Judgments - Regina v. Allen

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    25. On 9 May 1991 the appellant was served with a notice pursuant to section 20(1) of the 1970 Act. The notice required a variety of information, including requirement 6, which stated:

    "I require a certified statement of all your assets and liabilities as at 31 January 1991".

The appellant failed to comply with the notice and he received a summons dated 13 August 1991 to appear before the General Commissioners:


    To Mr B R Allen of  The Warleys, Hammerpond Road, Plummer Plain, Horsham, West Sussex

    INFORMATION has been laid this day by Mr G W Young of Inland Revenue, Special Office

    one of Her Majesty's Inspectors of Taxes that—

    1.  you were served for the purposes of section 20(1) of the Taxes Management Act 1970 with a notice dated 9 May 1991 requiring you to deliver to Mr A R Maxwell one of Her Majesty's Inspectors of Taxes, not later than 31 July 1991 the following document(s)—

    Per schedule attached.

    2.  you have failed to comply with the notice thereby rendering yourself liable under the provisions of section 98(1) of the Taxes Management Act 1970 to a penalty not exceeding fifty pounds.

    YOU ARE THEREFORE hereby summoned to appear before the Commissioners for the general purposes of the Income tax for the above-named Division sitting at 29 Park Place, Leeds on the 3rd day of September next at the hour of 2 o'clock in the afternoon to answer the information and to be further dealt with according to law.

    Dated the 13th day of August 1991

    Your attention is drawn to the statutory provisions overleaf and in particular to those relating to penalties."

This summons was signed by two of the Commissioners for the general purposes of the income tax for the Division.

    26. The appellant still failed to comply with the section 20(1) notice and at a meeting between the appellant and his accountant and officials of the Revenue the officials adopted what is termed "the Hansard procedure" whereby one of the officials formally read out to the appellant the reply of the Chancellor of the Exchequer to a Parliamentary Question on 18 October 1990 which was in the following terms:

    "The practice of the board of Inland Revenue in cases of fraud in relation to tax is as follows:

    (1)  The board may accept a money settlement instead of instituting criminal proceedings in respect of fraud alleged to have been committed by a taxpayer.

    (2)  It can give no undertaking that it will accept a money settlement and refrain from instituting criminal proceedings, even if the taxpayer has made a full confession and has given full facilities for investigation of the facts. It reserves to itself full discretion in all cases as to the course it pursues.

    (3)  Nevertheless, in considering whether to accept a money settlement or to institute criminal proceedings, its decision is influenced by the fact that the taxpayer has made a full confession and has given full facilities for investigation into his affairs and for examination of such books, papers, documents or information as the board may consider necessary." (Hansard (HC Debates), 18 October 1990, written answers, col 882).

At this meeting further questions relating to his financial affairs were also put to the appellant. Subsequently the appellant provided answers to the various questions put to him, and in compliance with requirement 6 of the section 20(1) notice he delivered to the revenue the schedule of assets referred to in count 11.

    27. Mr Newman QC, on behalf of the appellant, submitted that in obtaining from the appellant the schedule of assets upon which the prosecution case was based the revenue had breached his right to a fair trial under article 6 because the appellant had been compelled under threat of penalty to incriminate himself by providing the schedule of assets. Mr Newman also submitted that the appellant had been subjected to an inducement to provide the schedule by the assurance implicit in the Hansard statement that if the taxpayer makes a full confession criminal proceedings would not be instituted against him.

