Capital Gains and other taxes manual

Appendix 37: the Special Commissioners

The Valuation Office Agency's (VOA) technical manual used to assess Capital Gains and other taxes.


If a taxpayer disagrees with an assessment or a determination of liability to tax made by the Inland Revenue there is a right of appeal which normally has to be made within 30 days of the service of the formal notice.


Appeals will be considered by the Appeal Commissioners, unless the matter at issue concerns the value of land in the UK in which case reference is to the Lands Tribunal.

There are two distinct bodies of Commissioners - the General Commissioners and the Special Commissioners - and both are independent of the Inland Revenue. All appeals to Commissioners in respect of IHT matters are heard by the Special Commissioners.

General Commissioners

The General Commissioners are appointed by the Lord Chancellor and are unpaid lay people of good standing who are appointed to deal with cases arising in a particular area - referred to as a Division.

The members are assisted by a Clerk who is often a solicitor. The General Commissioners deal mainly with matters related to Income, Corporation and Capital Gains Taxes - they have no jurisdiction in IHT matters.

Special Commissioners

The Special Commissioners are a tribunal with full-time members appointed by the Lord Chancellor following consultations with the Lord Advocate and may be barristers or solicitors. Appeals are normally heard before a single Special Commissioner. Until the rules were changed in September 1994 proceedings at appeal hearing were held in private and were confidential. Decisions were not generally publicised.

Special Commissioners hearing after 1 September 1994

The procedure rules for the General and Special Commissioners were changed with effect from 1 September 1994. For the Special Commissioners the new rules apply only to “new” proceedings. That is, those for which notice of a hearing is first given by the Clerk on or after that date.

The presumption of the rules is that the Special Commissioners’ hearings will, in future, be in public. The Revenue can request a hearing in private but the decision rests with the Commissioners. The taxpayer can however require a private hearing.

A taxpayer may be represented by any person but the Commissioners can (with certain exceptions) refuse to hear that person if they think there is sufficient cause to do so.

The Commissioners can publish reports of their decisions, if necessary, in anonymised form. Costs can now be awarded but only where in the opinion of the Special Commissioners a party has acted wholly unreasonably in connection with the appeal.


In proceedings before the Special Commissioners the DV’s role will be confined to that of an expert witness giving a professional opinion supported by such evidence as may be available. All matters of advocacy will be dealt with by the Solicitor with whom close liaison should be maintained at all stages of the case.

The Presiding Special Commissioner issued a booklet in January 1988 giving notes for the guidance of parties to proceedings before the Special Commissioners. Information from the booklet is included below. A valuer required to give evidence at a Commissioners hearing is advised to study these notes at an early stage in the preparation of the case.

Notes for parties to appeal or other proceedings before the Special Commissioners

(From a booklet issued by the Presiding Special Commissioner, January 1988).

1) Introduction

These notes are issued for the guidance of those who are parties to proceedings before the Special Commissioners. They describe the procedure which is usually followed but, save where it is laid down by statutory instrument, they do not preclude variations in that procedure for special reasons in individual cases.

2) Informality

Proceedings before the Special Commissioners are informal in the sense that there are at present no written rules of procedure. The procedure adopted follows, so far as possible, the procedure adopted in the High Court or Court of Session in that one party puts his case, the other party responds, and the first party then has a right of reply.

3) Burden of proof

Normally in an appeal against an assessment the initial burden of proof is on the taxpayer. This means that it is for the taxpayer to show why the assessment is excessive or wrong. If questions of fact are involved, then it is for the taxpayer to put evidence before the Special Commissioners which will establish the facts, for example, that the taxpayer’s profits were less than the figure assessed. If what is in issue raises a question at law the taxpayer’s task will be to explain why the assessment appealed against is wrong in whole or in part as a matter of law.

In any case where fraud, wilful default or neglect is alleged - for example where assessments are made outside the six year time limit - the initial burden of proof will be on the Revenue. This means that the Revenue must put evidence before the Special Commissions to prove the facts alleged.

4) Representation

The taxpayer may appear in person, or may be represented by counsel, a solicitor or a qualified accountant. Other agents or representatives may be heard with leave of the Special Commissioners.

5) Costs

The Special Commissioners have no power to award costs (in Scotland, expenses) to or against either party to an appeal.

Preparing for a Hearing

1) The issues

Unless the matter in dispute is straightforward and has been precisely defined, it is desirable that the parties to an appeal should, before the appeal comes to be heard, discuss and agree what the questions are which they wish to have decided when the appeal is heard. If cases are not adequately prepared before they are heard adjournments may be necessary, resulting in a waste of time and money.

