FOURTH SECTION

FINAL DECISION

AS TO THE ADMISSIBILITY OF

Application no. 13881/02 by James Murray KING against the United Kingdom

The European Court of Human Rights (Fourth Section), sitting on 17 February 2004 as a Chamber composed of:

Mr M. Pellonpää , President , Sir Nicolas Bratza , Mrs V. Strážnická , Mr R. Maruste , Mr S. Pavlovschi , Mr L. Garlicki , Mr J. Borrego Borrego , judges , and Mr M. O’Boyle , Section Registrar ,

Having regard to the above application lodged on 24 March 2002,

Having regard to the partial decision of 8 April 2003,

Having regard to the observations submitted by the respondent Government and the observations in reply submitted by the applicant,

Having deliberated, decides as follows:

THE FACTS

The applicant, Mr James Murray King, is a United Kingdom and New Zealand national, who was born in 1930 and lives in London, England. He is represented before the Court by Salim and Patel, lawyers practising in London. The respondent Government were represented by Mr J. Evans of the Foreign and Commonwealth Office, London.

A. The circumstances of the case

The facts of the case, as submitted by the parties, may be summarised as follows.

The applicant was born in New Zealand and at all material times was domiciled there. In 1966, he came to the United Kingdom to attend flying courses and at the same time engaged in other occupations of an engineering or building contractor variety, trading under the name “King Enterprises Engineering & Hardware Co”. The applicant met Miss J. and between April 1973 and October 1991 they purchased properties together.

From the 1970’s onwards, the applicant’s tax returns were incomplete and late, in some cases by several years. From February 1982, the Inland Revenue began investigating a number of guesthouse businesses in London which were associated with the applicant and/or his partner Miss J. of which no mention had been made in the applicant’s tax returns.

In December 1985 the General Commissioners of taxes served two notices on the applicant requiring him to provide details of the acquisition of one of the guesthouses and to produce his business records. At a meeting on 21 November 1986, the applicant states that he was informed that the Revenue would be seeking penalties as part of any settlement.

From this time the applicant was involved in frequent discussions and correspondence with the Revenue about his affairs.  The Government stated that the Revenue held some 38 meetings with the applicant and/or his accountant between September 1986 and July 1991.

In June 1987 the Revenue requested a statement of assets and liabilities from the applicant. The applicant states that he objected to disclosing all his assets since due to his non-domicile status his overseas assets were of no relevance. When he had not provided the statement by November 1987, the applicant was interviewed by the Inspector of taxes and on 21 November 1987 the ‘ Hansard statement’ was read to him. The statement, revised by the Chancellor of the Exchequer from time to time, sets out the practice of the Inland Revenue in cases in which criminal proceedings may be contemplated and outlines the factors taken into account by the Revenue when deciding whether to prosecute.

In April 1988 the General Commissioners served a notice requiring the applicant to give details of all transfers of property and cash and of his bank accounts. The notices included a warning about the financial penalty which could be imposed for non-compliance.

On 18 January 1989 the applicant signed a ‘Statement of Personal Assets and Liabilities and Business Interests’ as at 1 September 1986. He states that this was after the Special Commissioners had refused to require him to disclose his overseas assets. The same month, the Revenue issued tax assessments against the applicant for the tax years 1972/3 to 1986/7. The assessments were for income tax on guesthouse profits and bank interest which had not been declared by the applicant in his tax returns. The total claimed was in excess of 620,000 pounds sterling (GBP). For the tax years more than six years prior to the assessments being made, the Revenue could only raise assessments which were to make good a loss of tax due to the neglect or wilful default of the applicant.

1. The 1991 appeal

The applicant appealed against the assessments. Initial hearings during early 1989 before the General Commissioners were adjourned on the application of the applicant or Miss J. On 24 August 1989, at the Revenue’s application, the appeals were transferred to the Special Commissioners of taxes. A hearing of one week was scheduled for November 1990. On the date set for the hearing of his appeal, the applicant applied for judicial review of the refusal of the Special Commissioners to hold a preliminary hearing at his request. The appeal was adjourned as a result. After the refusal of permission to apply for judicial review, the appeals were relisted .