    28. In support of his submission relating to self-incrimination Mr Newman relied on the judgment of the European Court of Human Rights in Funke v France (1993) 16 EHRR 297, 326, para 44 in which it was held that the right to a fair trial given by article 6(1) includes the right "to remain silent and not to contribute himself to incriminating itself." Mr Newman also relied strongly on the judgment of the European Court in Saunders v United Kingdom (1996) 23 EHRR 313. In that case the Secretary of State for Trade and Industry appointed inspectors to investigate the affairs of Guinness Plc pursuant to sections 432 and 442 of the Companies Act 1985. During the course of that investigation Mr Saunders made statements to the inspectors in reply to questions from them. Mr Saunders was subject to legal compulsion to give evidence to the inspectors. He was obliged under sections 434 and 436 of the 1985 Act to answer the questions put to him by the inspectors in the course of the interviews which they conducted with him. A refusal by him to answer the questions put to him could have led to a finding of contempt of court and the imposition of a fine or committal to prison for up to two years, and it was no defence to proceedings consequent on a refusal that the questions were of an incriminating nature. In the course of the subsequent criminal trial in which he was charged with offences relating to an illegal share support operation the transcripts of Mr Saunders' answers to the inspectors, whether directly self-incriminating or not, were used against him by the prosecution in a manner which sought to incriminate him. Mr Saunders lodged an application with the European Commission of Human Rights complaining that the use at his trial of statements made by him to the inspectors under their compulsory powers deprived him of a fair hearing in violation of article 6(1) of the Convention. Both the European Commission and the European Court upheld Mr Saunders' complaint. In its judgments the European Court stated, pp 337-340, paras 68-74:

    "68.  The Court recalls that, although not specifically mentioned in article 6 of the Convention, the right to silence and the right not to incriminate oneself, are generally recognised international standards which lie at the heart of the notion of a fair procedure under article 6. Their rationale lies, inter alia, in the protection of the accused against improper compulsion by the authorities thereby contributing to the avoidance of miscarriages of justice and to the fulfilment of the aims of article 6. The right not to incriminate oneself, in particular, presupposes that the prosecution in a criminal case seek to prove their case against the accused without resort to evidence obtained through methods of coercion or oppression in defiance of the will of the accused. In this sense the right is closely linked to the presumption of innocence contained in article 6(2) of the Convention.

    69.  The right not to incriminate oneself is primarily concerned, however, with respecting the will of an accused person to remain silent . . .

    In the present case the Court is only called upon to decide whether the use made by the prosecution of the statements obtained from the applicant by the Inspectors amounted to an unjustifiable infringement of the right. This question must be examined by the Court in the light of all the circumstances of the case. In particular, it must be determined whether the applicant has been subject to compulsion to give evidence and whether the use made of the resulting testimony at his trial offended the basic principles of a fair procedure inherent in article 6(1) of which the right not to incriminate oneself is a constituent element.

    70.  . . . the Government have emphasised, before the Court, that nothing said by the applicant in the course of the interviews was self-incriminating and that he had merely given exculpatory answers or answers which, if true, could serve to confirm his defence. In their submission only statements which are self-incriminating could fall within the privilege against self-incrimination.

    71.  The Court does not accept the Government's premise on this point since some of the applicant's answers were in fact of an incriminating nature in the sense that they contained admissions to knowledge of information which tended to incriminate him. In any event, bearing in mind the concept of fairness in article 6, the right not to incriminate oneself cannot reasonably be confined to statements of admission of wrongdoing or to remarks which are directly incriminating. Testimony obtained under compulsion which appears on its face to be of a non-incriminating nature— such as exculpatory remarks or mere information on questions of fact— may later be deployed in criminal proceedings in support of the prosecution case for example to contradict or cast doubt upon other statements of the accused or evidence given by him during the trial or to otherwise . . .

    74.  Nor does the Court find it necessary, having regard to the above assessment as to the use of the interviews during the trial, to decide whether the right not to incriminate oneself is absolute or whether infringements of it may be justified in particular circumstances.

