a breach of an information notice served on a person abroad but taking place in England and Wales was not addressed in argument.
Conclusion
39.	I prefer the arguments of the Claimant and so hold that the taxpayer notice given to him was not lawfully given and should be quashed.
Reasoning
40.	I accept the submission of the Claimant that the question whether a taxpayer notice can be given to a British national who is resident or living abroad must be assessed by considering Schedule 36 as a whole and not by isolating taxpayer notices.  This accords with the proper approach to the interpretation and application of legislation because it addresses the territorial limits on the giving of taxpayer notices in their statutory context (see, for example, paragraph 55 of Derrin).  It does not preclude a different conclusion being reached in respect of taxpayer notices and other information notices, but it does require the justification of such a conclusion as a matter of statutory construction.
41.	The Revenue placed considerable reliance on Derrin and its confirmation that the purpose underlying Schedule 36 is to provide a credible and effective system of checking and investigation which encourages self-regulation and compliance and so forms a vital underpinning of the UK tax system.  I do not dispute that proposition.  Nor do I dispute that there is strong and well recognised public interest in the collection of all tax that is due and so in there being an effective, thorough and far reaching system for investigating what is due that is not delayed or frustrated.  This public interest and so purpose inform the purposive approach to be taken to determining the relevant intention of Parliament but do not of themselves found a conclusion that Parliament intended Schedule 36 or parts of it, to have effect outside the UK.  Rather they have to be taken into account with the language and other relevant approaches to statutory construction relating to the territorial limits of legislation.
42.	Further, I accept that Derrin provides a helpful and clear analysis of Schedule 36, but it needs to be remembered that that analysis was not directed to the territorial issue that arises in this case.  
43.	The point relied on by the Revenue that Schedule 36 permits the seeking of information for checking the liability of individuals to tax in member States or States in respect of which international tax enforcement arrangements have been made (see paragraph 63(4) of Schedule 36) seems to me to point to the conclusion that its reach extends only to the UK and that if the Revenue wants to seek information about liability to UK tax from persons who are abroad it should rely on such mutual assistance arrangements with the relevant state.  Such arrangements have existed with Cyprus since 1974 and one came into effect with the United Arab Emirates on 25 December 2016, and so after the date the taxpayer notice was given to the Claimant.
44.	The existence of such mutual assistance arrangements between states is well known and so it is also part of the background that is relevant to the interpretation and application of Schedule 36.  Such arrangements reflect the principles and approach referred to in the last cited paragraph from the speech of Lord Scarman Clark v Oceanic in paragraph 26 above.
45.	The existence of such mutual assistance arrangements also undermines the Revenue’s arguments based on the public interest in promoting and so not hindering an investigative regime with the purpose referred to in paragraph 41 above.  Additionally, in my view these public interest arguments are undermined by the Claimant’s points that:
(i)	there is a valid distinction between administrative machinery related to a tax that Parliament intended a foreigner to pay (as existed in Re Clore (deceased) (No 3), IRC v Stype Trustees (Jersey) Ltd and others [1985] STC 394) and a power of investigation, and
(ii)	the prospect that to avoid an investigation into his UK tax a person may move abroad and set up home there (become resident there) is more forensic or imaginary than real.  This is because the foot print left in the UK by any such person will remain together with the ability to give information notices to persons here (as the Revenue has done by giving the third party notices in respect of the Claimant’s tax position).  And this is so even if the person moves to a country with which the UK has no mutual assistance arrangement.
46.	The points made in the last paragraph relate to the territorial extent of the investigatory powers conferred by Schedule 36 in pursuance of the powerful public interest in the collection of all tax that is due to the UK Exchequer rather than to the existence and the strength of that public interest and so the purpose underlying Schedule 36.  
47.	I accept that Schedule 36 provides a clear link to the investigation of whether tax is payable to the UK Exchequer and so to that public interest.  But there are a number of provisions within Schedule 36, which to borrow the expression adopted by Lord Mance at paragraph 24 of Masri raise eyebrows at the notion that Parliament intended the Schedule to have extra territorial effect.  These include:
(i)	A provision permitting inspection of the business premises of a person (e.g. the Claimant) for the purpose of checking that person’s (i.e. in this case the Claimant’s) tax position (including his liability to UK or a relevant foreign tax) because it is not easy to see why Parliament would think it appropriate to authorise this abroad, or how it could be accomplished abroad by the Revenue.