The appeals were heard over eighteen days between May and September 1991. The Commissioners initially indicated that they were not prepared to sit one day a week for the convenience of the applicant, but after the Revenue had opened the case it was decided that, exceptionally, the hearings should be arranged to ensure that the applicant and Miss J. were able to attend. The applicant’s main submissions were that he had no beneficial interest in three of the guesthouses in respect of which assessments had been made and that certain funds used to purchase property had been a loan from his father.

On 18 November 1991, the Special Commissioners issued their written decision. Some of the assessments were reduced to nil or discharged, but the appeals were dismissed in substance, the Commissioners finding that (for those years for which it was necessary) the purpose of the assessments had been to make good a loss of tax which was due to the applicant’s wilful default or neglect. They found that the applicant had traded as a guest house proprietor and had derived profits from the trade. The applicant’s evidence was described as “irregular in quality” and his claim that he was in partnership with other members of the family, including his infant children was found to be “a complete sham”. The revised assessments amounted to approximately GBP 120,000.

In or about the end of December 1991, the applicant applied for the Special Commissioners to state a case by way of appeal to the High Court against the 1991 Commissioners’ decision, on the basis that they had erred in law, there being no evidence on which they could reach their determinations. The Special Commissioners drafted the case for the High Court in July 1992 and the applicant lodged his appeal on 17 August 1992. The appeal was heard and dismissed in about November 1993-January 1994 [the exact date is unclear]. The Court of Appeal dismissed the applicant’s further appeal in October 1995.

2. Imposition of interest and penalty determinations

Meanwhile, in December 1991 the General Commissioners issued a determination under section 88 of the Taxes Management Act 1970 that interest was payable on the assessments from specified dates on which the tax ought to have been paid, to the date of payment. The applicant appealed against the determination.

On 17 October 1994, the Revenue issued penalty determinations, assessed at 80% of the tax lost (the maximum penalty then being 100% of the lost tax, plus GBP 50). The penalties amounted to over GBP 50,000. The applicant appealed against the penalty determinations.

In April 1995 the General Commissioners agreed that the interest and penalty appeals should be transferred to the Special Commissioners. At about the same time, the Revenue discovered the existence of a further property, Roundwood Lodge, which had been purchased in 1983 and which was in the applicant’s name. The Revenue took the view that the property had been purchased with funds from the profits of the applicant’s business and the funds were therefore taxable. In April 1996 further assessments to income tax were therefore issued on guest house profits for the years from 1977/78 to 1985/86. The applicant appealed against the further assessments and the matter was later transferred to the Special Commissioners to be consolidated with other appeals.

Meanwhile, on March 1996 the applicant suffered a stroke which he states affected his memory and his ability to cope with pressure. In August 1996 he wrote to the Revenue to ask that the ‘matters in hand’ be adjourned to enable him to concentrate on his recovery. He appeared before the General Commissioners on 24 October 1996 when his request for further time for preparation of various matters was granted.

Meanwhile, despite reminders from the Inland Revenue on 6 June 1996 and 14 November 1996, the clerk to the General Commissioners did not write to the clerk of the Special Commissioners requesting a transfer until 3 March 1997. Despite further reminders in March, April and May 1997, he failed also to request a transfer of appeals against further assessments made in April 1996. The General Commissioners asked the clerk to request a transfer of these appeals on 24 October 1996.

On 6 March 1997 the Special Commissioners agreed to accept jurisdiction and issued requests for information about the status of various appeals. In September 1997 the appeals were consolidated.

3. The 2000 appeal

In February 1998 there was a preliminary hearing of the appeals against, ( i ) the December 1991 determination of interest, (ii) the 1994 penalty determination and (iii) the further assessments raised in 1996. The substantive hearing began in May 1998 and was heard over seventeen days between then and April 1999. The applicant represented himself. During the hearing he applied for a copy of the notes made by the 1991 Commissioners. When the application was refused he sought permission to judicially review the decision, which was also refused.