    It does not accept the Government's argument that the complexity of corporate fraud and the vital public interest in the investigation of such fraud and the punishment of those responsible could justify such a marked departure as that which occurred in the present case from one of the basic principles of a fair procedure. Like the Commission, it considers that the general requirements of fairness contained in article 6, including the right not to incriminate oneself, apply to criminal proceedings in respect of all types of criminal offences without distinction, from the most simple to the most complex. The public interest cannot be invoked to justify the use of answers compulsorily obtained in a non-judicial investigation to incriminate the accused during the trial proceedings. It is noteworthy in this respect that under the relevant legislation statements obtained under compulsory powers by the Serious Fraud Office cannot, as a general rule, be adduced in evidence at the subsequent trial of the person concerned. Moreover the fact that statements were made by the applicant prior to his being charged does not prevent their later use in criminal proceedings from constituting an infringement of the right."

    29. My Lords, the present case is one which relates to the obligation of a citizen to pay taxes and to his duty not to cheat the Revenue. It is self-evident that the payment of taxes, fixed by the legislature, is essential for the functioning of any democratic State. It is also self-evident that to ensure the due payment of taxes the State must have power to require its citizens to inform it of the amount of their annual income, and to have sanctions available to enforce the provision of that information. In the United Kingdom this power is contained in the provisions of the Taxes Management Act 1970. Section 8(1) provides:

    "For the purpose of establishing the amounts in which a person is chargeable to income tax and capital gains tax for a year of assessment, and the amount payable by him by way of income tax for that year, he may be required by a notice given to him by an officer of the Board—

    (a)  to make and deliver to the officer, on or before the day mentioned in subsection (1A) below, a return containing such information as may reasonably be required in pursuance of the notice, and

    (b)  to deliver with the return such accounts, statements and documents relating to information contained in the return, as may reasonably be so required."

Section 93 provides:

    "(1)  This section applies where—

    (a)  any person (the taxpayer) has been required by a notice served under or for the purposes of section 8 or 8A of this Act (or either of those sections as extended by section 12 of this Act) to deliver any return, and

    (b)  he fails to comply with the notice.

    (2)  The taxpayer shall be liable to a penalty which shall be £100.

    (3)  If, on an application made to them by an officer of the Board, the General or Special Commissioners so direct, the taxpayer shall be liable to a further penalty or penalties not exceeding £60 for each day on which the failure continues after the day on which he is notified of the direction (but excluding any day for which a penalty under this subsection has already been imposed)."

Further subsections make provision for additional penalties if the taxpayer still fails to make a return.

    30. The Tax Return for the year ended 5 April 2001 sent to every individual taxpayer contains the following notice on its first page:

    "This Notice requires you by law to send me a Tax Return for the year from 6 April 2000 to 5 April 2001. Give details of all your income and capital gains using:

    *        this form and any supplementary Pages you need ….
    Make sure your Tax Return, and any documents I ask for, reach me by:

    *        30 September 2001 if you want me to
    -  calculate your tax, OR
    -  collect any tax you owe (less than £2,000) through your PAYE code for 2002-2003, OR

    *        31 January 2002 at the latest, or you will be liable to an automatic penalty of £100.

    Make sure your payment of any tax you owe reaches me by 31 January 2002, or you will have to pay interest and perhaps a surcharge.

    Any Tax Return may be checked. Please remember that there are penalties for supplying false information."

It is clearly permissible for a State to enact such provisions and there could be no substance in an argument that there is a violation of article 6(1) if the revenue prosecuted a citizen for cheating the revenue by furnishing a standard tax return containing false information. Similarly in the present case, viewed against the background that the State, for the purpose of collecting tax, is entitled to require a citizen to inform it of his income and to enforce penalties for failure to do so, the section 20(1) notice requiring information cannot constitute a violation of the right against self-incrimination. The present case is therefore clearly distinguishable from Saunders on that ground. As Lord Bingham of Cornhill stated in Brown v Stott (Procurator Fiscal, Dunfermline) [2001] 2 WLR 817, 836:

