swarb.co.uk - law index
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Income Tax - From: 1930 To: 1959
This page lists 41 cases, and was prepared on 08 August 2015.
Leeming -v- Jones (Inspector of Taxes) [1930] 1 KB 279; [1930] 15 Tax Cas 333
1930
Rowlatt J
Income Tax
1 Cites
1 Citers
Fry (Inspector of Taxes) -v- Salisbury House Estate Ltd [1930] UKHL 1; [1930] AC 432; [1930] 15 TC 266
4 Apr 1930
HL
Income Tax
[ Bailii ]
Archer Shee -v- Garland [1930] UKHL 2; [1931] AC 212
15 Dec 1930
HL
Lord Buckmaster, Viscount Dunedin, Lord Warrington of Clyffe, Lord Tomlin, Lord Thankerton
Income Tax, Equity, Wills and Probate
The parties disputed the taxpayer's liability to income tax on income coming due to her on an American based family trust. Held: a beneficiary in a fully administered deceased estate has an equitable interest in property which is the subject of a benefit devised or bequeathed to him or her under the will.
[ Bailii ]
Rutherford -v- Lord Advocate 1931 SLT 405
1931
Lord Fleming
Income Tax, Scotland
The taxpayer lived in Scotland but was assessed to tax in respect of director's fees paid to him by a company carrying on business in England. The assessment was confirmed by county general commissioners. The tax not having been paid, execution was levied on the taxpayer's furniture in Scotland. The taxpayer applied to the Court of Session to set aside this diligence. Held: The Court of Session could not set aside the determination of the commissioners. For that the taxpayer must resort to the English courts. But it was competent for the taxpayer to invoke the 'preventive jurisdiction' to stop the diligence of which he complained.
1 Citers
The Herald and Weekly Times Ltd -v- Federal Commissioner of Taxation (1932) 48 CLR 113; [1932] HCA 56
21 Nov 1932
Gavan Duffy CJ and Dixon J
Commonwealth, Income Tax
(High Court of Australia) The taxpayer newspaper sought to set off against its liability to income tax, sums which it had paid out in damages for defamation. Held: They were deductible. Such claims against a newspaper are a "regular and almost unavoidable incident of publishing it" and the damages are compensatory rather than punitive.
1 Citers
[ Austlii ]
Dewar -v- Commissioners for Inland Revenue [1935] 2 KB 351; 19 TC 561
1935
CA
Lord Hanworth MR
Income Tax
The executor had been left a legacy of �1,000,000 free of duty. When it came due to be paid, he was entitled to interest at 4%, but did not claim the interest. He was assessed to surtax on the sum he could have received. Held: Since he had not received the sum, he was not to be taxed upon it. Lord Hanworth MR remarked: "'receivability' without receipt is nothing."
1 Citers
Carter -v- Sharon; 1936 - (1936) 20 TC 229
Timpsons Executors -v- Yerbury; CA 1936 - (1936) 20 TC 155
Inland Revenue Commissioners -v- British Salmson Aero Engines Ltd [1938] 2 KB 482
1938
CA
Sir Wilfrid Greene MR
Income Tax
The court considered the applicability of certain provisions to royalty payments. The court considered the notorious difficulty of drawing a clear line between capital and income receipts: "There have been many cases which fall on the border-line. Indeed, in many cases it is almost true that the spin of a coin would decide the matter almost as satisfactorily as an attempt to find reasons. But that class of questions is a notorious one, and has been so for many years."
1 Citers
Radio Pictures -v- Commissioners of Inland Revenue [1938] 22 TC 106
1938
ChD
Lawrence J
Income Tax, Contract
The court considered whether a particular document could properly be included among the batch of documents which as a whole formed the contract, so that the stipulations therein were themselves contractual.