On 23 March 2000 the Special Commissioners dismissed the appeals. They held, inter alia , that they were bound by the factual findings of the 1991 Commissioners on the issue of neglect/wilful default for the years in respect of which such findings had been required. For the later years, in respect of which no determinations had been made by the 1991 Commissioners, they found wilful default and neglect on the part of the applicant (which was necessary to uphold the penalty determination). They also found that the capital statement he had prepared in 1991 was not truthful. As the amount of tax due was correctly determined by the 1991 Commissioners, the interest determination was also correct. The 80% penalties were appropriate. They allowed his appeal against the further (1996) assessments in part, by allowing some reduction in the amount claimed, but found that the applicant had been the owner of Roundwood Lodge and had purchased it with his own funds.

4. Appeal to High Court and Court of Appeal

In May 2001 Mr Justice Jacob dismissed the appeals against the findings of the 2000 Commissioners. As regarded the applicant’s complaints raised about the procedures under Article 6, he found that the system of imposition of penalties for fraudulent or negligent delivery of incorrect returns or statements was ‘criminal’ for the purposes of the Convention. He noted that the system was plainly punitive and deterrent, and the potential fine was very substantial and dependent on the culpability of the taxpayer, rather than being an administrative matter. The amount of the fine imposed also depended on the degree of culpability as mitigation, essentially a criminal matter, was more where the taxpayer was less culpable. The judge agreed with the applicant that the proceedings began in 1987, when the Hansard warning was given and considered whether the length of the proceedings was unreasonable. The judge noted that the applicant made no complaint of delay up to the 1991 decision and that some of the subsequent delay had been caused by or contributed to by the applicant, inter alia , in the way in which 16 hearing days was spread over nearly a year and due to problems arising from his illness. However, he observed that nothing happened for a two year period when the case was referred to the Special Commissioners, notwithstanding reminders from the Inland Revenue. In conclusion the judge said:

“The decision of the 1991 Commissioners was released on 18 November 1991. Mr King waited some 5 weeks before asking for a case stated (appeal was by way of cases stated was the procedure then). There was then an 8 month delay before that was produced (delay not of Mr King’s making). The appeal was launched on 17 August 1992. Judgment was given on 14 January 1994. The Revenue delayed making a penalty determination until 17 October 1994. Whilst it is understandable, and at least not unreasonable, for the Revenue to wait until the hearing of the first appeal, it makes no sense for them to wait some 9 months thereafter. The possibility of a determination was simply left hanging. Meanwhile the parties’ attention was focussed on other things, namely Mr King’s further appeal to the Court of Appeal and, more significantly so far as Mr King’s contribution to delay was concerned, the Revenue’s discovery of the purchase in 1983 by Mr King of the substantial property, Roundwood Lodge. This led to further assessments and appeals therefrom which, it was decided early on, should be heard with interest and penalty appeals. ...

It seems that but for Mr King’s concealment of Roundwood Lodge, the two other appeals would have been heard earlier than 1998. It is not possible to be precise as to how much delay was caused by the introduction of this factor... but it is far from insignificant. Naturally it prolonged the hearing itself, but on top of that I think a fair estimate of its effect is that it delayed the penalty and interest appeals for about three years.

... The result of all this is that there was delay through no fault of Mr King of, say, five years from the date of the 1991 decision. Is that too much? Marginally, but only just, I think not. He was not thereby prejudiced. He merely had to pay the penalty later. But for the complication of Roundwood Lodge, however, I think the time to determination of the penalty appeals would have been inconsistent with Article 6 (1). In future cases it is highly desirable that such appeals (and penalty determinations) are put on a fast track. So far as I can see they were treated in the same way as other determinations and appeals, but it should be appreciated that more is at stake in the case of penalties. Serious consideration should be given to penalty determination beings made earlier - in appropriate cases along with the assessments giving rise to the penalties. I see no reason why the 1991 Commissioners could not have dealt with a penalty determination appeal if such a determination had been made at the same time as the 1989 determinations or shortly thereafter.”

