To allow self-styled fung shui master Tony Chan Chun-chuen extra time to file objection against a HK$330 million tax claim would open the tax system to abuse, a lawyer for the government said yesterday.
Especially as Chan had failed to notify the Inland Revenue about a change of address.
Stewart Wong Kai-ming SC, for the Commissioner of Inland Revenue, said in the Court of First Instance it was not good enough for Chan to claim he had not received the notice of assessment, issued in February last year.
Chan alleged that the department only gave him notice on May 5 last year. The department received his notice of objection on June 4, but rejected it as it being past deadline.
'You've got to look at the system,' Wong said. 'We give notice...[there's] a duty on the taxpayer to tell us where we should send the notice.'
During Chan's epic probate fight over the billion-dollar estate of late tycoon Nina Wang Kung Yu-sum, which he lost, the tax department declared that money earned from fung shui consultation was income and therefore taxable.
In yesterday's judicial review hearing, Chan's lawyer Philip Dykes SC asked the court to quash the commissioner's refusal on June 22 last year for an extension of time.
The court heard that Chan had an informal mail-forwarding system in which law firm Kao, Lee & Yip would receive his letters and notify him. The department delivered the notice of assessment by registered post, which was signed for by the law firm on February 11 last year. However, the law firm denied having received it.
The Inland Revenue Ordinance provides that a taxpayer can file a notice of objection within one month after the date on the notice of assessment. It requires taxpayers to notify a change of address within a month.
Dykes argued that even though Chan did not fulfil his duty, it was still unreasonable for the commissioner to refuse the extension. But Wong said refusal was automatic.
The notice concerned two profits tax assessments that allegedly arose from the provision of personal services between 2005 and 2007.
In the application for the judicial review, filed in August, Chan's lawyers submitted that two payments to Chan of HK$688 million and HK$1.37 billion - which the government said were subject to profits tax - were in fact gifts. Lawyers did not argue on this point yesterday. Mr Justice Anselmo Reyes reserved judgment.
Meanwhile, Chan's lawyers will seek leave at the Court of Final Appeal on October 24 over the probate ruling. The Court of Appeal earlier ruled against Chan and reaffirmed a finding that a 2006 will purporting to bequeath Chan the entire estate was a forgery. Chan reiterated yesterday that the will was genuine.
He urged the government to disclose forensic findings of the will, and said he was distressed by allegations.