In some cases the issue will already have been defined when notice of appeal was given, since Section 31, Taxes Management Act 1970 requires a taxpayer in his notice of appeal to specify the grounds of appeal. A taxpayer can, in certain circumstances, be stopped from raising points which were not identified in his notice of appeal. If, therefore, the grounds of appeal were stated in very general terms it may, in a particular case, be appropriate before the appeal is heard to submit a supplementary and more detailed statement of the grounds.

In any event, it will usually simplify and shorten the hearing of the appeal if the parties have been able to agree in advance (a) what facts are not in dispute, and what questions of fact are in issue between them, (b) what question or questions of law is or are to be raised on the facts.

2) Application for a preliminary hearing

Either party may apply for a short preliminary hearing if that would help to identify the issues or clarify the procedure in preparation for the substantive hearing. A Commissioner will then give such guidance or directions as are appropriate after hearing both parties. If the need for such a hearing is apparent from the papers the Commissioners may arrange it on their own initiative.

3) Separate appeals where same point of issue

The Special Commissioners like their Clerk to be informed when, as sometimes happens, it is known to one or both parties that there is a more than one appeal in which the same point is in issue, and if so whether consolidation of the appeals is or is not acceptable to the parties concerned. The Commissioners may arrange a preliminary hearing with a view to giving directions about the procedure to be adopted.

4) Attendance of witnesses

If either party wishes the Special Commissioners to exercise their power under Section 52 Taxes Management Act 1970 to summon a witness, a written request may be made or the matter be raised on a preliminary application (see 7 above). In either case it will assist the Special Commissioners if the applicant indicates in general terms on what matters it is thought that the witness can give relevant evidence and whether he or she would be willing to attend and give evidence without a summons being issued.

5) Evidence

Matters of fact must be agreed between the parties or, if contested, proved by such evidence as would be admissible in the High Court or Court of Session. There are special procedures, in England and Wales, in respect of expert evidence and hearsay evidence: see paragraphs 11 and 12 below.

Much time and effort can be saved if, when the parties agree the issues, they also agree what facts are not in dispute, what facts require to be proved and, in particular instances, whether anything short of strict proof will be acceptable. In some cases it will also be possible to agree the figures in advance of the hearing so that when the points in issue are decided, the matter can be disposed of without delay : (see 19 below).

Copies of documents to be produced at the hearing should be agreed in advance. Only such documents should be included in agreed bundles as it is intended shall be referred to at the hearing. Photocopies should be made clear and easily legible. Correspondence and documents included in a bundle should be arranged in correct sequence and numbered consecutively.

At least two copies of each document must be produced, one for the Commissioner and one for the Court Clerk. A copy must also be given to the other party, if that has not already been done, and an extra copy may be needed for the use of witnesses. Where it is known in advance that the appeal will be heard by two or more Commissioners (see 15 below) additional copies should be prepared.

The agreement of a copy document only involves accepting that it is a true copy of its original; the agreement of an original document only involves accepting that it was made when and by whom it purports to have been made. Neither agreement involves acceptance of the truth of statements in the documents. If any such statements are admitted to be accurate, such admission should be specifically recorded.

6) Expert evidence

Expert evidence differs from ordinary evidence in that the witness giving it has special qualifications which entitle him to offer his opinion on a given set of facts; e.g. on how a particular item could be dealt with in a trader’s account according to the ordinary principles of commercial accountancy, or on the value at a certain date of a particular life interest. Any party who decides to call an expert witness should, if he is in any doubt and the position regarding expert evidence cannot be agreed with the other party, consult the Clerk to the Special Commissioners as early as possible, and in any event within 14 days of receiving notice of the date of the hearing.

The position (in England and Wales) regarding expert evidence is governed by Order 38 Rules 36 and Rules 38, 39 and 41 to 44 of the Rules of the Supreme Court. The relevant Rules are designed to ensure that each party will know what evidence the other party’s expert witness will be giving when the case comes to be heard. If the experts agree, the time will be saved. If there is a conflict of views, the issue between the experts will be identified and the element of surprise eliminated. Where there is agreement between the parties about disclosing expert evidence in advance, usually an exchange of proofs of expert witnesses (i.e. written statements of their evidence) is all that is needed.

In the event, however, that the parties are unable to agree about disclosing expert evidence in advance, Rule 36 makes it necessary for a party seeking to call expert evidence to apply to the Special Commissioners to decide whether they should give a direction under Rule 38 that the substance of the expert evidence should be disclosed in advance to the other party.

Where necessary, applications for a determination whether a direction should be given under Rule 38 should be made in writing to the Clerk to the Special Commissioners, wherever possible before a date for hearing is fixed, and in any event within 14 days of receipt of notice of the date of hearing.

The application should state whether the applicant has disclosed or is willing to disclose the substance of his expert’s evidence and whether he is willing that a direction should be given, and if he is unwilling it should state the reasons. The Special Commissioners expect that they will normally be able to deal with applications without the necessity of summoning parties to attend a hearing.