(ii)	If the Revenue is right, a provision that would enable it to give a notice to say a Swiss Bank, or (and closer to this case) to a Cypriot restaurant, hotel or other Cypriot business establishment requiring the production of information or documents for checking the tax position of a UK tax payer or someone who the Revenue are investigating to see if they owe UK tax (or relevant foreign tax) who they can identify and who they cannot identify.
(iii)	Provisions providing for penalties and possible prosecution of persons given information notices abroad for acts or omissions abroad or arranged from abroad.
(iv)	The absence of any express provision relating to territorial limits either distinguishing taxpayer notices from third party and paragraph 5 information notices, or at all.
48.	The Revenue points to its power to conduct investigations into the UK (or relevant foreign) tax position of persons who are dead, companies that have ceased to exist and unidentified persons.  This shows the width of the relevant potential tax liabilities.  But as this power can only be exercised by a third party notice or a paragraph 5 information notice, this point does not address the surprising nature of the points in sub paragraphs 47 (ii) to (iv) above.
49.	The Revenue argued that the approach of the Court of Appeal in Dar Al Arkan Real Estate Development Co and another v Refai [2014] EWCA 715; [2015] 1 WLR 135 provided persuasive support for its conclusion based on the public interest in the collection of, and so in the thorough investigation of the liability to, UK tax.  It argued that the public interest referred to in paragraph 41 was a very strong one and so stronger than the public interest that was considered important in Arkan.  Even if that assertion on the respective strengths of the public interests is relevant and correct, and notwithstanding the prospect of committal, it seems to me that Arkan is but one example (as demonstrated by the cases cited by Beatson LJ) of the application of the relevant principles of statutory construction.  Further, in my view the reliance on the claimant’s wish to continue litigating in the country and to call the relevant officer as a witness (see paragraph 50) and to companies being the subject of court orders (at paragraphs 43 and 44) provide:
(i)	 clear grounds of distinction between Arkan and this case, and
(ii)	 arguments that support the view that the Claimant is in a closer position to that of witnesses or a judgment debtor in cases where a territorial limit was found to exist.
50.	Also, in my view, the points urged by the Revenue by reference to the summary of the Masri principle in paragraph 41 of the judgment of Beatson LJ in Arkan do not make Arkan a highly persuasive authority in its favour.  Because:
(i)	that summary does not purport to and does not identify all the case sensitive factors to be taken into account or the weight to be given to such factors in the application of the principle in all cases,
(ii)	the “reasonableness” requirement for a notice (whether or not approved by the First-tier Tribunal) provides a very different connection to the UK to that which existed in Arkan,
(iii)	albeit that Schedule 36 is founded on a powerful public interest and is not concerned with the enforcement of a private judgment, the liability of a taxpayer to UK tax (or relevant foreign tax) has some similarities to a private judgment, and 
(iv)	an equivalent “reasonableness ground” exists under POCA and so applied in Perry.
51.	I return to Perry, the case heavily relied on by the Claimant.  That too involved a powerful public interest relating to POCA.
52.	In considering Perry, it is important to remember that an aspect of the Revenue’s argument founded on the strong public interest confirmed in Derrin is the need to give the investigatory powers in Schedule 36 “teeth” and so the inclusion therein of enforceable provisions for penalties and criminal sanctions.
53.	In my judgment, these “teeth” mean that the Claimant’s assertion (not addressed by the Revenue in its further submissions) that Schedule 36 is an enforcement jurisdiction (as described in the text book and cases referred to in paragraph 55 below) is correct.
54.	I also accept the Claimant’s argument that the relevant jurisdiction or issue is properly classified as “subject matter jurisdiction” and not “in personam jurisdiction” because it relates to whether a court can regulate a person’s conduct abroad (see for example Bilta (K) Ltd v Nazir [2016] AC 1 at paragraph 212 and the cases referred to in it which include cases enunciating and applying the Masri principle).
55.	The classification of the jurisdiction is relevant to the application of the approach in international law in construing in UK legislation. This is summarised in Brownlie’s Principles of Public International Law at 478/9 where it asserts that: “---- tax investigations may not be mounted, orders for the production of documents may not be executed on the territory of another state, except under the terms of a treaty or other consent given”.  A Canadian case R v Hape [2008] 1 LRC 55 at paragraph 58 supports this approach as does R (Smith) v Oxfordshire Assistant Deputy Coroner [2011] 1 AC 1 at paragraphs 245 and 246 where Lord Collins said:
245	As for enforcement jurisdiction, in the Lotus case (France v Turkey), the Permanent Court said (at 18-19): 
"Now the first and foremost restriction imposed by international law upon a state is that – failing the existence of a permissive rule to the contrary – it may not exercise its power in any form in the territory of another state. In this sense jurisdiction is certainly territorial; it cannot be exercised by a state outside its territory except by virtue of a permissive rule derived from international custom or from a convention."