1 Citers
Copeman -v- Coleman; 1939 - (1939) 22 TC 594
Commissioners of Inland Revenue -v- Payne (1940) 23 TC 610; [1940] EWCA 23_0610
1940
CA
Sir Wilfrid Greene MR
Income Tax
The taxpayer covenanted to pay an annual sum to a company controlled by him for his life or until it was wound up. He claimed to deduct the amount of the covenant in the computation of his total income for surtax purposes. The Revenue refused his claim saying the arrangement was a revocable settlement and the income arising remained his. Held: The Revenue was correct. There was a settlement: "The covenant had, apparently, no business purpose whatsoever. It was linked up with the rest of the scheme, the essential parts of which were that [the taxpayer] should put himself in such a relationship to the company that he could entirely control it by means of his voting power."
and "It appears to me that the whole of what was done must be looked at; and when that is done, the true view, in my judgment, is that Mr. Walter Payne deliberately placed himself into a certain relationship to the company as part of one definite scheme, the essential heads of which could have been put down in numbered paragraphs on half a sheet of notepaper. Those were the things which it was essential that Mr. Payne should do if he wished to bring about the result desired. He did it by a combination of obtaining the control of the company, entering into the covenant, and then dealing with the company in such a way as to achieve his object. Now, if a deliberate scheme, perfectly clear cut, of that description is not an "arrangement" within the meaning of the definition clause, I have difficulty myself in seeing what useful purpose was achieved by the Legislature in putting that word into the definition at all. I am clearly of opinion that, by placing himself into these relationships with the company, Mr. Walter Payne was engaged in making an "arrangement" within the meaning of that clause."
1 Citers
[ Bailii ]
Beak -v- Robson; HL 1942 - (1942) 25 TC 33
London County Freehold and Leasehold Properties Ltd -v- Sweet; 1942 - (1942) 24 TC 412
Lomax -v- Peter Dixon & Son Ltd; CA 1942 - [1943] 2 All ER 255; [1943] KB 671; [1942] 25 TC 353
British American Tobacco Company Limited -v- Inland Revenue Commissioners [1943] AC 335; [1943] 1 All ER 13
1943
HL
Viscount Simon
Income Tax
The House considered whether British American had a "controlling interest" in a subsidiary of its direct subsidiary. The company argued that "controlling interest" equated to beneficial ownership. In rejecting that argument Viscount Simon said: "I find it impossible to adopt the view that a person who (by having requisite voting power in a company subject to his will and ordering) can make the ultimate decision as to where and how the business of the company shall be carried on and who thus has, in fact, control of the company's affairs, is a person of whom it can be said that he has not in this connection got a controlling interest in the company."
1 Citers
Wales (Inspector of Taxes) -v- Tilley [1943] UKHL 1; (1945) 25 TC 136
11 Feb 1943
HL
Lord Chancellor, Lord Atkin, Lord Thankerton Lord Russell of Killowen Lord Porter
Income Tax
The taxpayer was managing director of a company. The Revenue sought to tax him on two sums of �20,000 paid by to him by the company. The sums were paid in part as the price of compounding a pension, and in part in consideration of the reduction of the Appellant's annual salary. Held: A pension is not an emolument, and a lump sum paid to commute a pension is in the nature of a capital payment which is substituted for a series of recurrent and periodic sums which partake of the nature of income, but the same view should not be taken of an arrangement made between an employer and his servant under which, instead of the whole or part of a periodic salary, a single amount is paid and received in respect of the employment.
1 Citers
[ Bailii ]
Absalom -v- Talbot [1944] 1 All ER 642
1944
HL
Income Tax
Income Tax Act 1918
Norman -v- Golder (Inspector of Taxes) [1944] 26 TC 293
1944
Croom-Johnson J
Income Tax
The court considered the nature of allowable expenses for an investment company: "the notion behind this Section may be thought to be that the expenditure is something which if you were looking at the profits and gains under Schedule D would be deductible as a sum of money wholly and exclusive expended for the purpose of making profits and gains, within Rule 3 of Cases I and II of Schedule D, and accordingly that any expenditure partaking of a capital nature is not aimed at by the Section."