The judge found in addition that the case was a serious one in which penalties were appropriate and the figure of 80% was not too high. So far as the further assessments were concerned, the reasoning of the Commissioners was detailed and convincing. The applicant had given misleading information to the Revenue and to the 1991 Commissioners and the further assessments had been to make good a loss of tax attributable to the applicant’s wilful default or neglect. There was no error of law and no reason to overturn the decision.

The applicant applied for permission to appeal to the Court of Appeal. Permission was refused on paper in July 2001 and at a hearing on 3 October 2001.

On the question of delay, the Court of Appeal said,

“The delays which occurred in relation to the penalty determination must be seen in the context of what has plainly been an extended campaign by the applicant in disputing his liabilities to the Revenue and in deferring the date on which those liabilities have to be satisfied. Moreover, I find...the greatest difficulty in seeing how the applicant could be prejudiced simply by the fact that the penalty might have been imposed earlier.”

The court was not persuaded that an appeal on that basis would have any prospect of success. Although by the time of the appeal a medical report had been provided, to the effect that the applicant’s memory had been significantly impaired as a result of his stroke, the author was unable to date the onset of the memory loss or its duration. The report did not take the applicant’s case as to prejudice any further.

B. Relevant domestic law and practice

Section 36 of the Taxes Management Act 1970 (“the Act”) provided:

“... where any form of fraud or wilful default has been committed by or on behalf of any person in connection with or in relation to tax, assessments on that person to tax may, for the purpose of making good to the Crown any loss of tax attributable to the fraud or wilful default, be made at any time.”

Section 37(1) provided:

“Where, for the purpose of making good to the Crown a loss of tax wholly or partly attributable to the fraud, wilful default or neglect of any person, an assessment for any year ... has been made on him not later than six years after the end of that year, assessments to tax for earlier years may ... be made on him notwithstanding that, but for this section, they would be out of time.”

For the years after 1982/83, the position was governed by a new section 36, section 37 having by then been repealed. Section 36 as amended provided:

“An assessment on any person ... for the purpose of making good to the Crown a loss of tax attributable to his fraudulent or negligent conduct ... may be made at any time not later than twenty years after the end of the chargeable period to which the assessment relates.”

Section 46(2) of the Act provided, (as relevant) that:

“... the determination of the General Commissioners or the Special Commissioners in any proceedings under the Taxes Acts shall be final and conclusive”.

Section 88(1) of the Act provided:

“Where an assessment has been made for the purpose of making good to the Crown a loss of tax wholly or partly attributable to the fraud, wilful default or neglect of any person, the tax charged by the assessment shall carry interest at the prescribed rate from the date on which the tax ought to have been paid until payment.”

Section 95 of the Act provided, as relevant:

“(1) Where a person fraudulently or negligently–

(a) delivers any incorrect return of a kind mentioned in section 8 or 9 of the Act ..., or

...

(c) submits to an inspector of the Board or any Commissioners any incorrect accounts in connection with the ascertainment of his liability to income tax or capital gains tax,

he shall be liable to a penalty not exceeding the aggregate of–

( i ) £50, and

(ii) the amount or, in the case of fraud, twice the amount of the difference specified in subsection (2) below.

(2) The difference is that between–

(a) the amount of income tax and capital gains tax payable for the relevant years of assessment by the said person ..., and

(b) the amount which would have been the amount so payable if the return, statement, declaration or accounts as made or submitted by him had been correct.”

Section 101 of the Act provided:

“For the purposes of the preceding provisions of this Part of this Act any assessment which can no longer be varied by any Commissioners on appeal or by order of the court shall be sufficient evidence that the income or chargeable gains in respect of which tax is charged in the assessment arose or were received as stated therein.”

