1. Presentation Tax 715 “Deemed Assessment” Presented by: Ahmad Suazzri 2009

2. Case Evaluation Homework LANGHAM, INSPECTOR OF TAXES V VELTEMA (COURT OF APPEAL) (2004) CORBALLY-STOURTON V REVENUE & CUSTOMS [2008] UKSPC SPC00692 (16 JUNE 2008) Evaluate both the above cases against Malaysian tax legislation. You must consider this in the light of the purpose of a tax system and the obligations of the Inland Revenue in the service of the Taxpayers for whom they work. Your evaluation must be supported by cases from around the world. You must evaluate a minimum of around the world. You must evaluate a minimum of 10 cases

3. What the ITA 1967 says? Sec 77(1) – every person need to submit tax form/return for each year of assessment provided that, that person has:2 (a) chargeable income for that year of assessment; (b) no chargeable income for that year of assessment, but has chargeable income or has furnished return in the preceding year. Sec 90 (1) when a person has submitted a return to the IRB for that year of assessment, the DGIRB shall be deemed to have made an assessment. (2) the DGIRB is deemed to have an assessment when; (b) on the day which the Director General is deemed to have made the assessment.

4. The issues.. According to the act, the submitted return is deemed to be an assessment by the DGIRB on the day it was furnished, or is it not? When is it the DGIRB is said to have made the assessment, and how?

5. Based on the principles in leading cases… Langham (A) v Veltema (R) : Facts: Respondent sent assessment of house sales to Revenue based on market value, however IOT valuation was more than that, therefore additional assessment raised Held: Appeal allowed Issue: Can the IOT raised an additional assessment if he feels that the amount of information presented to him is insufficient? Principles: -The Revenue cannot raise an assessment if the TP make an honest and accurate return. -The Revenue can raise additional assessment if he has been aware that the information presented to him is insufficient.

6. Deemed Assessment (cont’d).. Comm HMRC (R): Corbally-Stourton (A) v Comm HMRC (R): Facts: Appellant claimed loss in Castle Trust Scheme in her return. Respondent did not allowed the loss to be claimed and raised discovery assessment. Held: 1.Yes – The Appellant was not entitled to claim the loss 2.Yes – when the tax officer signed the certificate in the assessment book (Barford v Dunkin [1991] STC 7) - In this case, when the officer write to the taxpayer indicating an assessment is to be made (enter the amount in the computer) Issues: 1.Assessment – whether HMRC was permitted to make the assessment? 2.Assessment – whether made? Principles: 1.If the officer finds that, from the information presented to him is ‘insufficient’, then he can raised additional assessment. 2.An assessment is said to be made when there is some form of ‘action’ by the tax officer.

7. Relation between the said cases… The Corbally case has one of the same issue in Veltema case that is: “that a question arises as to whether it is only the information presented which to be treated as being available to the inspector at the relevant time, or whether he must be taken to have that information but may also be taken to have any other information which he or the Board has in his possession.” Therefore, it is learned that: -Tax officer can only raise an assessment when he, from the information made available to him at the relevant time, if: He newly found that is probability of ‘insufficiency’; He could not reasonably at that time, expected, have the general knowledge and skill attributed to him, to conclude that is was probable that there was ‘insufficiency’.

8. How about Nil Assessment? In M’sian’s practice, for YA 2000PY, if a person do not have chargeable income, then the notice of assessment can not be issued. Then doesn’t this contradict what appears in Sec 96(1) which says that “after an assessment has been made, other than in Sec 90(1), the DGIRB shall cause a notice of assessment to be served on that person”?

9. Apparently, it is not…learn from this case: KPJHDN v Enesty Sdn Bhd (2003) MSTC 4,053: Facts: TP’s tax agents has requested for IRB to issue notice of assessment under Sec 96(1) of the ITA 1967 for the YA of 1982-1984. IRB replied that no notice of assessment issued for no chargeable income. Only tax comp can be produce because there is no tax charged. TP appeal through the High Court

10. KPJHDN v ENESTY.. Issues: 1. Whether the IRB has made an assessment for the said year. If so, the IRB bound to issue a notice of assessment. If in contrary, there is no case for demanding service of notice of assessment. 2. Whether it is mandatory to make an assessment under Sec 90(1) when there is no chargeable income. 3. Whether making an assessment under any other form (besides the prescribed form under Sec 93) was still considered as making an assessment.

11. Held 1. It is by implication that Sec 90(1) requires that an assessment has to be made only if there is chargeable income. 2. Filling the form is not making an assessment, but an effort in making an assessment. Any other determination such as chargeable income or tax liability is to be made in other form. 3. Since, no assessment form has been completed for that years, no assessment has been made in respect of those year and the IRB is under no duty to have notices of assessment served on the tax payer. - The tax payer’s appeal failed.

12. But it can be yes either.. Please refer : Please refer : -Comm of Taxation v BCD Technologies Pty Ltd. - Thank You-