1 Citers
Blackwell (HM Inspector of Taxes) -v- Mills (1945) 26 TC 468
1945
Income Tax
1 Citers
Inland Revenue Commissioners -v- J Bibby & Sons Limited; HL 1945 - [1945] 1 All ER 667
Spofforth and Prince -v- Golder (Inspector of Taxes) (1945) TC 310
1945
Income Tax
1 Citers
Ayrshire Employers' Mutual Ins Co -v- Inland Revenue Commissioners [1946] UKHL 3; (1946) 79 Ll L Rep 307; 27 TC 331; 1946 SLT 235; 1946 SC (HL) 1
29 Mar 1946
HL
Scotland, Income Tax
[ Bailii ]
National Anti-Vivisection League -v- Inland Revenue Commissioners; HL 2-Jul-1947 - [1948] AC 31; [1947] UKHL 4; [1947] 2 All ER 217
Nugent-Head -v- Jacob [1948] AC 321
1948
HL
Viscount Simons
Income Tax
A wife was held still to be "living with her husband" who had been absent on military service for more than three years because there had been "no rupture of matrimonial relations."
Income Tax Act 1918
1 Citers
Smith's Potato Estates Ltd -v- Bolland (Inspector of Taxes); HL 1948 - [1948] AC 508
Capital and National Trust Limited -v- Golder (1949) 31 TC 266
1949
Croom-Johnson J
Income Tax
The court asked as a question of principle as to whether Parliament ever intended to allow capital expenditure to be deductible as an expense against income. Held: "the expenditure is something which if you were looking at profits and gains under Schedule D would be deductible as a sum of money wholly and exclusively expended for the purpose of making profits and gains."
1 Citers
Messrs. Mohanlal Hargovind of Jubbulpore -v- The Commissioners of Income Tax, Central Provinces and Berar, Nagpur [1949] UKPC 38; [1949] 2 All ER 652; [1949] TR 289; [1949] AC 521
28 Jul 1949
PC
Commonwealth, Income Tax
Nagpur
[ Bailii ]
Bentleys, Stokes & Lowless -v- Beeson (HMIT) [1952] 33 TC 491
1952
CA
Romer LJ
Income Tax
The court considered whether the partners in a firm of solicitors could deduct from profits the expenses involved in entertaining clients to lunch. Held: They were deductible, notwithstanding the element of hospitality involved: " The relevant words of r 3 (a) of the Rules Applicable to Cases I and II�"wholly and exclusively laid out or expended for the purposes of the � profession"�appear straightforward enough. It is conceded that the first adverb�"wholly"�is in reference to the quantum of the money expended and has no relevance to the present case. The sole question is whether the expenditure in question was "exclusively" laid out for business purposes, that is: What was the motive or object in the mind of the two individuals responsible for the activities in question? It is well established that the question is one of fact: and again, therefore, the problem seems simple enough. The difficulty, however, arises, as we think, from the nature of the activity in question. Entertaining involves inevitably the characteristic of hospitality: giving to charity or subscribing to a staff pension fund involves inevitably the object of benefaction: an undertaking to guarantee to a limited amount a national exhibition involves inevitably supporting that exhibition and the purposes for which it has been organised. But the question in all such cases is: Was the entertaining, the charitable subscription, the guarantee, undertaken solely for the purposes of business, that is, solely with the object of promoting the business or its profit-earning capacity? It is, as we have said, a question of fact. And it is quite clear that the purpose must be the sole purpose. The paragraph says so in clear terms. If the activity be undertaken with the object both of promoting business and also with some other purpose, for example, with the object of indulging an independent wish of entertaining a friend or stranger or of supporting a charitable or benevolent object, then the paragraph is not satisfied though in the mind of the actor the business motive may predominate. For the statute so prescribes. Per contra, if, in truth, the sole object is business promotion, the expenditure is not disqualified because the nature of the activity necessarily involves some other result, or the attainment or furtherance of some other objective, since the latter result or objective is necessarily inherent in the act."
1 Citers
Newsom -v- Robertson (1952) 33 TC 452; [1951] 1 Ch 7
30 Apr 1952
ChD
Danckwerts J
Income Tax
Mr Newsom, a practising barrister sought to set off against his income, the expenses of travelling between his home and his chambers in London. The Inspector appealed the decision of the commissioners that he could do so. The rule required that the expense be incurred wholely necessarily and exclusively for the purposes of a trade profession or employment. He practised partly from home and partly from chambers. The Special Commissioners had disallowed travel during term, but allowed it during vacations. Held: The issue had not previously been presented in just this form. Mr Newsom said that if he had two sets of chambers he would be allowed to claim for travel between them. However the travel in this case had a dual purpose, and it would be difficult to make a split between wholly professional purposes and private purposes. He travelled to and from chambers to get to and from home as much as to and from chambers. The travel was not therefore wholely or exclusively for business purposes, and was not deductible.