Sections 20 and 98 of the Act concern the powers of the Revenue to serve a notice on a taxpayer requiring him to provide information and/or documents and set out the penalties for failure to comply. (As at August 1991, the maximum penalty was GBP 300.)

COMPLAINTS

The applicant complained under Article 6 § 1 of the Convention that his right to trial within a reasonable time was infringed because of the overall length of the proceedings and complains that he was prejudiced by the delay.

THE LAW

The applicant complains of the length of the proceedings in the tax assessment and penalty proceedings, invoking Article 6 § 1 which provides as relevant:

“1. In the determination of  ... any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time...”

A. The parties’ submissions

1. The Government

The Government submitted that the penalty proceedings were not criminal in nature and did not engage Article 6 § 1 of the Convention. They argued that the Convention permitted Contracting States a high degree of freedom of action in the area of fiscal policy and a wide margin of appreciation in implementing taxation policies, and accordingly where a State considers that a civil penalty is best suited to achieve its fiscal objectives, the Court should be slow to re-categorise that measure as criminal. In this case there was no element of risk of deprivation of liberty and or “de-criminalisation” of offences, as the penalties in issue are solely concerned with negligence, not typically criminal conduct. They further submitted that as a matter of English law all the measures in issue were categorised as civil and were separate and distinct from the specific criminal offences providing for criminal prosecution (cf. Georgiou v. United Kingdom , no. 40042/98, (Dec.) 16 May 2000). The essential ingredient of the “offence” was negligence which was not typically criminal in nature and should be contrasted with penalties imposed for dishonest or fraudulent conduct which the Court has classified as criminal. The penalty was an integral element in a system concerned with the collection of the correct amount of tax and assisted in the enforcement of the obligation and in encouraging compliance. While to some extent it was concerned with punishment and deterrence, the predominant purpose was regulatory. As regarded the nature of the penalty, this was 80% of the tax due, calculation being made with regard to extent of voluntary disclosure, co-operation and the gravity of the taxpayer’s conduct. It was purely financial, not determined by a fixed scale, with provision for abatement taking into account the objects of efficient administration of the tax system, no entry is made on the criminal record, and penalties are not publicised but kept confidential.

Even assuming Article 6 was applicable, the Government submitted that the length of the proceedings was substantially a result of the applicant’s conduct. He took all available means to prolong the determination of his tax affairs. They argued that the time did not start to begin until 17 October 1994 when he was served with notice of determination of the penalties in issue. The Hansard warning given in 1987 did not notify the applicant that he had committed a criminal offence but provided him with the opportunity to disclose irregularities and co-operate to reduce the likelihood that a criminal prosecution for fraud would be brought. No allegation of fraud was ever made in this case, and the warning was only read because of the particular difficulty in establishing the extent of the applicant’s financial affairs. The Revenue was primarily concerned in investigating and reaching a negotiated settlement (some 38 such meetings occurred between 1986-July 1991). Penalty was only imposed after the 1991 Commissioners had established the level of the applicant’s tax liability and his appeal to the High Court against that finding had failed. He had not been “substantially affected” until that moment. The period which then ran until the refusal of the appeal on 3 October 2001 disclosed very little delay by the authorities. The applicant deliberately prolonged the proceedings by his refusal to give a truthful account of his assets, his continued denial of interest in various properties and his “near-preposterous” explanations. His affairs were also interlocked with those of Miss J. which meant that their appeals had to be heard together and he refused to accept judicial findings concerning ownership. In particular, he concealed the property known as Roundwood Lodge which only came to light in 1995, although purchased in 1983, which led to the issue of further assessments and led to an estimated delay of three years in the overall proceedings. The applicant also appealed against every assessment and decision, applied for judicial review and greatly slowed down the hearing of appeals e.g. requiring only one hearing day per month or due to illness. The case was also extremely complicated, though primarily due to the conduct of the applicant. While there were short periods of delay for which the authorities were responsible, these were minor. The timing of the penalty notices was due to the lack of certainty about the true ownership of the guest house businesses and it was reasonable to wait for these issues to be settled by the courts.  The gap of 11 months between the High Court and issue of the notices was explicable by the need to obtain approval and to review thirteen files with a view to ensuring consistency of mitigation.

