Comment : General Commissioners of Income Tax
(October 2006)
Henry Russell, Chairman of the National Association of General Commissioners talks about the General Commissioners of Income Tax.
General Commissioners of Income Tax are the oldest tribunal. They were established in 1799 by William Pitt the Younger's Income Tax Act, a temporary measure to finance the Napoleonic Wars. The Special Commissioners were created in 1805, to assist the General Commissioners. Many of the characteristics of income tax we recognise today, such as the tax schedules and taxation at source, were introduced in the early years of the 19th century.
General Commissioners also had tax collecting and administrative powers, but these finally disappeared in 1946. Traditionally, the value of locally-recruited Commissioners was that they have an understanding of the businesses and economy of their area.
The General Commissioners remain a lay, unpaid and local tribunal, while the Special Commissioners have developed in to a specialist legally-qualified tribunal. General Commissioners are appointed to a division, based on the old tax divisions. Each division appoints a chairman for the division (as distinct from the hearing chairman), and there is no regional or presidential structure above that. Commissioners are appointed by the Lord Chancellor, on the recommendation of county advisory committees, which are usually chaired by the Lord Lieutenant.
Each division's administration is carried out by a clerk who gives the Commissioners legal advice. Administration that needs to be carried out centrally, such as policy, training and finance is been carried out by the Tribunals Service.
We hear appeals from taxpayers on income tax, corporation tax, National Insurance and some capital gains tax matters. Typical cases will be appeals against penalties and surcharges, tax status, applications to close tax inquiries, and amended assessments to tax. We also hear ex parte applications from Her Majesty's Revenue and Customs (HMRC) requiring taxpayers (and others) to provide information and tax returns. The appellant may appeal the General Commissioner's decision on a point of law to the High Court, on the basis of a case stated.
Some ten years ago, the National Association of General Commissioners was established to represent Commissioners' interests and to provide training. The National Association and the Tribunals Service provide an annual day of training for Commissioners. This is delivered in regional centres across the UK. This year we have developed a new chairmanship course, the first of which was held in Birmingham in September and was very successful.
A major change to our workload resulted from the introduction of self-assessment in 1997. The reduction in caseload resulted in a moratorium on new appointments. This has led to a decline in the numbers of Commissioners in the UK from 3500 a few years ago to under 2000 now. This has created difficulties in mustering panels of three Commissioners in some areas. To tackle this the Tribunals Service has introduced a programme of cross-appointing Commissioners to all divisions in their county. That is a recent innovation and we have yet to see how it operates.
Reform of the tax tribunals has been mooted for some years. The current vehicle for our reform is now likely to be Tribunals Courts and Enforcement Bill and the work of the Tax Appeals Modernisation Project. The bill will provide the framework of the two-tier tribunal system, sliced vertically into chambers relating to different tribunal jurisdictions. The First-tier will hear cases at first instance with the Upper Tribunal hearing appeals.
Lord Justice Carnwath, Senior President Designate of Tribunals established the Tax Appeals Modernisation Stakeholder Group chaired by Stephen Oliver QC to recommend how the tax appeals system might be reformed. The jurisdictions of the four tax tribunals will be combined, bringing together the Special and General Commissioners, the VAT and Duties Tribunal and the Section 703 Tribunal.
The bill proposes that all tribunal appeals from the Upper Tribunal will go the Court of Appeal. There are some complex cases which are likely to go up the appeal ladder. It may well be appropriate for such cases to be heard at first instance by the Upper Tribunal.
The offices of General Commissioner and Clerk will be abolished. The functions of the General Commissioner tribunal will be transferred to the new tribunal. Some clerks may well qualify as legal members of the tax chamber. Existing General Commissioners may wish to apply to join as non-legal members.
The stakeholder group also considered that many of the straightforward appeals currently heard by the Commissioners could be determined by a wholly non-legal panel, with appropriate qualifications and training. Users value the non-legal element in the tribunal, demonstrated by a recent research paper by the Chartered Institute of Taxation ('Tax Appeals: A Low Income Perspective' CIOT September 2006).
The wider role of non-legal members of tribunals is being considered by the Department for Constitutional Affairs. Announcing the review at the Council on Tribunals conference in 2005, Baroness Ashton said, "Non-legal tribunal members play an important role in connecting with users, particularly the most vulnerable. I believe they are sometimes under-used and undervalued. While the highest standards of legal expertise will be vital in a reformed tribunal system it is equally important that tribunals harness all the skills and knowledge of all types of member." As and when the Tribunals Courts and Enforcement Bill reaches the statute book, there will undoubtedly be substantial and wide-ranging reforms to the tax tribunals. It is important that these meet the needs of the users.
What do you think?
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