246	That is a statement about enforcement jurisdiction, namely the limits of the right of a state to act on the territory of another state or to take measures on its own territory which require compliance in another state. Thus a state cannot, without the consent of the territorial sovereign, perform official acts in a foreign state or carry out official investigations in the foreign state. The inability of a foreign state to claim, directly or indirectly, its taxes in England is sometimes put on the basis that it is an illegitimate extension of its territorial jurisdiction: see Government of India v Taylor [1955] AC 491. 

56.	Accordingly, the classification of a jurisdiction as an enforcement jurisdiction is relevant to the approach to be taken to the application of UK legislation to its nationals who are living abroad.
57.	At paragraphs 44 to 46 of his speech in R (Al-Skeini v Defence Secretary [2007] UKHL 26; [2008] 1 AC 153 Lord Rodger says:
44.	 	So far as the application of statutes is concerned, there is a general rule that legislation does not apply to persons and matters outside the territory to which it extends: Bennion, Statutory Interpretation, p 306. But the cases show that the concept of the territoriality of legislation is quite subtle - "slippery" is how Lord Nicholls of Birkenhead described it in R (Quark Fishing Ltd) v Secretary of State for Foreign and Commonwealth Affairs [2006] 1 AC 529, 545, para 32. 
45.	  	Behind the various rules of construction, a number of different policies can be seen at work. For example, every statute is interpreted, "so far as its language permits, so as not to be inconsistent with the comity of nations or the established rules of international law": Maxwell on The Interpretation of Statutes (12th edition, 1969), p 183. It would usually be both objectionable in terms of international comity and futile in practice for Parliament to assert its authority over the subjects of another sovereign who are not within the United Kingdom. So, in the absence of any indication to the contrary, a court will interpret legislation as not being intended to affect such people. They do not fall within "the legislative grasp, or intendment," of Parliament's legislation, to use Lord Wilberforce's expression in Clark v Oceanic Contractors Inc [1983] 2 AC 130, 152C-D. In Ex p Blain (1879) 12 Ch D 522 the question was whether the court had jurisdiction, by virtue of the Bankruptcy Act 1869, to make an adjudication of bankruptcy against a foreigner, domiciled and resident abroad, who had never been in England. James LJ said, at p 526: 
"But, if a foreigner remains abroad, if he has never come into this country at all, it seems to me impossible to imagine that the English legislature could have ever intended to make such a man subject to particular English legislation."
On this general approach, for instance, there can be no doubt that, despite the lack of any qualifying words, section 6(1) of the 1998 applies only to United Kingdom public authorities and not to the public authorities of any other state.
46.	  	Subjects of the Crown, British citizens, are in a different boat. International law does not prevent a state from exercising jurisdiction over its nationals travelling or residing abroad, since they remain under its personal authority: Oppenheim's International Law (ninth edition, 1992), vol 1, para 138. So there can be no objection in principle to Parliament legislating for British citizens outside the United Kingdom, provided that the particular legislation does not offend against the sovereignty of other states. In Ex p Blain (1879) 12 Ch D 522, 531-532, Cotton LJ explained the position in this way ---------: 
58.	This restates the relevant presumption (the Masri principle) and confirms the points that:
(i)	 its application can go both ways, and under it 
(ii)	a British national is in a different position to foreigners.
59.	At paragraphs 47 and 48 Lord Rodger goes on to say:
47.	  	The cases indicate, therefore, that British individuals or firms or companies or other organisations readily fall within the legislative grasp of statutes passed by Parliament. So far as they are concerned, the question is whether, on a fair interpretation, the statute in question is intended to apply to them only in the United Kingdom or also, to some extent at least, beyond the territorial limits of the United Kingdom. Here, there is no doubt that section 6 applies to public authorities such as the armed forces within the United Kingdom: the only question is whether, on a fair interpretation, it is confined to the United Kingdom. 
48.	  	Even in the case of British citizens, a court may readily infer that legislation is not intended to apply to them outside the United Kingdom. See Maxwell on The Interpretation of Statutes, p 171: 
"In the absence of an intention clearly expressed or to be inferred either from its language, or from the object or subject-matter or history of the enactment, the presumption is that Parliament does not design its statutes to operate on its subjects beyond the territorial limits of the United Kingdom."