2. The applicant

The applicant submitted that the penalties imposed on him were clearly of a criminal nature, referring to the Court’s case-law to the effect that tax surcharges were criminal for the purposes of the Convention, even where no term of imprisonment was imposable and domestic law did not classify the penalties as criminal ( Västberga Taxi Aktiebolag and Vulic v. Sweden , no. 36985/97, judgment of 23 July 2002). As in that case, the applicant had been subject to penalties applicable to the population as a whole and which were of a punitive, rather than compensatory nature. There was also the possibility of imprisonment if the penalties were not paid. The High Court judge in this case also considered the penalties were criminal. He disputed that the Inland Revenue treated his case as one of neglect, rather than fraud, referring to the high penalty imposed (80%) and the fact that a Hansard warning was given. In any event, the criminal nature of the penalty would not be affected by whether fraud had to be proved or whether the penalty was based objectively on neglect. The domestic classification of the penalty as civil was also not conclusive.

The applicant submitted that he was “charged” for the purposes of Article 6 on 21 November 1986 when the Inland Revenue made it clear that any settlement would have to include penalties or, at the latest, on 27 November 1987 when he was read the Hansard extract, the circumstances making it clear that he was considered guilty of neglect and dishonesty and that criminal prosecution was being considered if a settlement could not be obtained. He noted that the High Court judge also took the view that the applicant was charged when the Hansard statement was read to him.

As regards the length of proceedings, the total period of 14-15 years was unreasonable and a large portion of the delays was attributable to the United Kingdom authorities.  He submitted that some delays were caused by the Inland Revenue’s insistence on his producing details of his worldwide assets in which they had no legitimate interest. There was no reason why the penalty determinations could not have been made at the same time as the assessments so that all the issues could have been heard and resolved at the same time. He accepted that he had no realistic prospect of success on his appeal to the High Court from the 1991 Special Commissioners’ decision but it took almost 11 months for the Revenue to issue the penalty determinations. The Special Commissioners had also taken an unduly long time to produce the stated case and after the agreement on 17 April 1995 to transfer the case from the General Commissioners’ to the Special Commissioners there was an inexplicable failure on the part of the clerk to take the necessary steps until 6 March 1997.

The applicant submitted that he has no major complaints about the manner in which the appeals were conducted after the transfer to the Special Commissioners, acknowledging that some delay was caused by his ill-health although pointing out that if matters had proceeded more quickly they would have concluded before his stroke occurred. To the extent that the Government criticised him for appealing against all the tax interest and penalty assessments made, he considered that since he disputed these liabilities he acted entirely reasonably in doing so.

B. The Court’s assessment

1. Existence of a “criminal charge”

The Court would note, first of all, that the procedures concerning the assessment of tax owing by the applicant fall outside the scope of Article 6 § 1 as neither concerning the determination of a “criminal charge” or of any of the applicant’s civil rights or obligations (for example, Ferrazzini v. Italy [GC], no. 44759/98, ECHR 2001-VII, § 29). As however regards the imposition of penalties, calculated as a percentage of the unpaid tax, the Court considers that these cannot be regarded as pecuniary compensation for any costs that may have been incurred as a result of the taxpayer’s conduct but that their main purpose is to exert pressure on taxpayers to comply with their legal obligations and to punish breaches of those obligations. The same elements may be identified in this case therefore as in the cases Janosevic v. Sweden (no. 34619/94, ECHR 2002-VII) and Västberga Taxi Aktiebolag and Vulic v. Sweden (no. 36985/97, judgment of 23 July 2002) which found that the imposition of tax surcharges of up to 40% for avoidance of tax fell within the scope of Article 6 in its criminal aspect. As in those cases, the Court does not consider it decisive that a sentence of imprisonment was not at stake in the proceedings. While the Government asserted that the procedures were classified as “civil” in domestic law terms, the Court notes that the domestic courts themselves appeared to have no doubt that they should be regarded as criminal for the purposes of examination under Article 6 § 1 of the Convention.

