Act At Leisure, Repent In Haste

Of the host of problems thrown up by the Human Rights Act one of the most interesting is the impact of Article 6, the right to a fair hearing, on tax appeals. Only one aspect of that right will be explored in this article, namely, the obligation upon the Revenue to prosecute appeals without undue delay. However, the point has already shown itself to be a live one. As has already been seen in several well publicised cases in Scotland, where the Human Rights Act has been effective since 1 July last year, excessive delay will in certain instances lead to the Revenue being compelled to abandon proceedings.

This article examines three aspects of Article 6. First, when will it apply to tax proceedings; second, when will delay amount to a breach of Article 6; and finally, what are the consequences of breach.

Article 6 and tax proceedings

Article 6 of the European Convention for the Protection of Human Rights and Fundamental Freedoms (the Convention), now to be found in Schedule 1 to the Human Rights Act, provides, so far as is relevant:

'In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time'

The Commission (which was, until its abolition, the 'gatekeeper' to the Court of Human Rights in Strasbourg) has held on a number of occasions (at least 34, according to Philip Baker in his impressive cataloguing of the tax case law of the Court of Human Rights and Commission) that ordinary tax appeals, such as the majority of those made to the Special and General Commissioners or the VAT and Duties Tribunal will not involve the 'determination of civil rights and obligations'. The Court of Human Rights has also made at least three statements to this effect.

By section 2 of the Human Rights Act, courts and tribunals in the United Kingdom are bound to take those decisions into account. However, there are a number of arguments to suggest that United Kingdom courts may take a different approach (a possibility averred to by the tribunal chairman in Coleman [1999] V&DR 133). In the first place, the marked distinction between public and civil law that exists in the legal systems derived from the Napoleonic code, and from which the reference to 'civil rights and obligations' in Article 6 derives, is not mirrored in our own legal system. The concept of 'civil rights and obligations' is, essentially, one unknown to United Kingdom lawyers.

Second, as Philip Baker's researches have revealed, the documents preparatory to the Convention (travaux preparatoires) show no evidence of any intention to exclude tax matters from the scope of Article 6.

Finally, third, approached purely as a matter of principle, it is difficult to find any logical basis to justify the exclusion of tax appeals from Article 6 hearings.

In any event, it is clear even on the basis of the case law of the Court of Human Rights, that a number of species of tax proceeding will fall within the notion of civil rights and obligations. In broad terms, any claim against a tax authority for damages or of a restitutionary nature is likely to be afforded Article 6 protection: see Editions Periscope v France [1992] 14 EHRR 597 and the Building Societies case [1997] 25 EHRR 127. So, too, will cases for the restoration of property seized by taxing authorities: see BASIC v Austria (decision of 16 March 1999).

The taxpayer would also enjoy Article 6 protection in any hearing which involved the determination of a criminal charge. This is a notion which, by contrast, has benefited from a broad interpretation. It includes matters which United Kingdom lawyers would describe as criminal, for example the tax fraud dropped by the Revenue in Scotland after a delay in prosecution of over a year (see Scotland's Sunday Mail of 16 July this year), but will not be confined to such matters.

Cases concerned with fraudulent conduct or wilful negligence are likely to fall within Article 6 as involving criminal charges. So, too, will cases involving substantial tax penalties. The penalty at issue in Covexin SA v France (decision of 21 May 1997), for example, amounted to 25 per cent of the tax in question and was held by the Commission to bring the proceedings within the autonomous Convention concept of criminal proceedings. There can be little doubt, following the recent decision of the VAT Tribunal in Murrell, that these cases will be followed in United Kingdom courts and tribunals. Mere administrative penalties the £100 fine imposed on the late submission of a tax return or the obligation to pay interest on the late payment of tax will not, however, suffice to bring a matter within the criminal domain.

The nature of the protection

Where the proceedings in question do involve the determination of 'civil rights and obligations or of any criminal charge', the taxpayer will benefit from the protection which Article 6 affords. This article will explore but one aspect of the protection afforded by that Article, namely, the right to a determination within a reasonable time.

The purpose of the obligation to determine proceedings within a reasonable period is to protect against excessive procedural delays and to 'underline the importance of rendering justice without delays which might jeopardise its effectiveness and credibility': see H v France [1990] 12 EHRR 74.

The Strasbourg institutions have been reluctant to stipulate a fixed time within which proceedings must be determined. Rather they have tended to approach the matter on a case-by-case basis having regard to four factors:

(i) the complexity of the case;

(ii) the importance of the matter to the applicant;

(iii) the conduct of the public authorities, including the courts or tribunals; and

(iv) the conduct of the applicant.

Ultimately, therefore, no sensible answer of broad application can be given to the question 'how long is too long'. However, some understanding of the nature of the obligation under Article 6 to prosecute tax matters expeditiously will be gained through giving one or two examples.