In Tomalin v S Pearson & Son Ltd [1909] 2 KB 61, 64, Cozens-Hardy MR approved an earlier version of this statement. The court held that the Workmen's Compensation Act 1906 did not apply where a workman, employed by a British company, had been killed in the course of his employment in Malta. Leaving aside the rule of construction, various provisions of the Act indicated that it was only intended to apply in certain specific circumstances outside the United Kingdom.
49.	 	Again, this rule of construction has to be seen against the background of international law. One state is bound to respect the territorial sovereignty of another state. So, usually, Parliament will not mean to interfere by legislating to regulate the conduct of its citizens in another state. Such legislation would usually be unnecessary and would often be, in any event, ineffective. But sometimes Parliament has a legitimate interest in regulating their conduct and so does indeed intend its legislation to affect the position of British citizens in other states. For example, section 72 of the Sexual Offences Act 2003 makes certain nasty sexual conduct in other countries an offence under English law. So, if the words of a statute are open to more than one interpretation, whether or not it binds British citizens abroad "seems to depend ... entirely on the nature of the statute": Maxwell on The Interpretation of Statutes, p 169”
60.	I accept the submission of the Claimant that these passages from the speech of Lord Rodger and the relevance in international law of a jurisdiction being an enforcement jurisdiction support the conclusions that:
(i)	Lord Phillips’ reference to the breach of international law in paragraph 95 of his judgment in Perry (see paragraph 32 above) in a case not involving British nationals can be extended to cover them, on the basis of the presumption that Parliament does not intend to breach international law by imposing criminal sanctions and penalties on British nationals outside the jurisdiction, and so 
(ii)	although distinctions can be made between Perry and this case, Perry provides persuasive authority in favour of the Claimant’s contention that Parliament did not intend to give the Revenue (with or without the approval of the First-tier Tribunal) the power to give an information notice (including a taxpayer notice) to persons outside the jurisdiction because although criminal offences only arise if such approval is given, penalties are not so dependent, and in any event a territorial distinction cannot be made between information notices on the basis of such approval being given.
61.	In short, in my judgment the application of (i) the Masri principle, and (ii) the approach that Parliament is presumed to have intended to act in accordance with international law, and so not to offend against the sovereignty of another state, found the conclusion that Schedule 36 does not provide a power to give the taxpayer notice that was given to the Claimant in Dubai and so the Revenue should not have given it, the First-tier Tribunal should not have approved it and it should be quashed.
62.	In my judgment, that conclusion is in line with and is supported by the well- known and well-recognised need for international tax enforcement arrangements as to which s. 173 of the Finance Act 2006, which is mirrored in the definition of foreign tax in paragraph 63(4) of Schedule 36 (see paragraph 12 above), provides:
(2) For the purposes of subsection (1) arrangements relate to international tax enforcement if they relate to any or all of the following—
 (a) the exchange of information foreseeably relevant to the administration, enforcement or recovery of any UK tax or foreign tax;
 (b) the recovery of debts relating to any UK tax or foreign tax;
 (c) the service of documents relating to any UK tax or foreign tax.
 (3) In this section—
    “UK tax” means any tax or duty imposed under the domestic law of the United Kingdom, and
    “foreign tax” means any tax or duty imposed under the law of the territory, or any of the territories, in relation to which the arrangements have been made.
Miscellaneous
63.	I am very conscious that permission was refused by both Cranston J and Mitting J on the wider grounds advanced by the Claimant and that in his refusal Cranston J cites paragraphs 68, 70, 71, 73, 118 and 119 of the judgment of Sir Terence Etherton C in Derrin which provides binding authority that Parliament has put in place a monitoring system by the First-tier Tribunal whose decision can be made ex parte and in private and can be challenged by judicial review.
64.	I am also very conscious that the points I raise were not the subject of argument before me. 
65.	However, it seems to me that it is worth noting that in Derrin some reliance is placed on the difference between a third party notice and a taxpayer notice and that a number of cases relating to fundamental common law principles are not addressed in that case or in Ariel.  These include Al Rawi v Security Service [2011] UKSC 34; [2012] AC 531 at paragraphs 10 to 17 and Re A (a child) (disclosure) [2012] UKSC 60; [2013] 1 FCR 69, R (Osborn) v Parole Board [2014] AC 1115 paragraphs 54 to 63 and perhaps in particular R v SSHD ex parte Doody [1994] AC 531 at 560 because it confirms that what satisfies the principles of fairness is case sensitive and a fundamental issue is whether a person knows the case he has to meet.
