Unilever Caribbean Ltd v Board of Inland Revenue
| Jurisdiction | Trinidad & Tobago |
| Judge | Mendonca, J.A.,Pemberton, J.A.,Rajkumar, J.A. |
| Judgment Date | 14 December 2016 |
| Neutral Citation | TT 2016 CA 51 |
| Docket Number | Civil Appeal No. P 41 of 2015; Tax Appeal No. 16-128 of 2014 |
| Court | Court of Appeal (Trinidad and Tobago) |
| Date | 14 December 2016 |
Court of Appeal
Mendonca, J.A.; Rajkumar, J.A.; Pemberton, J.A.
Civil Appeal No. P 41 of 2015; Tax Appeal No. 16-128 of 2014
Mr. Barry Attzs for the Claimant instructed by Mr. Bryan McCutcheon
Ms. Indra Rampersad-Suite for the respondent
Statute - Statutory interpretation in relation to taxing statutes — Whether under the Income Tax Act there existed a statutory pre-condition which must be satisfied before the Board of Inland Revenue was allowed to make a determination against an employer for PAYE on additional emolument income — Whether the literal construction of section 99 of the Income Tax Act, Chap. 75:01 which permits service of a notice of determination demanding the amount of tax to be deducted or withheld upon the employer meant that the emolument earner required an assessment where there was no language to suggest that an assessment was required prior to the payment of the requisite PAYE — Interpretation of “Notwithstanding any provision of this Act to the contrary” — Whether the change in the wording of the act from its predecessor provision meant that the Board of Inland Revenue was obliged to do an assessment prior to the payment of the PAYE where the language in the Act was sufficiently wide to encompass the exclusion of other provisions in the Income Tax Act, including those which referred to the assessment of the individual emolument earner — Three stages in the imposition of a tax — Statutory regime of section 99 of the Income Tax Act, Chap 75:01 — Principles governing statutory construction of taxing statutes — Notice of determination — Whether the issuance of a notice of determination by the Board of Inland Revenue on employers was a means to facilitate due process in the mechanism to determine whether the employer was in compliance with its statutory obligation to deduct from the emolument earner and remit to the Board of Inland Revenue the appropriate amounts of PAYE — Whether there was a separate statutory liability on the employer/emolument provider to deduct and remit the correct amount of tax independent of the obligation to first assess the employee/emolument earner having considered section 99 of the Income Tax Act — Whether the specific PAYE regime established by section 99 applied when the Board revisited a prior income year where there was no statutory evidence that the employer was only obliged to deduct taxes from the present and future years — Headings — Whether the headings present in the Act formed part of the written law where section 11(2) of the Interpretation Act, Chapter 3:01 instructed that marginal notes and headings formed no part of the written law — Whether the limitation period in relation to civil liability was the same as the limitation period for the taxation — Section 99 required the service on the person providing the emolument of notice of the determination; it further required that the person was to be informed of his right to object and that there may be a review of that determination — Appeal dismissed.
I have read the judgement of Rajkumar, J.A. and I agree with it.
Allan Mendonca
Justice of Appeal
I also agree.
Charmaine Pemberton
Justice of Appeal
This appeal comes before this court by way of case stated by the Tax Appeal Board (the Board) in relation to a preliminary issue, namely, whether under the Income Tax Act [the Act] there exists a statutory pre-condition which must be satisfied before the respondent is allowed to make a determination against an employer for PAYE on additional emolument income.
The issue arises in the following context: -For the income years 2004 and 2005 Unilever Caribbean Ltd. [the employer] provided for some of its employees [the employees or the emolument earners] a motor vehicle which was made available for their private use.
The appellant calculated the gross chargeable income of those emolument earners for Income Tax purposes on the sum of their salary and the value of the motor vehicle perquisite at 33 1/3 percent of the monthly rental of the motor vehicle incurred by the appellant. It remitted PAYE to the respondent on this basis.
Under the motor vehicle leases a payment was also required of $1600.00 per month in respect of maintenance. The appellant did not deduct PAYE on the motor vehicle benefit in kind for income tax purposes on that maintenance cost incurred by the appellant in respect thereof.
