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Khan v Director of the Assets Recovery Agency SpC 523

The Director made discovery assessments under section 29, Taxes Management Act 1970 (TMA) on Mr Khan subsequent to his being charged with money laundering offences, for which he had not been tried due to his ill health.
 
The Special Commissioners held that they do have jurisdiction on appeal under section 320(1), Proceeds of Crime Act 2002 (PoCA) to determine that an assessment by the Director under section 29 is invalid on the grounds that the qualifying condition in section 317(1), PoCA is not satisfied, just as the Commissioners can determine that the conditions in section 29(4) or (5), TMA are not satisfied.
 
Article 6 of the European Convention on Human Rights (ECHR) is not engaged by assessments to tax by the Director, where they do not involve penalties under section 95, TMA; such assessments do not involve civil rights or criminal charges within Article 6. The fact that an assessment under section 29 depends on the conditions in section 29(4) or (5) being satisfied does not have the effect that it involves a criminal charge.
 
The principles of natural justice do not have the effect that the Special Commissioners cannot or should not consider the appeal because of the appellant’s ill health. Provided that the assessments were validly made, they stand subject to any determination under section 50(6), TMA.
 
The fact that the Director is given power to make assessments does not affect the liability of the appellant to be assessed to tax on income and does not involve retrospection regarding such liability. In any event PoCA provides expressly for assessments “in respect of years of assessment whenever occurring”.
 
The qualifying condition under section 317(1) of “reasonable grounds to suspect” does not involve proof of criminal conduct but a genuine suspicion which is reasonable viewed objectively: see O’Hara v Chief Constable of the Royal Ulster Constabulary [1997] AC 286.
 
Although the assessments do involve deprivation of the appellant’s possessions within Article 1 of the First Protocol to ECHR, the procedure on section 29 assessments and the powers of the Director under Part 6 of PoCA are within the wide margin of appreciation of contracting states.
 
The fact that the appeal may involve evidence of matters which constitute criminal conduct does not mean that the decision of the Special Commissioners, if adverse to the appellant, would involve a holding that he is guilty of a criminal offence within Article 7, ECHR. No criminal penalty is involved.
 
 
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