66.	Schedule 36 provides that a taxpayer notice cannot be approved by the First -tier Tribunal if notice of what is sought by it and an opportunity to make submissions to the Revenue that are to be summarised to the First-tier Tribunal has not been given to the taxpayer unless paragraph 3(4) of Schedule 36 applies and so unless the First-tier Tribunal is satisfied that doing this might prejudice the assessment or collection of tax (and see paragraphs 3(3)(e) and 4 which apply to information to be given to the taxpayer about third party notices).  
67.	Applying the general approach to ex parte applications, the reasons for the application of paragraph 3(4) would have to be fully explained to the First-tier Tribunal and a full record of that explanation provided when the relevant risk has passed.  
68.	When paragraph 3(4) of Schedule 36 does not apply (and so at least arguably in cases when a precursor letter has been sent and so the condition for the offence provided for in paragraph 54 of Schedule 36 exists) it seems to me that it is at least arguable that:
(i)	a private hearing is not justified on the grounds of confidentiality owed to the taxpayer, particularly if the taxpayer wants a hearing in public and so a full record of what is said and done at the hearing, 
(ii)	the underlying logic of the decision on the power to convene an inter partes hearing set out in paragraph 50 of the judgment of Blackburne J, and so of the Court of Appeal,  in Morgan Grenfell does not apply to the monitoring jurisdiction conferred on the First-tier Tribunal under Schedule 36 because it envisages submissions being made by the taxpayer (and so that they can be of some use) and, in some cases, it may well not be the case that the Revenue will be at risk of letting “any cat out of any bag” and so taxpayer participation would not be excluded by the nature of the jurisdiction (e.g. on an issue relating to the territorial jurisdiction or on the reasonableness of the notice), and further
(iii)	the reasoning in Morgan Grenfell based on the nature of the jurisdiction should be revisited having regard to the approach of the Upper Tribunal and the Court of Appeal in Browning v Information Commissioner and another [2013] UKUT 0236 and [2014] EWCA Civ 1050 and [2014] 1 WLR 3848. 
69.	To my mind, applying fundamental principles and the Rules of the First-tier Tribunal (including the overriding objective), it is at least arguable that in cases where a precursor letter has been sent the points that the First-tier Tribunal is carrying out a monitoring role and the taxpayer and third parties do not have a right to an inter partes hearing do not mean that the First-tier Tribunal, as the monitor charged with ensuring that arbitrary conduct by the executive is avoided and making a decision that removes rights of appeal and founds penal consequences, cannot or should not do any of the following:
(i)	call for further explanation from the Revenue,
(ii)	insist that the taxpayer be given a copy of the summary of his representations that the Revenue propose giving to the First-tier Tribunal,
(iii)	call for further explanation or comment in writing from a taxpayer on his position or that summary,
(iv)	hold the hearing in public or direct that the taxpayer can attend to observe and make public what is said and done,
(v)	direct that a full record on what is said and done at any hearing and all documents put before the First-tier Tribunal are provided to the taxpayer, and 
(vi)	permit the taxpayer to take part in the hearing.
70.	If there is a risk that disclosure of matters not covered in the precursor letter and related communications to a taxpayer (including the opportunity given to the taxpayer to make representations) would trigger grounds for their non-disclosure (e.g. the further disclosure would prejudice the assessment or collection of tax) the Revenue can set them out and the First-tier Tribunal can adapt its procedure accordingly.
71.	The arguability of the points set out above, and the view of Mann J cited by the First-tier Tribunal in Ariel, underlie my suggestion that the Revenue and the First-tier Tribunal may wish to address their approach to applications made pursuant to the monitoring regime put in place by Schedule 36 to, as Mann J says, ensure that the First-tier Tribunal is properly informed in its performance of its monitoring role. I add that a transparent monitoring system may better promote the public interest and purpose of Schedule 36 and reduce challenges by way of judicial review.
72.	 In Derrin substantial information on what was provided and said to the First-tier Tribunal was provided to the judicial review court and the summaries to be given to the First-tier Tribunal by the Revenue were provided prior to the hearing before it (see paragraphs 37, 38 and 90).  I do not know how this reflects what happened here, or general practice, but clearly what the taxpayer is told about a hearing before the First-tier Tribunal that he was not permitted to attend, and when he is given this information, and so how and when a full record of the hearing, the documents put before the First-tier Tribunal and its reasoning is provided to him, are at least potentially relevant to the fairness of the monitoring process and so its lawfulness applying public law principles.