Quigley (Inspector of Taxes) v Burke

• Jurisdiction: Ireland
• Judge: Hamilton C.J.
• Judgment Date: 01 January 1996
• Neutral Citation: 1995 WJSC-SC 5448
• Court: Supreme Court
• Docket Number: [1990 No. 172]
• Date: 01 January 1996

1995 WJSC-SC 5448

THE SUPREME COURT

HAMILTON C.J.

EGAN J.

BLAYNEY J.

172/91

QUIGLEY v. BURKE

BETWEEN:

J.J. QUIGLEY (INSPECTOR OF TAXES)

Appellant/Respondent

and

MAURICE BURKE

Respondent/Appellant

Citations:

INCOME TAX ACT 1967 S174(1)(a)

INCOME TAX ACT 1967 S429

INCOME TAX ACT 1967 S58

CHANTREY MARTIN & CO V MARTIN 1953 2 AER 691

BULA LTD V TARA MINES LTD 1994 1 ILRM 111

LEICESTERSHIRE C C V MICHAEL FARREDAY & PARTNERS 1941 2 KB 205

Synopsis:

REVENUE

Income tax

Assessment - Tax return - Constituents - Substantiation - Inspector of taxes - Powers - Inspection of records - Ledger - Owner ship - Taxpayer's return forwarded by his tax agent - Return based on contents of nominal ledger - Ledger bought and entries made by agent - Right of inspector to examine ledger - Income Tax Act, 1967, s. 174 - (172/91 - Supreme Court - 7/11/95)1995 3 IR 278

|Quigley v. Burke|

WORDS AND PHRASES

"Possession or power"

Tax - Return - Documentation - Preparation - Nominal ledger - Procurement by taxpayer's agent - Information from primary sources entered by agent in ledger - Requirement by tax inspector that ledger be made available - Refusal of accountant agent to part with ledger - Ledger within possession or power of taxpayer - (172/91 - Supreme Court - 7/11/95) [1995] 3 IR 278 - [1996] ITR 59

|Quigley v. Burke|

1 Judgment delivered on the 7th day of November 1995 by Hamilton C.J. [NEM DISS]

2 This is an appeal brought by the Respondent/Appellant, Maurice Burke (hereinafter referred to as the Appellant) against the judgment and order given and made by Miss Justice Carroll on the 30th day of April 1991 and which order was perfected on the 7th day of May 1991.

3 The matter came before Carroll J. in the High Court pursuant to a case stated dated the 19th day of November 1990 by His Honour Frank Martin, Judge of the Circuit Court in which he submitted questions of law for the opinion of the High Court.

4 These questions are set forth in paragraph 8 of the case stated and were as follows:-

5 a "(a) Whether I was correct in law in holding that an Accountant who was engaged in the manner aforesaid by a taxpayer and who submits accounts and computations of taxable income to the Inspector of Taxes, in support of a statutory tax return, is not acting as an Agent of the Taxpayer in the preparation of the said accounts?

6 (b) Whether I was correct in law in holding that the relationship between an accountant, engaged in the manner aforesaid by a taxpayer, and the taxpayer is that of professional man and client.

7 (c) Whether I was correct in law in holding that a nominal ledger drawn up by an Accountant in the course of preparing accounts, in the manner aforesaid, from books of primary entry belonging to the taxpayer, is not a book or document which is "within the possession or power" of the taxpayer within the meaning of Section 174(1)(a) of the Income Tax Act, 1967?

8 (d) Whether I was correct in law in holding that the nominal ledger, prepared by an accountant in the manner aforesaid, is part of his working papers and is the property of the accountant.

9 (e) Whether I was correct in determining the amount of the taxpayer's liability by reference to the adjusted profit figure in the income tax computation submitted by the accountant; this having been computed by adding to the net profit figure in the accounts expenses which were not allowable for income tax purposes; notwithstanding the fact that the detailed workings, which formed the basis of the figures in the accounts submitted, were not given in evidence?"

10 The learned trial judge answered each of these questions in the negative and the appellant appeals to this court against the findings and answers given by the learned trial judge.

11 The facts, which led to the case stated, are set forth in detail in the case stated by the learned Circuit Court judge and need not be set forth in detail in the course of this judgment.

12 It appears therefrom that:-

13 1. The matter came before the learned Circuit Court Judge on an appeal by way of re-hearing by the Appellant under the provisions of Section 429 of the Income Tax Act, 1967against an assessment to income tax in his trade as an electrical contractor for the year assessment 1986/87 in the sum of £20,000.

14 2. At the said hearing the Appellant was represented by one Mr. John McElhinney, a Partner in the firm of John McElhinney & Co., Accountants and Tax Agents for the Appellant.

15 3. On the 30th day of April 1989, Mr. McElhinney acting as Tax Agent on behalf of the Appellant furnished to the Inspector of Taxes in support of the appeal against the assessment the documents set forth at paragraph 1.1(i) of the case stated.

16 4. On the 23rd day of September 1987, Mr. McElhinney submitted to the Inspector of Taxes a statutory return of income 1986/87 duly signed by the Appellant.

17 5. The Respondent, having considered the accounts was not satisfied with them and sought further information from Mr. McElhinney and requested all accounting records for the period including any nominal ledger, journal including narrative, sales and purchases analysis books, cash book, bank statements, return cheques and cheques stubs and wages record.

18 6. Additional information was furnished in response to that request and the further accounting records as set out in 1.2 of the case stated were supplied.

19 7. Mr. McElhinney in correspondence informed the Inspector that Mr. Burke, the Appellant had not maintained any nominal ledger as part of his primary books of accounts and records but that they had made up a nominal ledger as part of their working papers. They regarded the nominal ledger, however, as their property and as confidential and declined to produce it to the Inspector.

20 The issue, which arose in the proceedings before the learned Circuit Court Judge was whether this nominal ledger prepared by Mr. McElhinney was in the power or possession of the...