The Court concludes that the procedures which imposed, in this case, penalties of considerable size attract the guarantees of Article 6 § 1 as concerning the determination of a “criminal charge”. It has therefore examined whether these proceedings exceeded the reasonable time requirement of that provision.

2. The period to be taken into consideration

The Court recalls that the parties dispute the moment from which the applicant should be regarded as subject to a criminal charge. The Government considered that time runs from 17 October 1994 when the applicant was served with notification of the penalties to be imposed, the applicant that it runs from the moment it was clear that penalties were envisaged, either a meeting on 21 November 1986 with the Inland Revenue or 27 November 1987, when the Revenue read out to him the “ Hansard warning” ( inter alia , putting him on notice of the possibility of prosecution).

The Court observes that the High Court took the latter date as the appropriate moment at which the applicant became subject to a criminal charge. In Janosevic , the time ran from the issuing of the audit report containing a supplementary tax assessment, which included tax surcharges; in the Västberga taxi case, from the date the applicants were informed by the Tax Authority of its intention to impose additional taxes and tax surcharges on them. In Georgiou v. United Kingdom (no. 40042/98, decision of 16 May 2000), however, concerning non-payment of VAT, the date taken was not that of the assessments of unpaid VAT but the subsequent issue of the formal summons informing the applicants of imposition of a penalty for dishonest evasion.

According to the Court’s case-law, criminal proceedings are said to commence with “the official notification given to an individual by the competent authority of an allegation that he has committed a criminal offence”, a definition that also corresponds to the test of whether “the situation of the [suspect] has been substantially affected” ( Eckle v. Germany , judgment of 15 July 1982, Series A no. 51, § 73). In a case such as the present, where an applicant’s financial affairs are under investigation by the Revenue in order to assess whether or not any tax is owed, it must always be considered a possibility that, in the event of any dishonesty or neglect being disclosed, measures may be taken by way of imposing criminal penalties. While it does indeed appear from the minutes of the meeting of 21 November 1986 that the settlement that the Inland Revenue wished to reach already included an element representing penalties for late returns, this was in the context of attempting to reach an agreed solution with the applicant, which did not in fact occur. The Court is not persuaded that asking the applicant to agree to pay unpaid taxes with a surcharge element included, even with the possible threat of penalty or prosecution procedures in the background, is sufficient to be considered as substantially affecting his position. It would rather take the view that the issuing of the Hansard warning, which the Government admit is only generally done in serious fraud cases, was a clear and unequivocal indication to the applicant that he was suspected of criminal misconduct. Even though he was not in fact formally charged with specific tax offences as such but subject to a penalty procedure, the applicant may claim to have been put on formal notice that he was at risk of serious consequences. It also appears that the domestic courts have held that the provisions of the Police and Criminal Evidence Act 1984 should apply to Hansard interviews, in particular that a caution should have given as to all persons suspected of having committed a criminal offence ( R. v. Gill and another , 31 July 2003, Court of Appeal, [2003] EWCA 2256). It is irrelevant that the Revenues’ main motivation, according to the Government, was in fact to induce the applicant to stop prevaricating and produce a statement of assets.

Taking the Hansard warning date of 21 November 1987 as the commencement of the relevant periods, the final decision was that of the Court of Appeal of 3 October 2001. The total period is accordingly 13 years 10 months and 12 days.

3. The reasonableness of the period

Having regard to the applicant’s complaints and the parties’ submissions, the Court finds that serious questions of fact and law arise, the determination of which should depend on an examination of the merits. The application cannot be regarded as manifestly ill-founded within the meaning of Article 35 § 3 of the Convention. No other grounds for declaring it inadmissible have been established.

For these reasons, the Court unanimously

Declares the remainder of the application admissible, without prejudging the merits of the case.

Michael O’Boyle Matti Pellonpää Registrar President