Income Tax Act 1918 Sch D
1 Cites
1 Citers
Lindsay -v- Commissioners of Inland Revenue; 1953 - (1953) 34 TC 289
Newsom -v- Robertson (1952) 33 TC 452; [1952] 1 Ch 7
3 Jan 1953
CA
Sommervell LJ, Romer LJ, Denning LJ
Income Tax
Mr Newsom, a barrister, sought to deduct the costs of travelling between his chambers in London and his home in Whipsnade or income tax purposes. He carried out a good deal of his professional work in his well-equipped study at home, especially during court vacations (when he only visited his London chambers on rare occasions for conferences). The Special Commissioners had found that in court vacations the basis of Mr Newsom's professional operations moved from London to Whipsnade. In the High Court, Danckwerts J held that none of the travel expenses were deductible, since the reason the expenses had been incurred was because Mr Newsom wanted to live in the country, and it followed that the travel to and fro had a mixed purpose (partly professional and partly "the requirements of his existence as a person with a wife and family and a home") and the expenses of that travel therefore failed the "wholly and exclusively" test. He now appealed. Held: The appeal failed, though each judge gave slightly differing reasons.
Sommervell LJ took the view that the expenses of travel to and fro should be aggregated and treated together. He considered that Mr Newsom's chambers in London remained his "professional base" throughout the year. This does not seem to have been his reason for dismissing the appeal however. Instead, he found that the location of Mr Newsom's house "had nothing to do with" his practice. It was simply his home, and the fact that he did a significant amount of professional work there did not change that fact. Accordingly, he doubted that there was any professional purpose to the travelling, but if there was it was certainly subsidiary to the private purpose.
Denning LJ made a tacit assumption that every trade, profession or occupation has a single "base". On that assumption, all that was necessary was to identify the base and then it was quite clear that the cost of travel between the home and that base was not deductible. It was incurred, in his view, "for the purposes of his living there and not for the purposes of his profession, or at any rate not wholly or exclusively". He found that Mr Newsom�s base was at his chambers in London and therefore he held that the commuting costs were not deductible.
Romer LJ first reasserted the general proposition that normally, travel between home and work has as its object "not to enable a man to do his work but to live away from it." He then considered whether anything was changed as a result of a taxpayer doing work at home as well as at his normal place of work. He considered that it changed nothing, at least in Mr Newsom's case, essentially because if Mr Newsom had not travelled at all, he could have carried on his profession perfectly satisfactorily from his chambers in London. He dismissed any suggestion that Mr Newsom might have had two places of business, but without elaborating on his reasons for doing so.
1 Cites
1 Citers
Marshall (Inspector of Taxes) -v- Thomas; HL 20-Apr-1953 - [1953] AC 543; [1953] UKHL 2; [1953] 1 All ER 1102
Commissioners of Inland Revenue -v- Lactagol; 1954 - (1954) 35 TC 230
Camille and Henry Dreyfus Foundation Inc -v- Inland Revenue Commissioners; CA 1954 - [1954] 1 Ch 672
Heasman -v- Jordan [1954] Ch 744
1954
Income Tax
Emoluments paid under an office or employment are taxed under Schedule E as income of the year of assessment in which they were earned, and it was irrelevant when they were paid.
1 Citers
Inland Revenue -v- Broadway Cottages [1954] EWCA Civ 4; [1955] Ch 20; (1954) 33 ATC 305; [1954] 3 All ER 120; [1954] TR 295; [1954] 3 WLR 438
26 Jul 1954
CA
Singleton, Jenkins, Hodson LJJ
Income Tax, Charity
Two charitable trusts appealed against decisions disallowing their claim to allowance for relief against income tax of certain incomes. Held: To be valid, a trust must be one which the Court can control and execute. In this case, the discretion given to the trutees was absolute, and nor was the class of beneficiaries ascertainable.
