Background
In JAVC Limited v. the Board of Inland Revenue (“JAVC Limited”), the issue for the Tax Appeal Board (the “Board”) was whether it had jurisdiction to hear an appeal where the taxpayer implored it to find, inter alia, that it was improper for the Board of Inland Revenue (the “Revenue”) to commence enforcement proceedings against it founded upon a VAT assessment that had been superseded and / or discharged as evidenced by a subsequently dated VAT Clearance Certificate which stated:
“[The Appellant] has to date discharged all obligations and paid all taxes due under the provisions of the Value Added Tax Act, Chapter 75:06”
The triggering point for the Notice of Appeal was the taxpayer’s receipt of a letter from the Revenue indicating the commencement of collection proceedings in relation to the superseded and / or discharged assessment.
The Ruling
The Board is a Superior Court of Record established by the Tax Appeal Board Act, Chap. 4:50 (the “TAB Act”) to provide for appeals from assessments to income tax, corporation tax and other taxes.
Although in the Board’s reasons it acknowledged “the cardinal principle of natural justice which establishes the right of a taxpayer to challenge an assessment made upon it through the dispute resolution mechanism as specified with the tax legislative regime before the [Revenue] may undertake appropriate proceedings for the recovery of outstanding tax liabilities”, it nonetheless ultimately concluded that its jurisdiction was constrained by section 3(4) of the TAB Act as follows:
“38. In our examination of the question as to whether the instant appeals were filed in accordance with the provisions of section 3(4) of the Tax Appeal Board Act, Chap. 4:50, we begin by considering the scope of the particular section which provides: –
‘(4) The Appeal Board shall have jurisdiction to hear and determine –
(a) Appeals from the decision of the Board of Inland Revenue upon objections to assessment under the Income Tax Act;
(b) Appeals from such other decisions of the Board of Inland Revenue as may be prescribed by or under that Act;
(c) Such other matters as may be prescribed by or under this Act or any other written law.’
39. The section therefore establishes that the jurisdiction of the Tax Appeal Board relates to appeals from either the decision of the [Revenue] upon its determination of an objection or a decision of the [Revenue] in which the appeal process to the Tax Appeal Board is prescribed such as for example, where the [Revenue] has made a decision not to extend the time to a taxpayer for lodging an objection to an income tax assessment or to cancel the VAT registration of an aggrieved VAT registrant.” [Emphasis Added]
The decision further reveals that not only does the Board have limited jurisdiction to adjudicate in disputes between taxpayers and the Revenue, but it also takes a very restrictive view on what constitutes a “decision” for the purposes of section 3(4) of the TAB Act. Specifically, the Board also held
“44. C. The communication which the Appellant has relied on as the decision of the [Revenue] upon which its Notices of Appeal have been founded, being the letter of the [Revenue] dated 22nd March 2017, is in our opinion not a letter in which the [Revenue] has made a decision but amounts to a notice in which the [Revenue] has communicated to the Appellant its intention to commence enforcement proceedings against it as it relates to its outstanding tax liability …”
The Board did not elucidate the legal distinction between a “decision” and a “notice of an intention to [take an action]” for the purposes of the TAB Act. In lieu of an explanation, we assume the Board is unlikely to view correspondence that is unilaterally issued by the Revenue to the taxpayer as a “decision” – even though such correspondence or notice may be indicative of the fact that a number of underlying decisions had been made prior to its issuance. Presumably, as a matter of form, the Revenue’s correspondence must be expressly referable to a specific request made by a taxpayer in order for the Board to consider it to be a “decision”.
Implications
This decision of the Board is a very useful precedent from the perspective of a tax practitioner. Specifically, the borders of the Board’s jurisdiction – unless and until subsequently redefined by statute or a higher court – are now clearly delineated. The Board deals, fundamentally, with (i) appeals following a decision by the Revenue in respect of an objection and (ii) other specific (and limited) areas listed in legislation that expressly confer a route of appeal to the Board. But where the taxpayer’s contention with the Revenue does not fit neatly into the “assessment-objection-appeal” conveyor belt, then the Board is not the appropriate arena for adjudication. So, for example, in circumstances that the taxpayer alleges that the Revenue’s conduct is in breach of certain principles of natural justice, or where the Revenue prohibits taxpayer from filing a Tax Return, or where the Revenue has not paid interest on an outstanding VAT refund in accordance with the VAT Act, or where the Revenue refuses to waive interest or penalties (to name just a few of the myriad of issues taxpayers in T&T routinely face), the appropriate judicial forum to obtain recourse may not be the Board.
Alternatively, section 5(1) of the Judicial Review Act, Chap 7:08 provides that an application for judicial review of a decision of an inferior Court, tribunal, public body, public authority or a person acting in the exercise of a public duty or function in accordance with any law, shall be made to the High Court in accordance with this Act and in such manner as may be prescribed by Rules of Court.
In Preston v Inland Revenue Commission, [1985] AC 835 (House of Lords) it was stated that:
“Judicial review is available where a decision-making authority exceeds its powers, commits an error of law, commits a breach of natural justice, reaches a decision which no reasonable tribunal could have reached, or abuses its powers. Judicial review should not be granted where an alternative remedy is available. In most cases in which the commissioners are said to have fallen into error, the remedy of the taxpayer lies in the appeal procedures provided by the tax statutes to the General Commissioners or Special Commissioners. This appeal structure provides an independent and informed tribunal which meets in private so that the taxpayer is not embarrassed in disclosing his affairs and the commissioners are not inhibited by their duty of confidentiality. The commissioners and the tribunals established to hear appeals from the commissioners have wide knowledge and experience of fiscal law and practice. Appeals from the General Commissioners or the Special Commissioners lie, but only on questions of law, to the High Court by means of a case stated and the High Court can then correct all kinds of errors of law including errors which might otherwise be the subject of judicial review proceedings.”
In Preston, the House of Lords stated that a taxpayer can apply for judicial review of a decision of the Revenue if it failed to discharge its statutory duty to taxpayers or abused its power. For the purposes of judicial review, abuse of power included the unfair exercise of a statutory power if the Revenue’s decision or action was equivalent to a breach of contract or breach of representation giving rise to estoppel.
Given, as stated in Preston, “judicial review should not be granted where an alternative remedy is available”, does the Board’s articulation of its own limited jurisdiction in JAVC Limited now fully support Judicial Review applications of Revenue decisions directly to the High Court in circumstances that Caribbean tax practitioners had previously, and exclusively, sought recourse from the Board? We suspect that until and unless overturned, the JAVC Limited decision will help to establish a paradigm shift in Caribbean tax jurisprudence in favour of the High Court. Very interesting times are ahead.
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CAVEAT
The views expressed in this article are the views of the author(s) 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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