    "The jurisprudence of the European Court very clearly establishes that while the overall fairness of a criminal trial cannot be compromised, the constituent rights comprised, whether expressly or implicitly, within article 6 are not themselves absolute. Limited qualification of these rights is acceptable if reasonably directed by national authorities towards a clear and proper public objective and if representing no greater qualification than the situation calls for . . . . The Court has also recognised the need for a fair balance between the general interest of the community and the personal rights of the individual, the search for which balance has been described as inherent in the whole of the Convention: see Sporrong and Lönnroth v Sweden (1982) 5 EHRR 35, 52, para 69; Sheffield and Horsham v United Kingdom (1998) 27 EHRR 163, 191, para 52. "

    31. In respect of his argument that there had been a breach of article 6(1) because the delivery of the schedule of assets had been "involuntary" having been induced by a promise implicit in the Hansard statement that the appellant would not be prosecuted if he furnished the required information, Mr Newman QC relied on the decision of the Court of Appeal in R v Barker [1941] 2 KB 381. In that case at an interview a revenue official read an earlier version of the Hansard statement to the taxpayer and his accountant, the appellant Barker. This statement differed from the later statement made in October 1990 because it stated that where the taxpayer voluntarily disclosed the fact of his past frauds and furnished full information to the revenue "the board will not institute criminal proceedings, but will accept the pecuniary settlement" (see p 382). After the statement had been read to them, the appellant and the taxpayer produced to the revenue official two ledgers which had been fraudulently prepared to induce the revenue authorities to believe that the irregularities amounted to £7,000 in all. At a later interview two further ledgers and working papers were produced which showed that the earlier ledgers were incomplete and had been brought into existence to deceive the revenue. Subsequently a letter was written which made it clear that the full amount of the irregularities was about £10,400. The appellant and the taxpayer were prosecuted and convicted of the offences of conspiring the cheat the revenue and of having delivered false statements of account with intent to defraud.

    32. Before the Court of Appeal counsel for the appellant argued that the statement read from Hansard was partly a promise or an inducement, and the appellant had produced the books or documents as a result of the promise, inducement or threat. Consequently his action was not free and voluntary and the books or documents should not have been admitted in evidence. This argument was accepted by the Court of Appeal and Tucker J stated, at pp 384 - 385:

    "The court . . . . does not desire to question that there may be cases in which evidence can be given of facts the existence of which have come to the knowledge of the police as the result of an inadmissible confession. But in the present case the promise or inducement which was implied in this extract from Hansard expressly related to the production of business books and records, and the court is of opinion that if, as a result of a promise, inducement or threat, such books and documents are produced by the person or persons to whom the promise or inducement is held out, or the threat made, those documents stand on precisely the same footing as an oral or a written confession which is brought into existence as the result of such a promise, inducement or threat.

    The result is that, in the opinion of the court, these vital documents and books, namely, the ledgers and the working papers of the appellant, were wrongly admitted in evidence and in those circumstances the conviction of the appellant cannot stand."

    The effect of this decision was reversed by section 105 of the Taxes Management Act 1970 (which replaced an earlier and similar provision) and which provides:

    "(1)  Statements made or documents produced by or on behalf of a person shall not be inadmissible in any such proceedings as are mentioned in subsection (2) below by reason only that it has been drawn to his attention that—

    (a)  pecuniary settlements may be accepted instead of a penalty being determined, or proceedings being instituted, in relation to any tax,

    (b)  though no undertaking can be given as to whether or not the Board will accept such a settlement in the case of any particular person, it is the practice of the Board to be influenced by the fact that a person has made a full confession of any fraudulent conduct to which he has been a party and has given full facilities for investigation,

    and that he was or may have been induced thereby to make the statements or produce the documents.

    (2)  The proceedings mentioned in subsection (1) above are—

    (a)  any criminal proceedings against the person in question for any form of fraudulent conduct in connection with or in relation to tax, and

    (b)  any proceedings against him for the recovery of any tax due from him, and

    (c)  any proceedings for a penalty or on appeal against the determination of a penalty."

