Han & Yau is a case concerning whether or not the ‘fair trial’ provisions of article six of the European Convention on Human Rights should apply to VAT civil evasion procedures.
To the outside observer it is very easy to see that the actions of Customs & Excise would not find sympathy with the court.
Yau was, at the time of the alleged offences, a Chinese restaurateur.
He was not going to be prosecuted by Customs & Excise, who were carrying out an investigation under the ‘civil’ evasion procedures, but these procedures relied on an admission of dishonesty. Yau did not speak English, yet Customs & Excise officials interviewed him without an interpreter. He had no true understanding of what had happened. Even if the convention did not exist, readers would find such practices unacceptable, perhaps even reprehensible, and certainly requiring revision in the 21st century.
After careful deliberation the court took the view that Yau should be afforded all the article six protections because, on balance, the civil evasion procedures were criminal charges for the purposes of article six.
Yet, at the same time, Lord Justice Manse said: ‘I remain to be convinced that our decision will seriously undermine or disrupt the general nature of existing procedures.’
Despite such words of assurance from the court it is clear that Customs & Excise policy makers have a great deal to think about. Customs officers will have to investigate matters more carefully and more thoughtfully.
Customs will have to explain the detail and nature of their allegations to taxpayers. A taxpayer on low income could be entitled to legal aid and so will have a defender.
Other new procedures may also be required, all of which will be designed to create a fair and transparent process. To avoid the uncertainty which Han & Yau might otherwise create, it is vital that Customs & Excise moves quickly to rationalise its processes, where necessary consulting with all interested parties. If these new processes can balance the rights of the individual on the one hand, with public interest on the other, then Han & Yau will clearly have been a landmark case.
- Mike Bailey is a partner in the indirect tax litigation department at PwC.
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