Month: December 2016

Recent Tax Case: C.G. v. The Board of Inland Revenue

The Appellant raised a previously untested point before the Appeal Board: whether a taxpayer can obtain an order for summary judgement and bring the appeal proceedings to an end prematurely without having to incur the costs and time associated with the trial process.

 

Obtaining an Order for Summary Judgement in Tax Appeal Cases

 

Background

A summary judgement is a judgement entered by a court for one party and against another party summarily, i.e., without a full trial. In the absence of an award of summary judgement (or some type of pretrial settlement), a lawsuit ordinarily proceeds to trial. This process can be costly and lengthy. A party applying for summary judgement is attempting to avoid the time and expense of a trial when, essentially, the outcome is obvious.

In Trinidad and Tobago summary judgement in the Supreme Court is governed by Rule 15 of the Civil Procedure Rules (formerly Order 14 of the Supreme Court Rules). The Tax Appeal Board (“Appeal Board”), which is a Superior Court of Record, is subject to its own rules: The Tax Appeal Board Rules, Chap. 4:50 (the “Tax Rules”). The Tax Rules do not expressly make provision for summary judgment applications; however Rule 21 of the Tax Rules provides that:

“Except as otherwise provided in the Act or in these Rules or in any written law, the Rules of the Supreme Court relating to applications to a Judge in Chambers and as to taxation of costs shall, with the necessary modifications, if any, apply to appeals and applications to the Court”.

Moreover, section 6(7) Tax Appeal Board Act, Chap. 4:50 provides that:

“The Board, as respects the… enforcement of its orders… and other matters necessary or proper for the due exercise of its jurisdiction, has all such powers, rights and privileges as are vested in the High Court of Justice…”.

The wording of this section is sufficiently wide to give the Appeal Board the power to award summary judgements.

C.G. v The Board of Inland Revenue

(Decision delivered December 1, 2016)

Material Facts

In C.G. v The Board of Inland Revenue, the taxpayer filed an application before the Appeal Board to allow his appeal, and to vacate the Board of Inland Revenue’s Assessment against him – without the delay and expense inherent in a full blown trial – on the basis, inter alia, that: the Statement of Case filed by the Board of Inland Revenue revealed, on its face, that it stood no reasonable chance of success on the Appeal.

Legal Issue

The Appellant raised a previously untested point before the Appeal Board, i.e. whether an Appellant can obtain an order for summary judgement and bring the appeal proceedings to an end prematurely without having to incur the costs and time associated with the trial process.

Held

In C.G. v. The Board of Inland Revenue, the Appeal Board confirmed that the remedy of summary judgement can be utilized at the Appeal Board and, in general terms, may be made [with necessary modifications] in the following circumstances:

“Where in an action to which this rule applies a statement of claim [Notice of Appeal] has been served on a defendant [Respondent] and that defendant [Respondent] has entered an appearance [Statement of Case] in the action [Appeal], the plaintiff [Appellant] may, on the ground that the defendant [Respondent] has no defence to a claim included in the writ [Notice of Appeal], or to a particular par of such a claim, or has no defence to such a claim or part except as to the amount of damages claimed, apply to the Court for judgement against that defendant [Respondent].”

Where questions of law are raised summary judgement is appropriate where:

1.  if the defendant’s [Respondent’s] only suggested defence is a point of law and the court can see at once that the point is misconceived, the plaintiff [Appellant] is entitled to judgement;

2.  if at first sight the point appears to be arguable, but with a relatively short argument can be shown to be plainly unsustainable.

Implications for tax law practice

By confirming its jurisdiction to grant summary judgements, this enables the Appeal Board to deal with its cases expeditiously and cost effectively.

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CAVEAT

The views expressed in this article are the views of the authors only and shared for discussion and information purposes only; they are not intended to constitute legal advice. Readers are encouraged to consult with their professional advisors for advice concerning specific matters. 

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Avoiding interest on quarterly taxes in Trinidad and Tobago

In Trinidad and Tobago, interest may be avoided by a company on the payment of quarterly taxes should the required amounts be paid to the Board of Inland Revenue on or before the due dates. The due dates for the payments of quarterly taxes are 31st March, 30th June, 30th September and 31st December. The 4th quarter for 2016 ends on 31st December and it is important that the quarterly taxes due are correctly determined and paid on time.

In Trinidad and Tobago, interest may be avoided by a company on the payment of quarterly taxes should the required amounts be paid to the Board of Inland Revenue on or before the due dates. The due dates for the payments of quarterly taxes are 31st March, 30th June, 30th September and 31st December. The 4th quarter for 2016 ends on 31st December and it is important that the quarterly taxes due are correctly determined and paid on time. Should a downward adjustment be required to be made for the payment, an application should be made and approved by the Board of Inland Revenue.  Interest of 20% per annum is imposed on the late payment of quarterly taxes.

Corporation tax is charged for the calendar year in which the accounting period ends, on taxable profits earned during the accounting period. Taxable profits is determined after deduction of capital allowances and the revenue expenses wholly and exclusively incurred in producing income. Corporation tax is based on 25% of taxable profits of a company.

In an income year quarterly corporation tax is based on the taxable profits of the previous year. The corporation tax payable for each quarter in 2016 is based on taxable profits for the income year 2015. The corporation tax installment payable for each quarter in 2016 is determined based on the following formula.

Taxable profits for 2015   X   25%

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Should the taxable profits for 2016 be expected to exceed the taxable profits for 2015, by 31st December the company is required to pay to the Board of Inland Revenue, quarterly taxes equal to the liability for income year 2015 in addition to 80% of the increase for 2016 over 2015.

Should the taxable profits for 2016 be expected to be less than the taxable profits for 2015, an application should be made to the Board to Inland Revenue for approval to reduce the quarterly tax installment. A company is required to pay the higher of corporation tax or business levy.

Business levy is charged at the rate of 0.6% of gross sales or receipts of a company. A credit is given against business levy liability for any corporation tax paid for the income year, the result being that only the higher of the corporation tax or the business levy liability is payable.

Green fund levy is charged at the rate of 0.3% of gross sales or receipts of a company. Green fund levy must be paid in addition to corporation tax or business levy.

DISCUSSION FORUM

If you have any questions or comments about quarterly tax computation, please ask or comment below.