Income Tax Act 1918 37(1)(b)
1 Cites
[ Bailii ]
Morgan -v- Tate & Lyle Ltd; HL 1955 - [1955] AC 21
Sharkey -v- Wernher [1955] 36 TC 275; [1956] AC 58
1955
HL
Income Tax
Where a trader takes stock from his business for private use or for use in another business which he owns, or where he transfers to his business stock which he owns in some other capacity than that of proprietor of that business, the transfer should be dealt with for taxation purposes as if it were a sale or purchase at market value. Thus, goods that a trader takes from his trading stock, for example, for the personal use and enjoyment of himself and members of his household, should be credited at market value.
1 Cites
1 Citers
Southern Railway of Peru Ltd -v- Owen [1957] AC 334; [1956] UKHL 4; 37 Tax Cas 602; [1956] 2 All ER 728
21 Jun 1956
HL
Lord Radcliffe
Negligence, Income Tax
When drawing up accounts where the company faces contingent laibilities and provision has to be made, the principles upon which such provisions are made does not depend upon (Lord Radcliffe) "any exact analysis of the legal form of the relevant obligation" but upon estimates of what in practice is likely to happen.
The House noted the difference between what is required by way of accounting standards in a financial statement so that a full picture may be presented on the financial position of the company and what is profit for the purpose of profits taxes. Lord Radcliffe said: "All this is very important, because, of course, accountants are very specially concerned with the problems that attend the true ascertainment of a year�s profit and the establishment of techniques that assist in this. But, for all that, there is nothing in the case that seems to me to fix on the point that is really the heart of this appeal. The requirements that an auditor may make before signing a balance sheet (I assume that the words used in the case are meant to cover the statutory reference to the profit and loss account) do, no doubt, cover his opinion that that account gives a �true and fair view� of the profit for the financial year, but I do not think that such requirements are necessarily the same thing as the auditor�s opinion that some particular provision could not be omitted without compromising the true and fair view. It is not possible completely to equate the balance shown by a company�s profit and loss account with the balance of profit arising from the trade for the year.�
1 Citers
[ Bailii ]
Thomson -v- Moyse (1958) 39 TC 291
1958
HL
Lords Reid, Denning, Lord Radcliffe, Viscount Simmonds, Lord Cohen, Lord Tucker
Income Tax
A British subject resident in England but domiciled in the United States was the life tenant of trusts administered in accordance with the law of the State of New York. The income of the trusts was paid in US$ into the beneficiary�s bank account with a bank in New York. The beneficiary drew cheques on that account in favour of banks in England and instructed them to convert them into sterling and credit the sterling equivalent to the beneficiary�s account with that bank. The English bank sold the US$ to the Bank of England, as required by the Exchange Control legislation then in force, and credited the proceeds of sale in sterling to the beneficiary�s account in England. The beneficiary was assessed to tax under Case V of Schedule D. The Special Commissioners discharged the assessments on the grounds that the American income had not been brought into the United Kingdom. Their decision was upheld by Wynn-Parry J and a majority of the Court of Appeal. Held: The House reinstated the assessments. The beneficiary had received sums �from money or value arising from property not imported�. The beneficiary was liable for the tax claimed on the grounds that the �bringing in� of a person�s income means the effecting of its transmission from one country to the other by whatever means. It is neither here nor there to ask whether anything, items of property or instrument of transfer, has actually been brought into the country or not. No more is it relevant to know what has happened to the taxpayer�s money in the country where the income arises. Ex hypothesi he has transferred it � in this case the dollar credit � to the purchaser who is to provide him with sterling. What use the purchaser may make of the dollars has no bearing on the question whether the taxpayer has received sums of sterling through remittance of his American income. The rule lists sources from which sums to be computed may have been received; and this additional wording has caused some of the mystificationin this branch of the law. These several instances of the way in which income may be remitted have been thought to limit the generality of the phrase � actual sums received in the United Kingdom�. It was not intended to say in effect that whereas under Case IV all sums of foreign income were to be computable, if received in the United Kingdom, under Case V only those sums of income received were to be computable which were attributable to the specified operations or sources. There could be no reason for such a distinction. The sub-heads should be treated as illustrationsand construed generally.
1 Citers