7) Hearsay evidence

The introduction of hearsay evidence - that is to say, statements made out of Court whether orally or in writing, statements contained in records and statements produced by computer- and of non-expert opinion evidence is governed in England and Wales by Order 38 Rules 21 to 31 and 34 of the Rules of the Supreme Court.

The Special Commissioners will determine, at a preliminary hearing, if necessary, any question arising under Rule 27 (whether a person can or should be called as a witness) or Rule 28 (directions with respect to statements made in previous proceedings) on which the parties cannot agree.

8) The law

If reported cases, or statutes other that tax statutes, are to be cited at the hearing, or text books referred to, a list should be prepared and particulars given to the Clerk to the Special Commissioners beforehand with a copy to the other side. Steps must be taken to ensure that sufficient copies will be available for the use of the Special Commissioners at the hearing. It may also be necessary to ensure that the other side has a copy or that a copy is made available to them. Where reported cases are in point, it is usually better to produce a complete report than to rely on selected extracts.

9) Request for Hearing

It is open to either party to an appeal to request that a hearing be arranged. A date for the hearing will be fixed as soon as convenient thereafter. Normally a hearing will be fixed for a date not earlier than one month after the summoning notices are despatched. It is particularly required that as soon as a date has been fixed the parties will take the steps suggested at 6 and 11 above with a view to agreeing the issues which are to be decided and how long the hearing is likely to last. It is probably better to over-estimate rather than under-estimate the time required for a hearing. Where witnesses are to be called, it is necessary to estimate realistically how much time will be taken up by cross-examination. Once a date has been fixed, if in the course of the ensuing discussions or correspondence it becomes apparent that the matter can be disposed of in less than the estimated time or by agreement between the parities, the Clerk to the Special Commissioners should be notified immediately.

10) Place of Hearing

The Special Commissioners normally sit in London, at the address shown in the Appendix to these Notes (Turnstile House, Holborn). They also visit Scotland, Northern Ireland and other cities in England and Wales. They will consider applications to sit in any city or town if suitable accommodation is available and the need for a local hearing can be shown.

11) Quorum

An appeal or application will be heard by a single Special Commissioner unless the Presiding Special Commissioner directs otherwise. Taxes Management Act 1970 Section 45 (1), as amended by the Finance Act 1984 Section 127 and Schedule 22 para 2(2).

The Hearing

1) Order of Hearing parties

The party upon whom rests the initial onus of proving his case will begin (see 3 above). He should introduce the case by explaining what it is about, giving a summary of the facts, and indicating how the law applies to the facts. It may be convenient to deal with agreed written evidence as well as the expert evidence, when the case is being introduced; or it may be convenient to deal with all the evidence, written and oral, after the case has been introduced. At some stage, the formal submissions being made on behalf of the party opening the case should be indicated. It is important for each party, in the course of presenting his case, to bring out the essential facts.

When the party has presented his case, called his evidence and made his submissions, the other party will open his case, call his evidence, if any, in the same way, and make his submission including his answers to the first party’s case. The first party then has a right of reply, but may not raise new issues.

The procedure is somewhat different in Scotland, where the evidence of both parties is heard consecutively.

2) Oral evidence

Oral evidence is given by a witness answering questions put to him first on behalf of the party who has called him, and then in cross-examination, on behalf of the other party, with the first party having a right of re-examination.

Questions put to a witness on behalf of the party who has called him should not be leading questions; that is, they should not be questions which indicate what answer is looked for. The answers should be the witness’s own answers, based on his own unprompted recollection. It is however permissible to lead a witness with the other side’s consent, or when he is merely dealing with matters not in dispute, or which have already been agreed.

The purpose of cross-examination is, in general, to test the validity of the evidence given by the witness; or to elicit further facts within the knowledge of the witness which the party cross-examining wishes to establish. Questions need not be confined to such evidence as the witness may already have given, but should be relevant to the issues of the appeal. Questions may be leading questions, for example, inviting the witness to accept some qualification of what he has himself stated without qualification. If the evidence of a witness called by one side is challenged by the other side, that challenge should be made clear in the questions put by the other side in cross-examination. The Special Commissioners are entitled to (but need not) accept as established what a witness says in his evidence if it is not challenged by cross-examination. A witness’s evidence is not challenged by a mere general assertion that it is not accepted. His attention must be adequately directed to each point which is challenged.

After cross-examination on behalf of the other party, a witness may be re-examined on behalf of the party to whom he was called. Such re-examination must be confined to elucidating matters which have emerged in cross-examination.

Care should be taken in examining and in cross-examining witnesses to distinguish between matters of fact with the knowledge of the witness, which constitute the proper area of enquiry, and matters of opinion (where the witness is not being called as an a expert witness) or of law, both of which will be covered in the submission and arguments put forward, and not by the witness.