    33. Section 76(4) of the Police and Criminal Evidence Act 1984 provides:

    "The fact that a confession is wholly or partly excluded in pursuance of this section shall not affect the admissibility in evidence—

    (a)  of any facts discovered as a result of the confession; or

    (b)  where the confession is relevant as showing that the accused speaks, writes or expresses himself in a particular way, of so much of the confession as is necessary to show that he does so."

    Cross and Tapper on Evidence, 8th ed (1995), p 535 footnote 4 comment unfavourably on R v Barker and say:

    "The extremely unsatisfactory case of R v Barker [1941] 2 KB 381, [1941] 3 All ER 33 which appeared to assimilate false accounts with a confession of false accounting, and which was overturned on its facts by Finance Act 1942, s 34 (see now Taxes Management Act 1970, s 105), appears to be inconsistent with s 76(4)(a) as a matter of law, and can be supported now only upon the basis of the judge's discretion, see Lord Diplock in R v Sang [1980] AC 402 at 435, [1979] 2 All ER 1222 at 1229."

    34. My Lords, I am unable to accept Mr Newman's submission and to follow the reasoning of the Court of Appeal in R v Barker. In that case the court stated, at p 385: "Those documents stand on precisely the same footing as an oral or a written confession which is brought into existence as a result of such a promise, inducement or threat". In my respectful opinion this is not so. When the Crown relies on an oral or written confession made by the accused and puts it in evidence it does so because it considers that the confession is true. When the courts have excluded a confession because it was involuntary having been obtained by an inducement they have done so on the ground that it was unsafe to rely on the confession as being true. As Lord Sumner explained in Ibrahim v R [1914] AC 599, 610-611:

    "The rule which excludes evidence of statements made by a prisoner, when they are induced by hope held out, or fear inspired, by a person in authority, is a rule of policy. 'A confession forced from the mind by the flattery of hope or by the torture of fear comes in so questionable a shape, when it is to be considered as evidence of guilt, that no credit ought to be given to it': R v Warwickshall. It is not that the law presumes such statements to be untrue, but from the danger of receiving such evidence judges have thought it better to reject it for the due administration of justice: R v Baldry."

    35. However in Barker and in this case the respective accused did not give information contained in the documents and the schedule respectively which the Crown claimed was true, both accused gave false information and were prosecuted for giving that false information. To the extent that there was an inducement contained in the Hansard statement, the inducement was to give true and accurate information to the revenue, but the accused in both cases did not respond to that inducement and instead of giving true and accurate information gave false information. Therefore, in my opinion, the appellant's argument in this case that he was induced by hope of non-institution of criminal proceedings held out by the revenue to provide the schedule and that its provision was therefore involuntary is invalid. If, in response to the Hansard statement, the appellant had given true and accurate information which disclosed that he had earlier cheated the revenue and had then been prosecuted for that earlier dishonesty, he would have had a strong argument that the criminal proceedings were unfair and an even stronger argument that the Crown should not rely on evidence of his admission, but that is the reverse of what actually occurred.

    36. Accordingly, I would dismiss the appellant's appeal.


My Lords,

    37. One of the grounds of appeal argued on behalf of the appellant was that under section 739(2) of the Income and Corporation Taxes Act 1988 the income of the off-shore companies (referred to in the judgment of the Court of Appeal [2000] 3 WLR 273 at 282) was deemed to be the income of the appellant and that the income must therefore be deemed not to be the income of the companies (see paragraph 5 of my noble and learned friend Lord Hutton's opinion).

    38. As Lord Hutton has explained in paragraph 7 of his opinion, counsel for the appellant, Mr Newman QC, dealt with the section 739(2) point before your Lordships by adopting the argument on that point advanced before your Lordships by counsel for Dimsey. In a separate opinion which I have prepared for the purposes of Dimsey's appeal, I have set out my reasons for rejecting his ground of appeal based on section 739(2). For the same reasons I would reject Allen's section 739(2) ground of appeal.


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