The Board of Inland Revenue (BIR) subsequently determined that the monthly payment in respect of maintenance was also a taxable emolument.
The emolument earners were never assessed by the respondent for the additional tax taking into account the maintenance cost.
The respondent has sought to recover that additional tax from the appellant, (not the employees), through PAYE determination.
The notices of determination were issued on November 14th 2011 and Unilever, the employer/appellant, was advised of its right to contest the determination before the Tax Appeal Board-(the Board).
The employer objected before the Board that it could not be liable for unpaid tax on emoluments if the employee, who was the actual emolument earner, had not been first assessed. The appellant contends that the employees must be duly assessed as liable to tax and served with a Notice of Assessment in respect of the quantum of emolument income in dispute before it can raise a determination against an employer.
The Board rejected this contention and concluded that “there is no statutory precondition which must be satisfied before the respondent can raise a PAYE determination against an employer of an individual who is in receipt of emolument income”.
It summarised its decision as follows(all emphasis added):
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a. There is no statutory pre-condition which must be satisfied before the respondent can raise a PAYE determination against an employer of an individual who is in receipt of emolument income.
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b. The issuance of a notice of determination by the respondent on the employer as the provider of particular emoluments to an employee is the means to facilitate the due process in the mechanism to determine whether the employer is in compliance with its statutory obligation to deduct from the emolument earner and remit to the respondent the appropriate amounts of PAYE.
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c. The statutory obligations an employer has under s.99 (1) of the Income Tax Act, Chap. 75:01 are separate and apart from the ability the respondent has for raising an assessment or an additional assessment on any particular individual within the ambit of sections 83 and 89 of the Income Tax Act, Chap. 75:01.
As stated by the Board –” The issue in this application is one of law as to whether there exists a statutory pre-condition which must be satisfied before the respondent is allowed to make a determination against an employer for PAYE on additional emolument income. The appellant has contended that the statutory pre-condition is that the respondent has to initially raise an assessment against the individual in receipt of the emolument income whilst the respondent has contended that no such condition exists.” (Paragraph 11 of the judgment & paragraph 6 of the Case Stated)
Whether there exists such a statutory precondition involves consideration as to whether an employer can be directly liable for the deductions that it is obligated to make under s. 99(1) of the Act in the absence of a prior assessment of the employee's liability.
We agree with the decision of the Board that:
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a. There is no statutory pre-condition which must be satisfied before the respondent can raise a PAYE determination against an employer (in respect) of an individual who is in receipt of emolument income.
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b. The issuance of a notice of determination by the respondent on the employer as the provider of particular emoluments to an employee is the means to facilitate the due process in the mechanism to determine whether the employer is in compliance with its statutory obligation to deduct from the emolument earner and remit to the respondent the appropriate amounts of PAYE.
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c. The statutory obligations an employer has under s.99 (1) of the Income Tax Act, Chap. 75:01 are separate and apart from the powers that the respondent has for raising an assessment or an additional assessment on any particular individual within the ambit of sections 83 and 89 of the Income Tax Act, Chap. 75:01.
The service of a notice of determination under section 99 is upon the employer. This triggers the right of the employer to contest the determination. The fact that a right is given to the employer to contest the determination, (and not the employee), is clearly indicative of the fact that the employer has a separate liability to deduct the correct amount of tax under the PAYE regime.
The section recognizes that statutory liability, (for tax not correctly deducted and therefore unpaid on emolument income), by providing within that regime the following statutory mechanisms:
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a. the requirement that notice of determination be served on the employer, demanding the amount of tax to be deducted;
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b. conferring on the employer the right to object;
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c. the imposition of criminal liability, by the stipulation that the employer can be guilty of an offence if the correct amount is not deducted;
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d. the express stipulation that the employer is liable in that case for the unpaid tax as if it were the taxpayer.
This emphasises that there is a separate ability to recover undeducted or unremitted tax under the PAYE regime from the employer.
Neither the sequence in which the provisions of the Act are set out nor, (given s. 11(2) of the Interpretation Act), the heading preceding section 98, is of sufficient weight to suggest otherwise or to suggest...
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