3) Shorthand note

It is open to a party to an appeal to arrange for a shorthand note of the evidence (or of the evidence and the argument) to be made. If it is known that a case is likely to turn on contested and lengthy evidence, a shorthand note may be helpful.

a. a transcript will in any event be furnished to the Special Commissioners free of charge b. if the other party desires a copy of the transcript, a copy will be furnished on payment of the cost or on such other terms as may be agreed between the parities.

The decision

1) Form of decision

The Special Commissioners will dispose of the appeal either by giving an oral decision at the conclusion of the hearing, sometimes after a brief adjournment, or by reserving their decision and issuing it subsequently in writing.

If on receiving a written decision a party notices some obvious misprint or mis-description, the attention of the Special Commissioners should at once be directed to the slip so that, if appropriate, it may be corrected.

2) Agreement of figures

It is desirable, if possible, to agree figures on alternative basis before a hearing that, having decided the point or points in issue between the parties, the Special Commissioners can on determining the issues raised in the appeal direct the consequential discharge, reduction, confirmation, or increase of the assessment appealed against, or make what other order will finally dispose of the matter.

There may be cases where the figures cannot be agreed until the Special Commissioners’ decision in principle is known. In such cases, the Special Commissioners will normally adjourn the hearing for a limited period to enable figures to be agreed. Once the figures have been agreed they will issue their final decision.

3) Expression of dissatisfaction

When the final determination has been issued, which may be at the hearing or at some later date, the right to express dissatisfaction conferred by Section 56 Taxes Management Act 1970 arises and, if the decision is not acceptable, the right should immediately be exercised by the unsuccessful party. An unsuccessful party who does not express dissatisfaction in this way may be debarred from taking the case further. An unsuccessful party who wished to keep open his right of appeal should therefore be seen to express dissatisfaction. If the decision is given orally and is a final determination of the appeal dissatisfaction should be expressed at the hearing. If the decision is given in writing or a final determination is issued in writing after figures have been agreed, dissatisfaction should be expressed by letter as soon as possible.

4) Appeal from a decision of the Special Commissioners

A party who has declared himself to be dissatisfied with the Special Commissioners decision on an appeal has the right, under Section 56 Taxes Management Act 1970, within thirty days after the determination, to require a case to be stated for the opinion of the High Court in England and Wales, the Court of Session in Scotland or the Court of Appeal in Northern Ireland. Notice in writing must be given to the Clerk to the Special Commissioners, and a fee must be paid. (Cheques should be made payable to HM Paymaster General). Some decisions are not subject to appeal: e.g. interest certificates (Section 70(3) Taxes Management Act 1970); applications to bring appeal out of time (Section 49).

Appeal from a decision of the Special Commissioners (in proceedings) lies only upon a question of law.

The party requiring a stated case should indicate, when doing so, the point of law which he wishes to have considered by the Court hearing the appeal.

In penalty proceedings under Section 100 of the Taxes Management Act 1970 either party may appeal to the High Court or Court of Session on a point of law and the defendant (defender) may appeal against the amount of any penalty imposed. In England and Wales the appeal is by originating motion in the Chancery Division under Order 91, Rule 5, of the Rules of the Supreme Court. The procedure is regulated in Scotland by Rule 282 of the Rules of the Court of Session and in Northern Ireland by Order 91, Rule 4, of the Rules of the Supreme Court (Northern Ireland).

5) The stated case

It is the responsibility of the Special Commissioners to settle the form and content of the stated case. Their practice is to prepare a draft of the case and send a copy of it to each party asking for it to be returned, with any comments which the party wishes to make, within 2 months. A the end of that time the Special Commissioners will normally state the case, whether or not the drafts have been returned. (but see below as to proceedings in Northern Ireland).

Where a full decision has been given in writing, or a note of a full oral decision has been sent to the parities, that decision or note will be included in the case as it stands, subject only to the correction of “slips” or clerical errors although passages which relate to issues not relevant to the stated case may be excluded. Suggestions for amendment of other parts of the draft case or for the inclusion of additional matter will be considered, but the case cannot include new facts or new arguments which were not put before the Special Commissioners at the hearing of the appeal.

6) Transmission to the High Court

When the case been stated and signed the party who required it shall, if he wishes to proceed, transmit it

a. in England and Wales or Scotland, within 30 days of receiving it, to the High Court or the Court of Session;

b. in Northern Ireland, within 14 days of its dispatch to the appellant, to the Court of Appeal;

in each instance serving a copy on the respondent.

Special Commissioners’ Office

1) The Clerk to the Special Commissioners cannot enter into correspondence about the merits of individual cases nor give advice on evidence. He deals only with the arrangements for hearings but will be glad to give any help or guidance which he can in relation to matters referred to in these notes.