Amidst allegations of tax evasion and self-insurance practices, the 6 year tax battle between the Comptroller of Inland Revenue and Unicomer (St. Vincent) Ltd, operators of the popular Courts household furniture and appliances store, has reached a new plateau.
High Court Judge Nicola Byer, in a recent judgment on the matter, refused several of the reliefs being claimed by lawyers for the Claimant, Unicomer (St. Vincent) Ltd. and “prescribed costs to the Defendant (Comptroller of Inland Revenue) on an unvalued claim pursuant to Part 65.5 CPR 2000 less 5% for the partial success of the Claimant is to be paid to the Defendant.”
The issue started when Courts was given notice in 2015 of the tax collector’s plans to reevaluate their corporate tax contributions to the nation’s coffers. According to the background captured in Judge Byer’s written judgement, “by letter dated 23 March, 2015, the Comptroller of Inland Revenue (hereinafter referred to as “the Defendant”) gave notice to the Claimant of the intention of the Inland Revenue Department to raise additional assessments to tax on the Claimant in the sum of $12,666,798.23 inclusive of interest and penalties.
“The basis of the Defendant’s increased assessment centered on the Claimant’s treatment of its credit protection premiums (hereinafter referred to as “CPI”), hire-purchase profits and royalties.”
By June 4 that same year, Unicomer – armed with evidence supplied by financial auditing firm KPMG – objected to the tax department’s reassessment.
Almost two years elapsed before the Comptroller of Inland Revenue “responded by letter dated 29 March, 2017 rejecting the Claimant’s ground of objection and maintained his assessment.”
This response provoked the Courts team to raise their protest with the tax Appeal Commissioners in a “Notice of Appeal filed on 26 April, 2017.” The Appeal Commissioners gave their decision on November 29, 2018 after hearing the positions of both parties.
“In summary, this decision held that the sums collected by the Claimant in CPI were disallowed and withholding tax was chargeable on payments made to Canterbury; the deferral of hire purchase profits was disallowed; and royalty expenses were allowed,” Judge Byer wrote.
Unicomer was supposedly “funneling funds out of the country to lower their tax liability” by way of what was ultimately proven to be legitimate insurance payments that protected both the company and hire-purchase customers.
Five days following the Appeals Commissioners’ decision, the Comptroller of Inland Revenue demanded, in writing, that the department store “make a payment of the sum of $13,556,007.30 on or before 14 December, 2018.” An order which Unicomer promptly refused to carry out.
They claimed, in another letter to the tax department, “that the Appeals Commissioners had not upheld or confirmed the Defendant’s assessment and there was, consequently, no obligation on the Claimant to comply with the Defendant’s demand.”
After another flurry of written correspondence the government’s exclusive tax collection agency, “on 20 December 2018 … served the managers of The Bank of Nova Scotia, CIBC First Caribbean International Bank, Bank of St. Vincent and the Grenadines and RBTT Bank Caribbean Ltd (hereinafter referred to as “the Banks”) with a letter of even date.
“This letter demanded that the Banks pay to the Accountant General sums held on behalf of the Claimant an amount up to $13,556,007.3011. The referenced letters outlined the provisions of the Income Tax Act, CAP. 435 (hereinafter referred to as “ITA”) and stated, inter alia, that the Banks were required to pay to the Accountant General on account of the Claimant’s liability under the ITA within fifteen days of the date of service of the notice, monies payable to the Claimant which they were liable to pay.
“The letters also stated that payable was the amount up to and not exceeding $13,556,007.30 by 20 December, 2018 (in the case of CIBC First Caribbean International Bank; and RBTT Bank Caribbean Ltd.) and by 21 December 2018 (in the case of Bank of St. Vincent and the Grenadines; and Bank of Nova Scotia).”
Unicomer (St. Vincent) Ltd sprang into action and ordered their lawyers to assert that the tax team’s “letters of 20 December, 2018 were unlawful.” They “also wrote to the Banks on 21 December, 2018 instructing them that the Defendant (Comptroller of Inland Revenue) had no power to demand the referenced payments from them until the expiry of 15 days from the date of the notice to them and that he had no lawful authority to demand immediate payment.
“The Bank of Nova Scotia paid to the Defendant the sum of $198,364.04 on 21 December, 2018 and informed the Claimant of this by letter dated 24 December, 2018.”
Within 4 days Unicomer’s lawyers lodged an appeal at the High Court against the Appeal Commissioner’s decision and by January the following year they filed “an ex parte application for an interim injunction restraining the Defendant (tax department) from taking enforcement action to recover the assessed taxes. This injunction was granted by the court and a copy of the order of court was served on the Defendant on 4 January, 2019.
“By letters dated 4 January, 2019, the Defendant issued letters to all of the banks withdrawing his letters of 20 December, 2018. By order of court made in SVGHCV2019/0001 on 24 January, 2019 the injunction which was granted on 3 January, 2019 was ordered to continue until the determination of these proceedings.”
The High Court chose to consolidate both cases as it deemed them to be caused by the same circumstances.
Of the 12 points of redress sought by Unicomer (St. Vincent) Ltd. Judge Byer only granted the “declaration that the notices in writing dated 20 December 2018 issued to the Bank of Nova Scotia, CIBC First Caribbean International Bank, Bank of Saint Vincent and the Grenadines and RBTT Bank Caribbean Ltd. requiring immediate payment of monies standing to the credit of the accounts of the Claimant were unlawful and out with the statutory powers of the Defendant in the Income Tax Act.”
The “declaration that the Defendant is not empowered to issue notices in writing pursuant to section 120 of the Income Tax Act to any commercial bank to pay over to the Defendant monies held by such banks to the credit of the Claimant in any account held by the Claimant with such banks is refused.”
So too was the “declaration that the Defendant is not empowered to take enforcement action or to take any steps to recover the taxes in dispute between the Claimant and the Defendant pursuant to any provision of the Income Tax Act.”
Judge Byer also refused “an order to restrain the Defendant from taking enforcement action to recover the taxes in dispute whether by way of notices pursuant to section 120 of the Income Tax Act or any other provision” even as she upheld “the decision of the Appeal Commissioners of 29 November 2018.”
She further ruled that the “assessment raised by the Comptroller of Inland Revenue which was maintained in his letter of the 29 March 2017 to the Claimant is confirmed” and mandated “that there is to be no repayment of the sum of $1,000,000.00 paid to the Comptroller of Inland Revenue on 7 December 2015 and the sum of $2,000,000.00 paid to the Comptroller of Inland Revenue on 30 December 2015 pursuant to the exercise of his statutory powers under section 107 of the Income Tax Act.”