In Editions Periscope v France [1992] 14 EHRR 597 the substantive first instance hearing occurred almost five years after the taxpayer lodged his appeal. The taxpayer failed and his appeal to the Conseil d'Etat was delayed for a further four years before eventually being dismissed. In Strasbourg, the Court of Human Rights stressed the fact that the case was not particularly complex and that the delay had been caused almost exclusively by inactivity on the part of the French Government: 'It follows that the Court cannot regard as reasonable in this instance a lapse of time of more than eight years'; see paragraph 44.

The case of Hentrich v France [1994] 18 EHRR 440 makes the point that Article 6 is not concerned simply with the effluxion of time prior to the first instance hearing. In that case there was a delay of less than nine months between the taxpayer initiating proceedings and judgment being handed down by the court of first instance. However, there was then a delay of some four years before the appeal court gave its ruling and a further two years before the court of final appeal upheld the decision to dismiss the taxpayer's case. In Strasbourg, the Court noted that the delay at the first level of appeal had been largely caused by a backlog of cases to be heard and the delay at the second level of appeal by a desire to consolidate the taxpayer's case with three other similar appeals. Neither of these factors, held the Court, could justify such a substantial delay.

In BASIC v Austria (decision of 16 March 1999) two and a half years passed from the issue of a notice requiring the payment of import duties to the first appeal being dismissed. The Commission, on these facts, declared the case admissible for a hearing before the full Court of Human Rights.

In summary, by way of a general rule, a delay of less than two years between the initiation and resolution of proceedings is unless those proceedings evidence a truly exceptional need for expedition unlikely to amount to a breach of Article 6. However, any period substantially greater than that may, depending upon the facts, merit further investigation. The long-stop is probably Neumeister v Austria [1980] 1 EHRR 91 where the Court of Human Rights held that the exceptional complexity of the case justified a period of seven years from charges being laid against the applicant until the hearing before the Court (at which time proceedings had yet to be resolved). However, it held that, in most cases, this would exceed the permitted period.

Consequences of breach

At this final stage of investigation of the nature of the right not to be subjected to undue delay, difficulties again arise. These flow, in part, from the nature of the Court of Human Rights as a tribunal of last resort. Article 41 of the Convention enables the Court to award 'just satisfaction' only where domestic law will not give full reparation.

The principle, therefore, is clear. The first port of call for a successful applicant is to look to his domestic law for his remedy. It is only where domestic law does not provide a remedy that the Court of Human Rights is empowered to make an award of damages. (It should be noted that this is the only remedial power that the Court possesses: it cannot annul decisions or reverse convictions.)

In Schouten v The Netherlands [1995] 19 EHRR 432, for example, the Court indicated that it is in principle for the national courts to decide what the appropriate sanction should be under their legal system for a breach of the 'reasonable time' requirement (see paragraph 75). It then went on to enquire as to the position which would have obtained had there not been a breach of Article 6: in other words, the Court asked whether the applicant suffered any loss by reason of the excessive delay. In the absence of such loss, the Court has tended not to award damages: see, for example, Schouten and Editions Periscope.

Where there has been a breach of the right to a fair trial in criminal proceedings, the Court has tended also to consider the question whether it would be appropriate to make an award of non-pecuniary damages. However, before making an award it seems to require that the applicant suffer some additional detriment by reason of the excessive delay in determining the criminal dispute. Where none can be shown, the Court has tended to view a finding of breach as itself being sufficient compensation for the wrong.

It is against this background that it is necessary to consider what remedies United Kingdom courts and tribunals would afford following the implementation of the Human Rights Act. It is, in the writer's view, open to question whether or not the approach taken by the Court of Human Rights which may be described as the 'causative' approach would be followed in the United Kingdom.

The maxim ubi jus ibi remedium (where there is a right, there must be a remedy) has some currency in the common law. The existence of a right to have one's civil rights and obligations and any criminal charge against one determined without undue delay without any means effectively of securing that public authorities do not breach that right with impunity appears to run counter to that maxim.

In the writer's opinion, the common law does provide a remedy. The courts of England and Wales possess power to strike out proceedings or parts thereof where those proceedings amount to an abuse of process. A failure to pursue proceedings with reasonable speed would seem to be akin to an abuse of process. Clearly, as the remedy is a discretionary one, courts may choose to withhold it where the circumstances require.

Conclusion

Despite the difficulties outlined above, Article 6 does enable the taxpayer to raise questions about the conduct of investigations and proceedings by taxing authorities. Moreover, unlike a number of other tax and human rights arguments, it is one that has already borne fruit for the taxpayer in United Kingdom courts.

The author is indebted to Philip Baker's recent treatment of the tax case law of the Strasbourg institutions at (2000) 4 BTR 211. The compendious nature of that work it catalogues every decision of those bodies on any tax point is such that one could hardly set pen to paper without rendering oneself susceptible to the allegation of plagiarism. Grateful acknowledgement is therefore made to that work.

 

Issue: 3783 / Categories: