judgement:
The Parliamentary Commissioner Act 1967 created for the first time in the United Kingdom an officer, the Parliamentary Commissioner for Administration, charged with investigating complaints of maladministration against government departments and a limited number of other public authorities exercising the functions of the Crown or controlled or funded by the Crown.
Since then, ombudsmen have come to fulfil an increasingly important role in mediating between the state and the public service on the one hand and the citizen on the other.
Commissioners have been established for complaints against the National Health Service since 1973, for complaints against local government since 1974 and for complaints against social housing landlords since 1996.
There are also separate Commissioners charged with examining complaints against public bodies or the providers of public services in Scotland, Wales and Northern Ireland.
There are currently 19 statutory officers charged with the handling of complaints against government departments, local government, the National Health Service and other public authorities or undertakers.
They are generally known as ombudsmen, after the officer of that title first established in Sweden in 1809.
In some cases, the same person performs the functions of more than one ombudsman, but each role has its own statutory basis.
The various enactments have a strong family resemblance.
But some of them have distinctive features which mean that considerable caution is required before principles derived from one legislative scheme can be read across to another.
In 1969, two ombudsmen were established for Northern Ireland.
The Parliamentary Commissioner Act (Northern Ireland) 1969 established a Northern Ireland Parliamentary Commissioner for Administration (later known as the Assembly Ombudsman for Northern Ireland).
His role and powers were closely modelled on those of the Commissioner established by the United Kingdom Act of 1967.
The Commissioner for Complaints Act (Northern Ireland) 1969 established a Northern Ireland Commissioner for Complaints.
I shall call him the Complaints Commissioner.
He is charged with reporting on complaints against bodies which were not within the jurisdiction of the Northern Ireland Parliamentary Commissioner, notably local authorities, the Northern Ireland Health Board and various public statutory undertakers.
Since 1972, the same person has held both offices.
But until recently (see below) his two roles have had distinct legislative foundations.
It is therefore necessary to have regard to the particular capacity in which an ombudsman is acting and the particular legislation governing that function in order to determine what his powers are.
The current legislation comprises two Orders in Council made on the same day in 1996, which repealed and replaced the corresponding Acts of 1969.
They are the Ombudsman (Northern Ireland) Order 1996 (SI 1996/1298 (NI 8)), governing the work of the Assembly Ombudsman, and the Commissioner for Complaints (Northern Ireland) Order 1996 (SI 1996/1297 (NI 7)), governing that of the Complaints Commissioner.
This appeal is about the powers of the Complaints Commissioner under the latter order, which I shall call the 1996 Order.
In particular it is about his powers in relation to general medical practitioners working in the National Health Service.
In Northern Ireland, as in other parts of the United Kingdom, the National Health Service is one of the main sources of complaints.
The original jurisdiction of the Complaints Commissioner extended to the various boards and committees responsible for the administration of the National Health Service in Northern Ireland.
But it was confined to maladministration and did not extend to any action in the discharge of a professional duty by a medical or dental practitioner, pharmacist, nurse, midwife or member of a profession supplementary to medicine in the course of diagnosis, treatment or care of a particular patient: see the
Commissioner for Complaints Act (Northern Ireland) 1969, Schedule 2, paragraph
That jurisdiction was preserved in the 1996 Order.
But the position was significantly altered by an amendment of 1997, which followed a similar amendment to the United Kingdom legislation.
Its effect was to extend the Complaints Commissioners jurisdiction to the merits of a decision to the extent that it was taken in consequence of the exercise of clinical judgment: see article 8(7) of the 1996 Order as amended. 4.
The main questions at issue in this appeal are whether, and if so in what circumstances, the Complaints Commissioner has power to recommend the payment of a money sum to a complainant; and whether in the event that that sum is not paid he has power to make a special report drawing the attention of the legislature to that fact.
The Northern Ireland Court of Appeal decided that the answer in each case was no.
These questions will shortly become moot.
The Public Services Ombudsman Act (Northern Ireland) 2016 abolishes the offices of both the Assembly Ombudsman for Northern Ireland and the Complaints Commissioner with effect from 1 April 2016, and combines their functions in a new officer, the Northern Ireland Public Services Ombudsman.
The jurisdiction and powers of the new office are in some respects greater than those of either of its predecessors, and his mode of operation different.
But the new Act has no bearing on the present appeal.
The transitional provisions provide for current matters to be transferred to the Public Services Ombudsman, but to be dealt with by him in accordance with the 1996 legislation.
We have been told that there are some 53 reports completed since the decision of the Court of Appeal which have been held back pending the determination of this appeal, and that in four further cases payment of a money sum has been recommended but the recommendation has not been followed.
The facts
The respondent is a general medical practitioner in sole practice in Northern Ireland.
The National Health Service operates in Northern Ireland through a Health and Social Care Board.
The respondent provides general medical services under contract with the board for his area under Part VI of the Health and Social Services (Northern Ireland) Order 1972 (SI 1972/1265 (NI 14)).
This means that complaints against him are liable to be investigated by the Commissioner under article 8 of the 1996 Order.
I shall deal below with the scope of that article.
The complainant is the widow of one of his patients, who has been referred to in this litigation as R. R died on 6 January 2009 of a myocardial infarction.
The complaint concerns the care and treatment received by him during the last eight months of his life.
He attended the respondents surgery on 30 May 2008 to ask for a heart screen.
Although he had no symptoms and was not complaining of chest pains, he was referred to a NHS hospital for a treadmill test.
The test was carried out in July, but terminated early due to fatigue.
The test recorded negative for ischaemic heart disease at the level of exercise attained at the time it was terminated.
A report to this effect was sent to the respondent, whose staff recorded it on the practice computer system, but no action was taken.
On 10 December 2008, R attended the surgery again, this time complaining of chest pains.
He was seen by a locum doctor, who noted typical angina pain but normal treadmill earlier in the year, but again, no action was taken.
R returned to the surgery on 15 December 2008 complaining of further chest pains.
He saw the respondent, who referred him to the Rapid Access Chest Pain Clinic at the same hospital.
The clinic, however, declined to give him an appointment, because the earlier treadmill test had been negative.
They suggested in a report dated 20 December that if any further medical review was required R should be referred to the outpatients department.
Their report arrived at the practice on Christmas Eve, and was input into the practice computer system.
The respondent was on holiday.
The locum was on duty, but she did not review the report because it was not marked urgent.
R returned to the surgery on 6 January 2009 to find out what had happened about the referral to the clinic.
The locum told him that an appointment had been refused, but referred him to the clinic as an outpatient for a treadmill test, as suggested in the report.
He died later that day, before anything had been done to follow up this suggestion.
Mrs R complained to the Complaints Commissioner.
She gave his officials to understand that she was not looking for compensation but wished to understand what had happened.
The Commissioner agreed to undertake the investigation, and in due course reported.
He concluded that the practice had failed to provide a reasonable level of care and treatment.
In particular, he found that it was guilty of maladministration in (i) failing to take action after the treadmill test, (ii) failing to follow up promptly the clinics failure to give R an appointment, and (iii) failing to refer R to the emergency services on 6 January 2009.
He also found that the respondent had acted inappropriately after Rs death in (iv) prematurely assigning responsibility to the hospital, (v) discouraging the family from making a complaint, and (vi) having promised to contact the hospital about Mrs Rs complaint against them, failing to get back to Mrs R after doing so.
The Complaints Commissioner made no finding that these failures caused the death of R, and the facts that he has found do not suggest that they did.
He specifically found that the failure to take appropriate action on 6 January 2009 made no difference to the outcome.
But at para 70 of his report he concluded: I have identified learning points earlier in this report for the Practice and I recommend that [the GP] acts upon them.
I also recommend that the Practice should pay [the complainant] 10,000 in respect of the clearly identified failings in the care provided to [the patient] and the events which consequently followed.
The respondent has apologised to Mrs R and, as the Complaints Commissioners report observes, has put in hand changes to his practices procedures designed to avoid a recurrence of the administrative failings.
But, having taken legal advice, he has declined to pay the money sum recommended, on the ground that he was not legally bound to do so.
The Complaints Commissioner has responded by saying that in that case he was minded to issue a special report to the Northern Ireland legislature reporting the respondents failure to comply with the recommendation.
The Commissioner for Complaints (Northern Ireland) Order 1996
The Complaints Commissioner is empowered to investigate and report on complaints made to him by those claiming to have suffered injustice as a result of the conduct of certain bodies and persons.
The bodies and persons in question, and the matters which he is empowered to investigate are identified by articles 7 to 10 of the Order.
The scheme of these provisions is that article 7 provides for the investigation of complaints about maladministration by any of the bodies listed in Schedule 2.
These are all non departmental public bodies exercising functions conferred on them by statute.
Schedule 2 may be amended by Order, but article 7(3) provides that such an Order may extend its operation only to bodies which either exercise statutory functions or have their expenses substantially defrayed from public funds.
The investigation of Mrs Rs complaint against the respondent was conducted under article 8, which deals with the investigation of complaints against individuals who have undertaken to provide general medical, dental, ophthalmic or pharmaceutical services under Part VI of the Health and Social Services (Northern Ireland) Order 1972 or in certain circumstances those performing personal medical or dental services.
Unlike the bodies whose conduct may be investigated under article 7, the persons liable to be investigated under article 8 are not public bodies.
They are individuals like the respondent providing professional services under contracts or other consensual arrangements with the National Health Service.
The distinction is significant, as I shall explain. article 8(a) provides for the investigation of complaints against independent health and social care providers.
These are not public bodies either.
Like the individuals covered by article 8, they provide services under arrangements with the National Health Service.
Articles 9 and 10 restrict in certain respects the undertaking of investigations authorised under all three preceding provisions.
Article 9 is mainly concerned with the potential overlap between the Complaints Commissioners investigations and other remedies available to the complainant.
Article 9(3) and (4) provides: 9.
Matters not subject to investigation (3) Subject to paragraph (4) and to [section 78 of the Northern Ireland Act 1998], the Commissioner shall not conduct an investigation under this Order in respect of (a) any action in respect of which the person aggrieved has or had a right of appeal, complaint, reference or review to or before a tribunal constituted under any statutory provision or otherwise; any action in respect of which the person (b) aggrieved has or had a remedy by way of proceedings in a court of law. (4) The Commissioner may conduct an investigation
Article 11 provides, in relation to all three categories of investigation: (a) notwithstanding that the person aggrieved has or had such a right or remedy as is mentioned in paragraph (3), if the Commissioner is satisfied that in the particular circumstances it is not reasonable to expect him to resort to or have resorted to it; or (b) notwithstanding that the person aggrieved had exercised such a right as is mentioned in paragraph (3)(a), if he complains that the injustice sustained by him remains unremedied thereby and the Commissioner is satisfied that there are reasonable grounds for that complaint. 11.
Purposes of investigation The purposes of the investigation by the Commissioner shall be to ascertain if the matters alleged in the (a) complaint (i) may properly warrant investigation by him under this Order; (ii) are, in substance, true; and to effect a settlement of the matter (b) where it appears to the Commissioner to be desirable (i) complained of; or if that is not possible, to state what action (ii) should in his opinion be taken by the body concerned, the general health care provider concerned or the independent provider concerned (as the case may be) to effect a fair settlement of that matter or by that body or provider or by the person aggrieved to remove, or have removed, the cause of the complaint.
Articles 15 19 cover (among other things) enforcement.
Three modes of enforcement are provided for.
First, under article 15, the Complaints Commissioner is required to send a copy of the report of his investigation to specified people, including the complainant and the body or person investigated.
Where the investigation is carried out under article 8 into the conduct of an individual health provider, the report must be sent to the National Health Service entity with whom he or she has contracted or arranged to provide the service in question.
That body may take whatever disciplinary or other action is open to it under its arrangements with the practitioner.
Secondly, article 16 provides: 16.
Application for compensation by person aggrieved (1) Where on an investigation pursuant to a complaint under article 7 the Commissioner reports that a person aggrieved has sustained injustice in consequence of maladministration, the county court may, on an application by that person, by order award that person damages to be paid by the body concerned. (3) Damages awarded under this article shall be such as the county court may think just in all the circumstances to compensate the person aggrieved for any loss or injury which he may have suffered on account of expenses reasonably incurred by him in (a) connection with the subject matter of the maladministration on which his complaint was founded; and (b) his loss of opportunity of acquiring the benefit which he might reasonably be expected to have had but for such maladministration. (4) In calculating the amount of damages to be awarded by virtue of paragraph (3)(b) the county court shall apply the same rule concerning the duty of a person to mitigate his loss as applies in relation to damages recoverable at common law.
The third mode of enforcement is provided for by article 17.
The substance of this provision is that where the Complaints Commissioner conducts an investigation under article 7 and reports persistent or systemic maladministration, the Attorney General may, at his request, apply to the High Court for an injunction.
In court proceedings under article 16 or 17, article 18(1)(a) provides that a recommendation of the Commissioner and any report of the Commissioner relating to the complaint in connection with which the recommendation is made shall, unless the contrary is proved, be accepted as evidence of the facts stated therein.
It is, finally, necessary to refer to articles 19 and 21.
They provide as follows: 19.
Reports to the Assembly The Commissioner shall annually lay before the Assembly a general report on the performance of his functions under this Order and may from time to time lay such other reports before the Assembly as he thinks fit. 21.
Disclosure of information by Commissioner Information obtained by the Commissioner or his (1) officers in the course of, or for the purposes of, an investigation under this Order shall not be disclosed except as permitted by paragraph 1(B) or for the purposes of the investigation and any report to be made (a) thereon under this Order; (b) any proceedings for an offence under the Official Secrets Acts 1911 to 1989 alleged to have been committed in respect of information obtained by the Commissioner or any of his officers by virtue of this Order; (c) any proceedings for an offence of perjury alleged to have been committed in the course of an investigation under this Order; (d) an inquiry with a view to the taking of proceedings of the kind mentioned in sub paragraphs (b) and (c); or (e) any proceedings under article 14, 16 or 17.
Power to recommend monetary redress: Article 9(3) and (4)
On the particular facts of this case, there is a short answer to the Complaints Commissioners appeal.
Under article 9(3) of the 1996 Order, he may not carry out an investigation into any actions in respect of which the complainant has a remedy by way of proceedings in a court of law.
This is, subject to article 9(4), a condition precedent to his jurisdiction.
It follows, as a Divisional Court in England held about a similar provision limitation on the powers of the Commissioner for Local Administration under the Local Government Act 1974, that the operation of article 9(3) cannot depend on whether the complainants allegations are well founded.
For the purposes of article 9(3) she has a remedy by way of proceedings in a court of law if, on the assumption that her complaint was justified, she would have a remedy in court: see R v Commissioner for Local Administration, Ex p Croydon London Borough Council [1989] 1 All ER 1033, 1044.
By way of exception to the restriction in article 9(3), article 9(4) provides that the Complaints Commissioner may nevertheless conduct the investigation if he is satisfied that in the particular circumstances it is not reasonable to expect the complainant to resort to law.
This is primarily directed to cases where litigation would not be worth the cost and trouble involved.
But it may also apply in other cases, for example where the complainant is looking for explanations rather than money.
According to the evidence of the Commissioners staff, this was the position of Mrs R.
The Commissioner accepted that the complaint should be investigated because Mrs R said that she was not seeking monetary redress but only wanted to know what had gone wrong.
I agree that that was a proper basis on which to undertake the investigation.
The Commissioner could properly conclude that it would not have been reasonable to expect Mrs R to commence proceedings in court if she was not seeking financial relief.
But if the only basis on which the Commissioner felt able to undertake the investigation at all was that Mrs R did not want money, it could not be proper for him to recommend a payment of money and threaten to report on the respondents failure to pay it.
Power to recommend monetary redress: in general
There is, however, a more fundamental question, which is directly raised by the Court of Appeals judgment, namely whether the Complaints Commissioner has power to recommend monetary redress at all.
The Court of Appeal held that he did not.
If that is correct, it applies irrespective of the basis on which the Commissioner satisfied the conditions in article 9(4).
The starting point is the legal and constitutional status of the Complaints Commissioners reports.
The practice of the United Kingdom government is to comply with the recommendations of statutory ombudsmen unless the department in question can put forward good reasons for not doing so: see Handling of Parliamentary Ombudsman Cases (Cabinet Office, 1996), para 61, and Managing Public Money (HM Treasury, 2013), para 4.12.2.
This corresponds to what has been held to be the position of the United Kingdom government in relation to reports of the Parliamentary Commissioner for Administration.
In R (Bradley) v Secretary of State for Work and Pensions [2008] EWCA Civ 36; [2009] QB 114, the Court of Appeal in England accepted (para 63) that where a minister was responsible to Parliament for the public body in question, he was not bound to accept the Commissioners findings or recommendations, because Parliament cannot have intended to preclude the minister from explaining his rejection of them to Parliament.
Nevertheless, it was held (para 72) that he could not rationally reject them without cogent reasons.
The decision in Bradley raises delicate questions about the relationship between judicial and Parliamentary scrutiny of a ministers rejection of the recommendations of the Parliamentary Commissioner for Administration.
But they are not questions which arise on this appeal, because on any view the principle stated in Bradley cannot be transposed without modification to a case where the Complaints Commissioner recommends financial redress against a medical practitioner.
In the first place, as I shall explain below, the Complaints Commissioner has a very different relationship with the legislature.
Secondly, even in a case where his recommendation is directed to a public body, article 16, which has no equivalent in the United Kingdom legislation, provides for claims to compensation to be determined in adversarial litigation before a court.
The effect is to create a statutory cause of action for maladministration which would not necessarily exist otherwise.
The function of the court is to decide the issue on the merits, and not simply by way of judicial review of the Commissioners report.
The Commissioners recommendations and findings are no more than rebuttable evidence of the facts.
It necessarily follows that the public body in question is entitled to dispute them on any ground which may find favour with a court.
Third, and critically, the recommendation which is challenged in the present case was not directed to a public body.
A general practitioner working in the National Health Service is not a public body, but merely provides services to a public body under a contract or some other consensual arrangement.
The Complaints Commissioner is not a court.
He is an official, albeit an independent one, performing an investigatory and advisory function under statute.
Except in relation to compelling the attendance of witnesses and the production of documents (see article 13 of the 1996 Order), he has no powers of compulsion.
Subject to the terms of the practitioners agreement with the relevant NHS body and to any power of enforcement conferred by the relevant legislation, the Commissioners recommendations are not binding on any one as a matter of private law.
At best, they are legally enforceable only by virtue of the public law duty of a public body not irrationally to reject them.
But that duty is irrelevant to a person in the position of the respondent, who has no relevant public law duties.
The scheme of the 1996 Order, like that of the 1969 legislation which it replaced, is based upon a similar distinction between public and private bodies.
The right of a complainant to claim damages in court under article 16 is limited to cases of maladministration found in the course of an investigation conducted under article 7, ie by one of the public bodies to which that article applies.
The same limitation applies to the right to request the Attorney General to apply for an injunction under article 17.
Similarly, by article 21, the Complaints Commissioner is permitted to disclose information obtained in the course of or for the purpose of an investigation only for limited purposes.
They are conducting the investigation and preparing his report on it, defending himself and his officers against a charge of breach of the Official Secrets Acts, and taking proceedings for perjury or obstruction in the course of an investigation.
The information may also be made available for the purpose of enforcement proceedings under articles 16 and 17, both of which as I have pointed out are limited to investigations conducted under article 7.
Leaving aside the possibility of a special report, to which I shall return, there is no power to use the information for the purpose of enforcement measures of any other kind.
Article 11 of the 1996 Order empowers the Complaints Commissioner to try to effect a fair settlement of the complaint.
If that is not possible, he may state what action should in his opinion be taken by the object of the complaint in order to effect such a settlement.
In a case where the complainant has suffered loss in consequence of the defaults found by the Commissioner, a fair settlement is likely if not certain to require that that loss should be made good.
It follows that if the Commissioner chooses to operate the settlement procedure, and fails to achieve a settlement, he the respondent has accepted must be entitled to recommend in his report a monetary payment sufficient to bring about a fair settlement.
That power is available irrespective of the statutory basis of the investigation, and therefore whether the party investigated is a public or a private body.
But the power is not relevant here, because the Complaints Commissioner never sought to operate the settlement procedure.
If he had done, a settlement might well have been achieved without difficulty, since Mrs R had not sought monetary redress and the Commissioners other recommendations.
Article 18(1)(a) of the 1996 Order provides that the Commissioners recommendations as well as his findings may be relevant to an action for damages against a public body under article 16.
It is arguable that the Complaints Commissioner may also have power to make recommendations that would be relevant in such proceedings.
But since the respondent is not a public body and not amenable to proceedings under article 16, that question does not arise on this appeal and I should prefer to leave it open.
What is clear is that investigations under article 8 into the conduct of persons who are not public bodies are an entirely different matter.
It is one thing for a public officer performing an investigatory and advisory role to recommend a payment out of public funds.
It is another thing altogether for him to recommend the payment by a private individual out of his own pocket of a sum which that individual has no public or private law duty to pay.
Articles 16 and 17, as I have pointed out, have been deliberately limited to investigations under article 7 into the conduct of one of the public bodies identified in Schedule 2.
There is no statutory mode of enforcing a monetary payment against a private contractor to which the Complaints Commissioners recommendation could be relevant.
More generally, a private individual has no means open to him of challenging the Commissioners findings before a court, such as a public body enjoys under article 16, except by way of judicial review, which offers only limited scope for a review of the merits.
I can think of no rational reason why the draftsman of the 1996 Order should have intended that private individuals with no relevant duty of compliance should have a more limited right to challenge the Commissioners report than a public body.
On the contrary, the assumption must have been that the Commissioner would not make recommendations against private individuals of a kind which could have no legal effect directly or indirectly, either under the Order or under the general law.
This is, in substance, what the majority of the Court of Appeal decided.
In my opinion, as applied to investigations under article 8, their conclusion was correct.
Power to make a special report
The Complaints Commissioners main response to this is that his recommendations do not depend for their efficacy on their legal enforceability but on the power of publicity.
By publicising a respondents failure or refusal to comply with a recommendation, he can bring pressure to bear on him to comply notwithstanding the lack of any legal obligation to do so.
This is what the Commissioner hopes to achieve by issuing a special report.
Mr McGleenan QC, who appeared for the Commissioner before us, drew our attention to the observations of Wade and Forsyth, Administrative Law, 11th ed (2014), p 69, about the Parliamentary Commissioner Act 1967: An ombudsman requires no legal powers except powers of inquiry.
In particular, he is in no sense a court of appeal and he cannot alter or reverse any government decision.
His effectiveness derives entirely from his power to focus public and parliamentary attention upon citizens grievances.
But publicity based on impartial inquiry is a powerful lever.
Where a complaint is found to be justified an ombudsman can often persuade a government department to modify a decision or pay compensation in cases where the complainant unaided would get no satisfaction.
For the department knows that a public report will be made and that it will be unable to conceal the facts from Parliament and the press.
I have no difficulty with this proposition as applied to a public body and to the scheme of the United Kingdom Act.
The United Kingdom Parliamentary Commissioner for Administration is an officer of the legislature.
The White Paper which preceded the passing of the 1967 Act (The Parliamentary Commissioner for Administration, Cmnd 1965/2767) observes at para 4, that his office was conceived as supporting the traditional constitutional function of Parliament of receiving the grievances of citizens and holding ministers individually and collectively accountable for their amendment.
The Parliamentary Commissioner in the United Kingdom is empowered to investigate complaints referred to him by a Member of Parliament against government departments and other public bodies identified in Schedule 2: see sections 4 and 5 of the 1967 Act.
He has no power to investigate complaints against private individuals providing services to government departments or public bodies.
The Parliamentary Commissioners practice is, in appropriate cases, to recommend that the department or public body provides financial redress, generally on a compensatory basis.
If the department decides not to comply, he may make a special report under section 10(3), which provides as follows: (3) If, after conducting an investigation under section 5(1) of this Act, it appears to the Commissioner that injustice has been caused to the person aggrieved in consequence of maladministration and that the injustice has not been, or will not be, remedied, he may, if he thinks fit, lay before each House of Parliament a special report upon the case.
In all of these respects, the position of the Assembly Ombudsman for Northern Ireland under the Ombudsman (Northern Ireland) Order 1996 is the same.
Section 10(3) of the 1967 Act of the United Kingdom is reproduced by section 10(3) of the Parliamentary Commissioner Act (Northern Ireland) 1969, and then by article 17(2) of the Assembly Ombudsman (Northern Ireland) Order 1996.
But no corresponding power was conferred on the Complaints Commissioner either by the legislation of 1969 or by that of 1996.
The absence of a power in the Complaints Commissioner to make a special report of the kind which is expressly conferred on the Assembly Ombudsman was not an oversight.
It reflects a significant difference in their constitutional status.
The Assembly Ombudsman, like the United Kingdoms Parliamentary Commission for Administration, is an officer of the legislature.
Under the Ombudsman (Northern Ireland) Order 1996, he may investigate only such complaints as are made by a member of the public to a member of the Assembly and referred by the latter to him: article 9(2).
He reports to the member in question or another appropriate member, as well as to the public body under investigation: article 16.
In keeping with this scheme, the sole mode of enforcing his recommendations provided for by the legislation is a special report to the legislature under article 17(2).
These had also been features of the Parliamentary Commissioner Act (Northern Ireland) 1969.
Their effect is that the Assembly Ombudsmans recommendations are enforceable politically, but they are not enforceable legally save arguably by way of judicial review.
This reflects the fact that the bodies subject to investigation by the Assembly Ombudsman are government departments and public bodies for whom the relevant minister is responsible to the legislature.
The position of the Complaints Commissioner is different.
He is a public officer but he is not an officer of the legislature in the same sense as the Assembly Ombudsman.
Under the 1996 Order, he receives complaints directly from the public: articles 7(7) and 8(5).
He reports to the complainant and to the bodies and individuals whose conduct is at issue: article 15.
There is no power to make a special report to the legislature or to any one else on non compliance with his recommendations.
Instead, his recommendations and findings are legally enforceable by the court by the procedures set out in articles 16 and 17, but only as against public bodies investigated under article 7.
In 1969 and 1996, it was evidently not considered appropriate to confer enforcement powers against private individuals with no relevant duties either in public or private law, whether by way of resort to the courts or by denouncing the recalcitrant party to the legislature.
I do not accept the Complaints Commissioners submission that this deliberate scheme can be circumvented by resort to article 19 of the 1996 Order, which empowers him to lay before the Assembly an annual report on the performance of his functions and such other reports as he thinks fit.
Reports of his investigations are governed by article 15.
The context and the scheme of the legislation, both in 1969 and in 1996, show that article 19 is concerned with general reports on his work, and not with reports on individual cases.
The assumption of the Complaints Commissioner that he can make a special report to the legislature on a failure to comply with his recommendations confuses his two roles, which are legislatively distinct.
The position of the new Public Services Ombudsman under the 2016 Act will be different, because his power to issue a special report is wider: see section 46(2).
But that is not the legislation upon which this appeal turns.
The Commissioners recommendation in this case
I have quoted para 70 of the Commissioners report, in which he recommends a payment by the respondent of 10,000.
The respondent challenges the rationality of that recommendation.
On the view that I have reached about the limits of the Commissioners powers, this question does not arise.
However, I would not like to part with this case without commenting on the fact that the Commissioner thought it appropriate to make a recommendation in these terms, even on the footing that he was entitled to recommend monetary redress at all.
The Commissioners recommendations, in those cases where he is entitled to make them, are discretionary and he has more latitude in arriving at a figure than a court would have.
But a monetary recommendation, like any other, must be rational, and it must be explained.
The only explanation proffered is that the 10,000 should be paid in respect of the clearly identified failings in the care provided to [the patient] and the events which consequently followed.
The report does not explain why these failings warrant a payment of 10,000 or how that figure has been arrived at.
It does not say whether Mr or Mrs R suffered any loss by the failings for which the 10,000 should be treated as compensation.
Some of the failings, notably the failure to take more urgent action on 6 January 2009 are found to have made no difference and others, such as the events which followed Rs death could not in the nature of things have done so.
It is possible that the recommendation was intended as a solatium for injured feelings, but the report does not say so, and in the absence of explanation 10,000 seems to be an excessive amount to recommend on that basis.
On the face of it, the figure has simply been plucked out of the air.
If I had concluded that the Complaints Commissioner had power to recommend a payment by the respondent, I would have regarded this particular recommendation as lacking any rational basis.
Conclusion
For these reasons I would dismiss the appeal.

summary/full:
A patient, who was clinically asymptomatic at the time, requested that his GP refer him for a heart screen on 30 May 2008.
The GP referred him for an electrocardiogram (ECG) test in July 2008.
The test reported negative for ischaemic heart disease, and no further action was taken.
The patient made further complaints of chest pain to a locum doctor on 10 December 2008, and so his GP referred him to a chest pain clinic 5 days later.
The clinic declined to see him because of his earlier negative test, and sent a report to the practice on 20 December, which was not marked urgent or reviewed.
The patient attended the practice again on 6 January 2009 enquiring as to why he had not received an appointment.
The GP referred him for another ECG, but the patient died of a myocardial infarction later that day.
The patients widow complained to the Northern Ireland Commissioner for Complaints (the Complaints Commissioner).
Following an investigation, the Commissioner held that the practice had failed to provide a reasonable level of care and treatment and was guilty of maladministration.
He recommended that the GP make a payment of 10,000 to the widow.
The GP refused to make the payment, and so the Commissioner indicated that he would lay a special report about the matter before the Northern Ireland Assembly.
The Commissioners recommendation was upheld at first instance but quashed by a majority of the Court of Appeal.
The Commissioner appealed to the Supreme Court.
The Supreme Court unanimously dismisses the appeal by the Complaints Commissioner, holding that the Commissioner had (i) no power to recommend the payment of a money sum against an individual who was not a public authority in an investigation under article 8 of the Commissioner for Complaints (Northern Ireland) Order 1996 and (ii) no power to make a special report drawing the attention of the legislature to such a persons failure to comply with a recommendation.
Lord Sumption gives the judgment, with which the other Justices agree.
The Complaints Commissioners power to investigate the complaint were derived from article 8 of the Commissioner for Complaints (Northern Ireland) Order 1996, which deals with complaints against individuals, like the GP in this case, providing professional services under contracts or other consensual arrangements with the NHS [11].
The short answer to this appeal is that the Complaints Commissioner may not, under article 9 of the 1996 Order, carry out any investigations in respect of which the complainant has a remedy by way of proceedings in a court of law, unless it is not reasonable to expect the complainant to resort to law.
The widow had such a remedy but the Commissioner proceeded with the investigation because she
said that she only wished to find out what had gone wrong (and not to obtain money).
It was not open to the Commissioner, having proceeded on that basis, to recommend a payment to her [17].
More generally, the Complaints Commissioner does not have the power to recommend monetary redress against individuals in investigations under article 8.
This is because his recommendations are not binding as a matter of private law, and a private individual such as a GP has no relevant duties in public law.
Furthermore, a private individual has no means of effectively challenging the Commissioners findings on the merits of the case before a court [20, 24].
Nor does the Complaints Commissioner have a power to make a special report in default of payment.
Whilst the Parliamentary Commissioner and Assembly Ombudsman for Northern Ireland have such a power as against departments or public bodies that have been ordered to provide financial redress, the Complaints Commissioner does not.
This is because the Commissioners relationship with the legislature is different to that of other statutory ombudsmen in the United Kingdom.
The Commissioner is not an officer of the legislature, unlike the Assembly Ombudsman for Northern Ireland, but receives complaints from and reports to the complainant and individuals or bodies whose conduct is at issue.
He has no powers of compulsion, and limited powers to use information discovered during investigations for the purposes of enforcement [20 21, 26 28].
Article 19 of the 1996 Order is concerned with the presentation of annual reports before the Assembly, and not reports on individual cases such as this [29].
Lord Sumption further comments on the substance of the Commissioners recommendation that the GP pay 10,000 to the widow.
A monetary recommendation must be rational and capable of explanation.
The figure in the Commissioners report appears to have been plucked out of the air: it does not offer a coherent explanation or calculation, or identify the precise failings in respect of which it was made [30].

summary/reasons: The Complaints Commissioners power to investigate the complaint were derived from article 8 of the Commissioner for Complaints (Northern Ireland) Order 1996, which deals with complaints against individuals, like the GP in this case, providing professional services under contracts or other consensual arrangements with the NHS [11]. The short answer to this appeal is that the Complaints Commissioner may not, under article 9 of the 1996 Order, carry out any investigations in respect of which the complainant has a remedy by way of proceedings in a court of law, unless it is not reasonable to expect the complainant to resort to law. The widow had such a remedy but the Commissioner proceeded with the investigation because she said that she only wished to find out what had gone wrong (and not to obtain money). It was not open to the Commissioner, having proceeded on that basis, to recommend a payment to her [17]. More generally, the Complaints Commissioner does not have the power to recommend monetary redress against individuals in investigations under article 8. This is because his recommendations are not binding as a matter of private law, and a private individual such as a GP has no relevant duties in public law. Furthermore, a private individual has no means of effectively challenging the Commissioners findings on the merits of the case before a court [20, 24]. Nor does the Complaints Commissioner have a power to make a special report in default of payment. Whilst the Parliamentary Commissioner and Assembly Ombudsman for Northern Ireland have such a power as against departments or public bodies that have been ordered to provide financial redress, the Complaints Commissioner does not. This is because the Commissioners relationship with the legislature is different to that of other statutory ombudsmen in the United Kingdom. The Commissioner is not an officer of the legislature, unlike the Assembly Ombudsman for Northern Ireland, but receives complaints from and reports to the complainant and individuals or bodies whose conduct is at issue. He has no powers of compulsion, and limited powers to use information discovered during investigations for the purposes of enforcement [20-21, 26-28]. Article 19 of the 1996 Order is concerned with the presentation of annual reports before the Assembly, and not reports on individual cases such as this [29]. Lord Sumption further comments on the substance of the Commissioners recommendation that the GP pay 10,000 to the widow. A monetary recommendation must be rational and capable of explanation. The figure in the Commissioners report appears to have been plucked out of the air: it does not offer a coherent explanation or calculation, or identify the precise failings in respect of which it was made [30].


judgement:
This appeal concerns the interpretation of sections 103 and 106 of the Income and Corporation Taxes Act 1988 (ICTA) which imposed a charge to corporation tax on post cessation receipts from a trade, profession or vocation.
The provisions were later rewritten in the Corporation Tax Act 2009.
The receipts in question came about as follows.
Over many years companies within the Littlewoods corporate group paid the Commissioners for Her Majestys Revenue and Customs (HMRC) substantial sums as value added tax (VAT) on an incorrect understanding of the law.
HMRC later repaid the sums, which had been incorrectly paid, to a nominated member of the corporate group together with interest on those sums as required by sections 78 and 80 of the Value Added Tax Act 1994 (VATA 1994).
At earlier stages in the proceedings, the dispute concerned HMRCs claim to tax several companies within the group on both repayments and also interest on those repayments, which in aggregate amounted to over 630m.
Now the only question is whether a repayment of overpaid VAT of 124,963,600 is liable to corporation tax in the hands of the appellant, Shop Direct Group (SDG).
SDG challenges the judgment of the Court of Appeal, upholding the determinations of the First tier Tribunal and the Upper Tribunal, that it is liable to corporation tax on the receipt of that sum.
The prior law
In order to understand the purpose of sections 103 and 106 of ICTA it is necessary to look at the prior law.
In short, until Parliament intervened by enacting sections 32 34 of the Finance Act 1960, sums which a taxpayer received as income from his trade, profession or vocation after he had ceased to trade or carry on his profession or vocation escaped taxation.
Case law established that the sums did not change their character after the discontinuance; their source was unchanged.
The courts treated those sums as the fruit of the trade or profession or as its fruit or aftermath.
The sums were held not to be taxable under Cases I or II of Schedule D because the trade, profession or vocation was not being carried on in the tax year in which the sums were received.
As a result, an astute taxpayer might choose to retire so that he received such income post cessation and thus tax free.
Similarly, as the case law shows, if the taxpayer were unfortunate and died before he had received income arising from his trade, profession or vocation, the receipts were not taxed as income in the hands of his personal representatives, heirs or assignees.
In 1930 Rowlatt J set out the basic principle in Bennett v Ogston (1930) 15 TC 374, in a passage which the House of Lords approved in the later cases to which I refer below.
He said (at p 378): When a trader or a follower of a profession or vocation dies or goes out of business and there remain to be collected sums owing for goods supplied during the existence of the business or for services rendered by the professional man during the course of his life or his business, there is no question of assessing those receipts to income tax; they are the receipts of the business while it lasted, they are arrears of that business, they represent money which was earned during the life of the business and are taken to be covered by the assessment made during the life of the business, whether that assessment was made on the basis of bookings or on the basis of receipts.
Thus in Brown v National Provident Institution [1921] AC 222 the tax paying companies escaped tax on profits derived from transactions conducted in the preceding year because they did not carry on the trade in the tax year in which they received the profit generating sums.
In Stainers Executors v Purchase [1952] AC 280, 23 TC 367, after the actor and film producer, Leslie Howard had been killed by enemy action in 1943, his executors received income from films, which he had produced or in which he had acted.
The Crown argued that the sums had assumed a different character after his death and could no longer be treated as profits and gains of his profession.
The House of Lords rejected this argument and held that the source of the payments was Mr Howards professional activity.
Lord Simonds stated (at p 289) that they retained the essential quality of being the fruit of his professional activity and Lord Asquith of Bishopstone (at p 290) described the payments as the fruit or aftermath of the professional activities of Mr Leslie Howard during his lifetime.
The House of Lords confirmed this approach in relation to royalties received after the death of an author in Carson v Cheyneys Executor [1959] AC 412.
Tax legislation thus left the door wide open to tax avoidance so long as the taxpayer could, by choosing when to discontinue a business, escape tax on post cessation receipts.
The statutory provisions
Parliament sought to close that door by enacting the predecessors of the provisions which are the subject of this appeal, initially in sections 32 34 of the Finance Act 1960, and imposed a charge to tax on post cessation receipts primarily under Case VI of Schedule D. Later, sections 103 to 110 of ICTA became the relevant provisions for both income tax and corporation tax.
Since the statutory provisions relating to income tax were separated from those relating to corporation tax in 2005, the ICTA provisions were amended to relate only to corporation tax.
Section 103 of ICTA, as it was worded in 2007 2008 at the time of the relevant transaction, stated so far as relevant: (1) Where any trade, profession or vocation carried on wholly or partly in the United Kingdom the profits of which are chargeable to tax has been permanently discontinued, corporation tax shall be charged under Case VI of Schedule D in respect of any sums to which this section applies which are received after the discontinuance. (2) Subject to subsection (3) below, this section applies to the following sums arising from the carrying on of the trade, profession or vocation during any period before the discontinuance (not being sums otherwise chargeable to tax) (a) where the profits for that period were computed by reference to earnings, all such sums in so far as their value was not brought into account in computing the profits for any period before the discontinuance, and (b) where the profits were computed on a conventional basis (that is to say, were computed otherwise than by reference to earnings) any sums which if those profits had been computed by reference to earnings, would not have been brought into the computation for any period before the discontinuance because the date on which they became due, or the date on which the amount due in respect thereof was ascertained, fell after the discontinuance. (emphasis added) In this case sub section (2)(a) is relevant as the trading companies computed their profits by reference to earnings.
The only other provision which it is necessary to set out is section 106 of ICTA (as amended by section 882 of, and paragraph 85 of Schedule 1 to, the Income Tax (Trading and Other Income) Act 2005) which governs the charge to tax in some, but not all, of the circumstances in which the rights to receive payments which are post cessation receipts are transferred.
Section 106(1) addresses the circumstance of a transfer for value and provides: Subject to subsection (2) below, in the case of a transfer for value of the right to receive any sum to which section 103, 104(1) or 104(4) applies, any corporation tax chargeable by virtue of either of those sections shall be charged in respect of the amount or value of the consideration (or, in the case of a transfer otherwise than at arms length, in respect of the value of the right transferred as between parties at arms length), and references in this Chapter to sums received shall be construed accordingly.
The subsection quantifies the charge to tax on the transferor of the right.
Thus, for example, if a company, which was entitled to receive royalties from films or books, permanently discontinued its business and assigned the right to receive those royalties to a third party at full market value, the assigning company would be liable to corporation tax under section 103 on its profits calculated by reference to the value it received as consideration for the assignment.
Subsection (2) of section 106 addresses the circumstance where, under sections 110(2)(a) and 337 of ICTA, there is a deemed discontinuance of a trade caused by a change in the persons carrying on the business.
It provides: Where a trade, profession or vocation is treated as permanently discontinued by reason of a change in the persons carrying it on, and the right to receive any sum to which section 103 or 104(1) applies is or was transferred at the time of the change to the company carrying on the trade, profession or vocation after the change, corporation tax shall not be charged by virtue of either of those sections, but any sum received by that company by virtue of the transfer shall be treated for corporation tax purposes as a receipt to be brought into the computation of the profits of the trade, profession or vocation in the period in which it is received.
So, if the transferee, while it is carrying on its trade, receives sums which are post cessation receipts of the former trade, section 103 does not apply to the transferees receipt.
Instead, the subsection treats those receipts by the successor company as part of its trade, brings them into the computation of its profits in the period in which they are received and subjects them to a charge under Case I of Schedule D.
The effect of subsection (2) can be seen in relation to income tax on a partnership, before it was re worded to apply only to corporation tax.
It superseded the decision of the House of Lords in Crompton v Reynolds 33 TC 288, [1952] 1 All ER 888.
In simplified form the facts of that case were as follows.
A partnership of cotton brokers as originally constituted had as an asset of their business a debt owed by a customer incurred in the course of their trade.
A change in the membership of the partnership gave rise to a technical dissolution of the old partnership and the new partnership acquired the assets and liabilities of the old partnership.
The new partnership subsequently collected the debt and escaped income tax on it because the House of Lords held that the collection of the debt was not part of the new partnerships trading operation and thus was not assessable to tax under Case I of Schedule D. Section 106(2) closed the loophole by treating such collection of a prior partnerships debt as a trading receipt of the new partnership.
The factual background
As I have said, the case now concerns only one repayment of 124,963,600 of overpaid VAT which HMRC made in the tax year 2007 2008.
It was referred to as VAT Repayment 2 or VRP2 in the decision of the First tier Tribunal and the judgments of the Upper Tribunal (Asplin J) and of the Court of Appeal and I will use the same term to describe it.
The overpayments arose because VAT was wrongly calculated when goods were sold to agents of the supplier with a discount for commission.
The complex facts are set out in full in the decision of the First tier Tribunal (Judge Roger Berner and Miss Sandi ONeill) [2012] UKFTT 128 (TC)).
I can therefore present them briefly.
The relevant supplies were made by companies in the group of companies between 1978 and 1996.
In presenting the appeal counsel grouped the relevant supplies and the repayments relating to those supplies (which were components of VRP2) as follows.
The supplies were made by: (i) SDG (then named John Noble Ltd) between 1 January 1986 and 31 December 1987 (VRP2A(i)); (ii) Reality Group Ltd (RGL) between 1 April and 30 September 1996 (VRP2A(ii)); (iii) Kay & Co Ltd (Kay & Co) between 1 January 1978 and 30 September 1996 and Abound Ltd (Abound) between 1 April 1978 and 30 September 1996 (VRP2B); and (iv) GUS plc or RGL between 1 January 1978 and 31 March 1996 (VRP2C).
The VAT had been paid in relation to those supplies by the representative member of the group of companies under section 43 of VATA 1994, which until 11 February 1992 was GUS Merchandise Corporation Ltd and between then and 6 August 1997 was Kay & Co Ltd. By the time VRP2 was paid in 2007, each of the companies which had made the relevant supplies had permanently discontinued its trade.
It is not necessary to set out the complex facts of the reorganisations of businesses within the group of companies in any detail.
The relevant transfers may be summarised as follows: (i) the trade of SDG was transferred to RGL on 1 June 1991; (ii) the trade of GUS plc was transferred to RGL on 1 April 1996 but the transferors right to receive a VAT repayment, which became VRP2C, was retained; (iii) the trades of Kay & Co and Abound were transferred to RGL on 1 April 1997 but the transferors rights to VAT repayments, which became VRP2B, were retained; (iv) the trade of RGL was transferred to SDG on 25 November 2000; and (v) finally, after March UK Ltd (March) had acquired from GUS plc various companies, including SDG, RGL, Kay & Co and Abound, on 27 May 2003, the trade of SDG was transferred to Shop Direct Home Shopping Ltd (SDHSL) on 28 October 2005.
No documentation vouching the transfers in (i) and (iv) above was available to the First tier Tribunal but the tribunal inferred and found as fact that in each case the whole of the trade was transferred, including the transferors right to VAT repayments.
On 24 June 2003 GUS plc, which had become the representative member of the VAT group on 20 May in that year, made a claim for repayment of VAT under section 80 of VATA 1994 from HMRC.
The claim included the various payments which led to the repayment which has been described as VRP2.
The person entitled to receive the repayments under section 80 of VATA 1994 was the representative member of the VAT group.
But the First tier Tribunal held that the benefit of the repayment was accepted as belonging to the appropriate companies acquired by March.
The tribunal did not have evidence of how the GUS group operated its treasury function but inferred that the trading companies had had to account to the representative member to fund the VAT due on their trading and that the representative member had to account to them for any repayments of VAT.
Argos Ltd (Argos) became the representative member of the VAT group on 9 October 2006.
Because, by the time HMRC paid VRP2 in September 2007, Argos had been transferred to another group of companies under Home Retail Group plc (HRG), it was necessary for the interested parties to enter into agreements to determine which entity within the corporate group which was not being sold should receive the repayments from Argos, which was acting as the groups representative member.
March, GUS plc and HRG agreed that the solicitors, Weil, Gotshal & Manges (WGM), be appointed agents of Argos and this was done.
WGM were also appointed the agent of SDG to receive VRP2 as part of the administrative arrangements for the receipt of this payment from HMRC.
Argos gave an irrevocable instruction to HMRC to pay all VAT repayments to WGM.
To secure its position, HMRC obtained (a) an undertaking from SDG that it would repay VRP2 and the statutory interest thereon in specified circumstances and (b) releases from Kay & Co, RGL and Abound in relation to their entitlement (if any) to receive any repayment when the GUS home shopping business was sold to March in May 2003.
On Marchs direction, WGM paid an amount equal to VRP2 to a Jersey registered company, L W Corporation Ltd (LWC), which March had made SDGs parent company on 25 October 2006.
SDG, which had been dormant since October 2005, had become an unlimited company on 30 January 2007 and so did not have to file its accounts in Companies House but only with HMRC.
This enabled it to avoid publicity regarding the receipt of VRP2 and the interest thereon.
Amounts equal to the sums paid to LWC were recognised as an exceptional item in the profit and loss account of SDG and as an inter company receivable due from LWC on SDGs balance sheet.
SDG thus received VRP2.
Consistently with this presentation in SDGs accounts, the First tier Tribunal held that SDG received VRP2 as beneficial owner at the time of receipt.
The tribunal interpreted Marchs agreed arrangements with GUS plc and HRG as an acknowledgement that SDG was entitled to VRP2.
There was no suggestion in the findings of fact that any other company ever questioned SDGs right to receive VRP2.
In my view the inference that SDG was beneficially entitled to VRP2 was obvious.
The proceedings below
After HMRC amended the corporation tax self assessments of the companies, including SDG, which received the various VAT repayments, the recipient companies appealed those assessments.
The First tier Tribunal in a decision dated 14 February 2012 dismissed each of the appeals.
On 19 April 2013 Asplin J sitting as a judge of the Upper Tribunal (Tax and Chancery Chamber) dismissed the appeal.
SDG alone appealed to the Court of Appeal in respect of its assessment to corporation tax on VRP 2 and the related statutory interest.
In a judgment dated 11 March 2014, which Briggs LJ wrote and with which Rimer LJ and Sir Stanley Burnton agreed, the Court of Appeal dismissed the appeal: [2014] EWCA Civ 255; [2014] STC 1383.
SDG applied for permission to appeal to this court and was permitted to appeal in relation to VRP2 only.
The issues now in dispute
Mr David Goldberg QC for SDG submitted that the maximum sum (if any) on which SDG should be charged corporation tax was the sum of about 200,000 which related to the supplies that SDG itself had made in 1986 and 1987 and which was VRP2A(i) in para 10 above.
He advanced three reasons in support of this contention.
First, he submitted that section 103 of ICTA imposed a tax charge only on the original trader (ie the person from whose pre discontinuation trading the sum arises).
As SDG did not carry on the trades which produced the bulk of VRP2, it was not liable to corporation tax on VRP2 except, possibly, for VRP2A(i).
Secondly, if the receipt of a sum equivalent to VRP2 arose from an intra group transfer to SDG without any assignment of rights to it, section 103 did not impose a charge.
Thirdly and alternatively, if the receipt of that sum were the result of a transfer to SDG of the right to the receipt, section 103 did not impose a charge and, in any event, section 106 precluded any charge to tax on SDG.
Mr Malcolm Gammie QC for HMRC challenged this analysis on every count.
He submitted (a) that it was illegitimate to read into section 103 any restriction that confined the charge to the original trader, (b) that section 106(1) applied only to transfers for value (which did not occur in this case) and (c) that section 106(2) did not apply unless the company to whom a trade was transferred received the transferors post cessation profits while it, the transferee, was trading (which also did not occur in this case).
He pointed out that SDG and the other group companies had led no evidence of the intra company transactions and had been content to rely on an agreed statement of facts.
It was not open to SDG to seek to undermine the First tier Tribunals findings of fact by inviting the court to make contrary inferences as to the nature of the intra group transactions.
Analysis
Section 6 of ICTA provided that corporation tax shall be charged on profits of companies.
Section 8 of that Act provided that a company shall be chargeable to that tax on all its profits wherever arising, and section 9 provided that the amount of any income shall for purposes of corporation tax be computed in accordance with income tax principles, all questions as to the amounts which are or are not to be charged to tax as a persons income being determined in accordance with income tax law and practice.
Section 18 of ICTA set out Schedule D which imposed a charge to tax on the annual profits or gains arising or accruing to any person residing in the United Kingdom from any trade, profession or vocation.
Section 18(3) set out the Cases of Schedule D. Case I charged tax in respect of any trade carried on in the United Kingdom or elsewhere.
Case VI, which section 103 brings into play, provided for tax in respect of any annual profits or gains not falling under any other Case of Schedule D .
Finally, section 18(4) of ICTA provided: The provisions of Schedule D and of subsection (2) above are without prejudice to any other provision of the Tax Acts directing tax to be charged under Schedule D or under one or other of the Cases set out in subsection (3) above, and tax directed to be so charged shall be charged accordingly.
Section 103 was one such provision.
Against this background the first question is whether section 103, which I have set out in para 6 above, contains an implicit restriction so that the charge to tax on post cessation receipts falls only on the former trader, whose trade was the source of the income, as Mr Goldberg submitted.
In my view the answer to that question is no, for the following three principal reasons.
First, there is nothing in the words of section 103(1) or (2) which necessitates such implication.
The charge to tax is clear: where a trade has been permanently discontinued, corporation tax shall be charged under Case VI on sums arising from the carrying on of the trade during any period before the discontinuance.
Section 103(1) required only that the sums are received after the discontinuance.
The section specified the source of the sums which fell within the charge but imposed no further restriction on the charge.
In particular, it imposed no limit on who was the recipient of the sums and thus liable to the charge.
Secondly, the mischief which section 103 addressed is clear.
Its predecessor, section 32(2) of the Finance Act 1960, contained the same phrase, sums arising from the carrying on of the trade .
The phrase referred in my view to the sums which the prior case law called the fruit of the trade.
Section 32 of the 1960 Act addressed the circumstance, which I have discussed in paras 3 and 4 above, of sums from an otherwise taxable source escaping tax as a result of the permanent discontinuance of a trade.
Like Briggs LJ (at para 29 of his judgment) I interpret the provision and its statutory successors as bringing into the Schedule D Case VI charge to tax the fruit of the discontinued trade not only in the hands of the former trader, his personal representatives and heirs but also in the hands of those to whom the rights to the post cessation receipts have been assigned or who are otherwise entitled to receive and keep the sums.
The mischief was the loophole created by the need for a continuing source in the year of receipt.
The purpose of section 103 was to make sure that sums which a person received, which arose from a discontinued trade and which were not otherwise taxed, were brought into a charge to tax.
The statutory innovation was to impose the Case VI charge, absent that continuing source, on the recipient of the sums.
No sound reason of policy has been suggested for confining the charge to the former trader and his personal representatives.
Thirdly, neighbouring provisions in ICTA drew a distinction between the person chargeable to tax and the person who had previously carried on the trade, giving rise to the inference that the former person was not confined to the latter.
Thus section 105, which provided for allowable deductions in the calculation of the section 103 charge, referred in subsection (1) in its pre 2005 form to computing the tax charge under section 103 in respect of sums received by any person and in its later form to sums received by any company.
It listed as the allowable deductions both losses and expenses which the former trader (the person by whom [the trade] was carried on) would have deducted if the trade had not been discontinued and also capital allowances to which the former trader (the person who carried on the trade) was entitled before the discontinuance.
Had Parliament intended that the section 103 charge should fall only on the former trader, there would have been no need to distinguish between any person on the one hand and the former trader on the other.
Section 105(4) before 2005 also used the phrase any person in relation to an analogous charge to tax after a change of basis under section 104.
Section 108 as initially enacted allowed the person by whom the trade had been carried on to elect to carry back the charge so that the sum in question was treated as if it had been received on the date of the discontinuance.
The way the opening of the section was worded is illuminating.
It provided the election was available: Where any sum is (a) chargeable to tax by virtue of section 103 or 104, and (b) received in any year of assessment beginning not later than six years after the discontinuance or, as the case may be, change of basis by the person by whom the trade, profession or vocation was carried on before the discontinuance or change, or by his personal representatives In my view again this wording suggests that there is a general charge to tax under section 103 and that the former trader (or his personal representative) is not the only recipient who falls within that charge.
Parliament had no reason to spell out in (b) that the sum had to be received by the former trader or his representatives if that was inherent in section 103.
Mr Goldberg also submitted that SDGs receipt of a sum equal to VRP2 did not have a former trade as its source but was the result of an intra group arrangement which was either a transfer for no consideration of that sum or a transfer for no consideration of the rights to VRP2.
He posed the question, what is the receipt from? and submitted that the correct answer was the transfer of either the sum or the right.
He referred to Hochstrasser v Mayes [1960] AC 376 and Abbott v Philbin [1961] AC 352 in support of the contention that regard must be had to the most proximate cause of the receipt.
I do not accept this submission.
In my view those cases have no bearing.
They concern the charge to tax under Schedule E on the remuneration of an employee.
I accept Mr Gammies submission that in the context of Schedule E the relevant statutory question focused on the character of the receipt in the employees hands.
Rule 1 of the Schedule spoke of a charge on a person having or exercising an office or employment in respect of salaries perquisites or profits whatsoever therefrom (emphasis added).
The question was whether the employee has received money or moneys worth representing remuneration for his services.
By contrast, under section 103 the focus was on the original source of the receipt.
The decisions and arrangements within the VAT group of companies about the specific company which was to receive the repayment did not alter the original source of the receipt.
The question was whether the sum received arose from the discontinued trade before its discontinuance.
Section 106(1), which I have set out in para 7 above, also supports a wide interpretation of the scope of the section 103 charge.
Contrary to Mr Goldbergs submission, I cannot read the subsection as covering all transfers whether for value or for no consideration (other than the transfer of the right to receive the post cessation payments when there is a deemed discontinuance of the trade under subsection (2)).
The opening words of subsection (1) show that the subsection relates to transfers for value.
Where the transfer is at arms length, the transferor is charged under section 103 by reference to the stipulated consideration.
The words in parenthesis substitute market value where the transfer is not at arms length.
It is true that it may appear anomalous that the subsection governs a transfer for a nominal value, say 50 pence, in a transaction otherwise than at arms length but not a transfer for no consideration.
But that is what the section says.
Further, the anomaly is more apparent than real if, as I consider, section 103 imposes a charge on the gratuitous transferee.
Thus, for example, section 103 when it extended to the individual taxpayer would have applied to an author who on his retirement assigned for value the future royalties arising from his work.
Having chosen to capitalise his future income flow, he would be taxed at the market value of that income flow as at the date of transfer rather than on his future receipts as and when received.
But where, on his retirement, he assigned the future royalties to his spouse or friend for no consideration, section 103 would tax the receipts when they are received by the transferee.
That to my mind is a rational regime.
Section 106(2), which I have set out in para 8 above, deals with the circumstance that a trade is treated as having been discontinued by reason of a change of the persons carrying it on and at the same time the right to receive the post cessation receipts is transferred to the company that carries on the trade thereafter.
The rule is set out in the phrase: corporation tax shall not be charged by virtue of either [section 103 or 104], but any sum received by that company by virtue of the transfer shall be treated for corporation tax purposes as a receipt to be brought into the computation of the profits of the trade in the period in which it is received.
I construe the words after the conjunction but as the trigger for disapplying sections 103 and 104.
Like Briggs LJ, I adopt a purposive analysis.
I do not accept that Parliament intended to create a large class of post cessation receipts which the transferee could release from a charge to tax by the simple expedient of discontinuing its trade or by creating a deemed discontinuation by transferring its trade to another person while reserving to itself the right to receive those receipts.
That was the mischief which led to the enactment of sections 32 to 34 of the Finance Act 1960 in the first place.
In my view this subsection takes effect only if the transferee receives those sums while it is trading.
If it does, the transferee is taxed under Case I of Schedule D.
If it does not receive the sums or if it receives them after it has ceased trading, section 103 applies to impose a charge on the recipient.
In summary, (i) the basic rule in section 103 is that sums arising from the carrying on of the trade before discontinuance are, if received after discontinuance, charged to tax under Case VI of Schedule D; (ii) there is no restriction in section 103 itself on who the recipient of those fruits of the trade may be; (iii) section 106(1) quantifies the section 103 charge at the amount of the consideration or the market value of the rights to such sums when the former trader transfers its rights to those future receipts for value and the subsection imposes the charge on the former trader; and (iv) section 106(2) disapplies section 103 and substitutes Case I of Schedule D only if the transferee company is carrying on the continuing business when it receives the fruits of the trade, which is deemed to have been discontinued.
It is necessary now to apply that analysis to the facts as found by the First tier Tribunal.
Before so doing, I record that SDG did not argue before the First tier Tribunal that section 106(1) had the effect of imposing a charge to tax on an entity other than SDG.
The Court of Appeal refused to allow SDG to run such an argument.
I also am satisfied that it would not be fair to allow the argument to be advanced at this late stage.
It involves SDG inviting the court to make inferences from findings of fact which were not directed to the argument it now wishes to advance.
SDG did not lead any evidence about the various intra group transfers.
It may be that SDG did not have the necessary evidence to explain how it was arranged that it should receive VRP2.
But SDG had the burden of overturning the challenged assessment and did not lead evidence to achieve that.
The court must therefore apply the law to the facts as found by the First tier Tribunal.
In any event, SDGs principal case before this court was that there must have been an intra group transfer or transfers of the component parts of VRP2 the sum of money to it for no consideration and that there was no transfer to it of the rights to repayment which made up VRP2.
If that is what occurred, or if there had been a transfer of the rights for no consideration, it would not assist SDGs appeal as section 106(1) would not apply to impose a charge on the transferor or transferors in the absence of a sale.
Turning to the First tier Tribunals findings of fact, it is clear from the summary in para 11(ii) above that on the transfer of the trade of GUS plc in 1996, the entitlement to a VAT repayment arising from the discontinued trade, which became VRP2C, was not transferred.
Similarly, Kay & Co and Abound retained their equivalent entitlements when their trades were transferred to RGL in 1997 (para 11(iii) above).
Those entitlements became VRP2B. There is no explanation as to how those entitlements resulted in VRP2C and VRP2B being paid to SDG.
There is no suggestion that either the transfer of the trade of SDG to RGL (para 11(i) above) or the later transfer of RGLs trade to SDG (para 11(iv) above), both of which may have relevance to the two components of VRP2A, was for value.
Accordingly, section 106(1) is of no relevance to these transactions and no tax falls to be charged on the various transferors.
Further, there was no evidence and no findings that any of the intra group transfers which may have occurred in order to transfer the right to receive VRP2 to SDG involved transfers for value.
Again, section 106(1) has no application.
Section 106(2) also is of no relevance.
While the trade of SDG was transferred to SDHSL in 2005 (para 11(v) above), none of the repayments of VAT were made to SDHSL.
That is the end of the matter.
It is therefore not necessary to address Mr Goldbergs challenge to the finding by the First tier Tribunal that the transfer of SDGs trade to SDHSL did not include the entitlement to the VAT repayments, which was based on his construction of the transfer agreement between SDG and SDHSL in 2005.
What is clear from the findings (viz paras 13 and 14 above) is that March organised the groups affairs so that VRP2 would be paid by HMRC to SDG via the solicitors, WGM, and that HMRC protected itself against other possible claimants by obtaining releases.
SDG, as the First tier Tribunal found, received VRP2 as its beneficial owner.
It received sums arising from the carrying on of the trade of the companies enumerated in para 11 above during periods before the discontinuance and the sums were not otherwise chargeable to tax.
VRP2 accordingly is subject to a charge to corporation tax in the hands of its recipient, SDG.
Conclusion
Before concluding, I would like to acknowledge the admirable decision of the First tier Tribunal in this case, which involved grappling with many more factual and legal issues than this court has had to address.
I would dismiss the appeal.

dataset_name: UK-Abs

summary/full:
This appeal concerns a repayment of overpaid value added tax (VAT) of approximately 125m (the VAT Repayment) received by the appellant, Shop Direct Group (SDG), a company in the Littlewoods corporate group (the Group).
Over a number of years, companies within the Group made substantial overpayments of VAT to HMRC.
These VAT overpayments were made on an incorrect understanding of law: the VAT was wrongly calculated when goods were sold to agents of the supplier with a discount for commission.
The relevant supplies were made between 1978 and 1996 by companies within the Group, including SDG.
VAT was paid to HMRC in relation to these supplies by the representative member of the Group under section 43 of Value Added Tax Act 1994 (VATA 1994).
By 2007, following a series of reorganisations within the Group, each of the companies which had made relevant supplies had permanently discontinued its trade.
In June 2003, the representative member of the Group made a claim for repayment of VAT from HMRC under section 80 of VATA 1994.
This claim included the various payments which led to the VAT Repayment.
In September 2007, HMRC made the VAT Repayment pursuant to arrangements which resulted in the VAT Repayment being received by SDG as beneficial owner at the time of receipt.
The issue before the Supreme Court is whether the VAT Repayment is liable to corporation tax under the Income and Corporation Taxes Act 1988 (ICTA, later rewritten in the Corporation Tax Act 2009).
Sections 103 and 106 of ICTA imposed a charge to corporation tax on post cessation receipts from a trade, profession or vocation.
These provisions and their statutory predecessors were enacted to prevent tax avoidance by businesses choosing when to discontinue a business in order to escape tax on post cessation receipts [1, 3 9].
In the proceedings below, the First tier Tribunal, Upper Tribunal and Court of Appeal all held that SDG was liable to corporation tax on the receipt of the VAT Repayment.
The Supreme Court unanimously dismisses SDGs appeal.
Lord Hodge (with whom Lord Neuberger, Lord Reed, Lord Carnwath and Lord Hughes agree) gives the judgment of the court.
Against the background of the other relevant provisions of ICTA [18], the court concludes that section 103 does not contain an implicit restriction so that the charge to tax on post cessation receipts falls
only on the former trader whose trade was the source of the income [19].
There are three reasons in support of this conclusion: First, there is nothing in the wording of section 103(1) or (2) which necessitates such implication.
The charge to tax is clear: where a trade has been permanently discontinued, corporation tax shall be charged on sums arising from the carrying on of the tradeduring any period before the discontinuance.
Section 103(1) required only that the sums are received after the discontinuance; it specified the source of the sums falling within the charge but imposed no further restriction [20].
Secondly, section 103 was designed to catch the fruit of the trade.
Its aim was to make sure that sums which a person received, which arose from a discontinued trade and which were not otherwise taxed, were brought into a charge to tax.
No sound policy reason has been suggested for confining the charge to the former trader and his personal representatives [21].
Thirdly, the neighbouring provisions of section 103 drew a distinction between the person chargeable to tax and the person who had previously carried on the trade.
This suggests that the former was not confined to the latter [22 23].
The court rejects SDGs submission that the sum it received equivalent to the VAT Repayment did not have a former trade as its source, but was the result of an intra group arrangement which was either a transfer for no consideration of that sum, or a transfer for no consideration of the rights to the VAT Repayment.
Under section 103 of ICTA, the focus was on the original source of the receipt; the arrangements within the Group as to the specific company that was to receive the VAT Repayment did not alter that original source [24].
Section 106 of ICTA also supports a wider interpretation of the scope of the section 103 charge to corporation tax: section 106(1) quantifies the section 103 charge at the amount of the consideration or the market value of the rights to such sums when the former trader transfers its rights to those future receipts for value and the subsection imposes the charge on the former trader [25]; and section 106(2) disapplies section 103 and substitutes another Case of Schedule D only if the transferee company is carrying on the continuing business when it receives the fruits of the trade which is deemed to have been discontinued [26].
Applying this analysis of sections 103 and 106 of ICTA to the facts of this case, the court concludes that the Groups affairs were organised such that the VAT Repayment was received by SDG as beneficial owner, receiving sums arising from the carrying on of the trade of the companies making relevant supplies during periods before the discontinuance and the sums were not otherwise chargeable to tax.
The VAT Repayment accordingly is subject to a charge to corporation tax in the hands of SDG [28 31].

summary/background: This appeal concerns a repayment of overpaid value added tax (VAT) of approximately 125m (the VAT Repayment) received by the appellant, Shop Direct Group (SDG), a company in the Littlewoods corporate group (the Group). Over a number of years, companies within the Group made substantial overpayments of VAT to HMRC. These VAT overpayments were made on an incorrect understanding of law: the VAT was wrongly calculated when goods were sold to agents of the supplier with a discount for commission. The relevant supplies were made between 1978 and 1996 by companies within the Group, including SDG. VAT was paid to HMRC in relation to these supplies by the representative member of the Group under section 43 of Value Added Tax Act 1994 (VATA 1994). By 2007, following a series of reorganisations within the Group, each of the companies which had made relevant supplies had permanently discontinued its trade. In June 2003, the representative member of the Group made a claim for repayment of VAT from HMRC under section 80 of VATA 1994. This claim included the various payments which led to the VAT Repayment. In September 2007, HMRC made the VAT Repayment pursuant to arrangements which resulted in the VAT Repayment being received by SDG as beneficial owner at the time of receipt. The issue before the Supreme Court is whether the VAT Repayment is liable to corporation tax under the Income and Corporation Taxes Act 1988 (ICTA, later rewritten in the Corporation Tax Act 2009). Sections 103 and 106 of ICTA imposed a charge to corporation tax on post-cessation receipts from a trade, profession or vocation. These provisions and their statutory predecessors were enacted to prevent tax avoidance by businesses choosing when to discontinue a business in order to escape tax on post-cessation receipts [1, 3-9]. In the proceedings below, the First-tier Tribunal, Upper Tribunal and Court of Appeal all held that SDG was liable to corporation tax on the receipt of the VAT Repayment.

summary/reasons: Against the background of the other relevant provisions of ICTA [18], the court concludes that section 103 does not contain an implicit restriction so that the charge to tax on post-cessation receipts falls only on the former trader whose trade was the source of the income [19]. There are three reasons in support of this conclusion: First, there is nothing in the wording of section 103(1) or (2) which necessitates such implication. The charge to tax is clear: where a trade has been permanently discontinued, corporation tax shall be charged on sums arising from the carrying on of the tradeduring any period before the discontinuance. Section 103(1) required only that the sums are received after the discontinuance; it specified the source of the sums falling within the charge but imposed no further restriction [20]. Secondly, section 103 was designed to catch the fruit of the trade. Its aim was to make sure that sums which a person received, which arose from a discontinued trade and which were not otherwise taxed, were brought into a charge to tax. No sound policy reason has been suggested for confining the charge to the former trader and his personal representatives [21]. Thirdly, the neighbouring provisions of section 103 drew a distinction between the person chargeable to tax and the person who had previously carried on the trade. This suggests that the former was not confined to the latter [22-23]. The court rejects SDGs submission that the sum it received equivalent to the VAT Repayment did not have a former trade as its source, but was the result of an intra-group arrangement which was either a transfer for no consideration of that sum, or a transfer for no consideration of the rights to the VAT Repayment. Under section 103 of ICTA, the focus was on the original source of the receipt; the arrangements within the Group as to the specific company that was to receive the VAT Repayment did not alter that original source [24]. Section 106 of ICTA also supports a wider interpretation of the scope of the section 103 charge to corporation tax: section 106(1) quantifies the section 103 charge at the amount of the consideration or the market value of the rights to such sums when the former trader transfers its rights to those future receipts for value and the subsection imposes the charge on the former trader [25]; and section 106(2) disapplies section 103 and substitutes another Case of Schedule D only if the transferee company is carrying on the continuing business when it receives the fruits of the trade which is deemed to have been discontinued [26]. Applying this analysis of sections 103 and 106 of ICTA to the facts of this case, the court concludes that the Groups affairs were organised such that the VAT Repayment was received by SDG as beneficial owner, receiving sums arising from the carrying on of the trade of the companies making relevant supplies during periods before the discontinuance and the sums were not otherwise chargeable to tax. The VAT Repayment accordingly is subject to a charge to corporation tax in the hands of SDG [28-31].